For Indigenous Peoples Groups within the borders of the United States, reliable revenue they control is a cornerstone of self-sufficiency. One of the ways to build such revenue is through diverse streams, not only including gaming operations but many other industries.
Just as tribal gaming authorities in the US are becoming more active with real-money online casinos, opportunities to build new revenue streams in and around their gaming operations are emerging. Among those opportunities is Heritage Distilling Company’s Tribal Beverage Network.
The network allows Native American peoples to develop their own distilleries and spirits brands, in conjunction with their gaming enterprises if they wish. The second of these partnerships has just started. If it affords greater sovereignty to the tribal groups involved, more could soon follow.
Mazatzal Hotel and Casino announces distillery, tasting room
On Thursday, the Tonto Apache Tribe announced that it is expanding its operations in Payson, Arizona. Currently, the tribe’s businesses in the area include the Mazatzal Hotel and Casino. The tribe will be adding “a full scale spirits distillery adjacent to the” casino according to Chairman Calvin Johnson.
“The Tribe spent the last several years researching the market to determine what the next phase of growth should look like, and what the next generation of tourist, visitor, consumer and gambler looks like,” Johnson said. “We know the next generation of patrons is looking for a brighter environment, fresh food options, new amenities and, most importantly, new experiences.”
“We also know that all the data tells us that adult beverage consumers are shifting away from beer and wine towards spirits,” Johnson added. “To that end we made the decision to add a production facility centered around spirits and a tasting room in partnership with Heritage Distilling Company.”
While this is a new undertaking for the Tonto Apache, Heritage has some experience in these operations.
Tribal Beverage Network’s beginnings
With the addition of the Tonto Apache Tribe, Heritage’s Tribal Beverage Network has doubled its reach. The network’s first partnership was with the Chehalis Tribe. That tribe operates the Lucky Eagle Casino and Hotel in Rochester, Washington.
Another of the Chehalis Tribe’s operations, Talking Cedar, is located in Grand Mound, Washington. According to Gabe Guarente of Eater Seattle, the brewery, distillery, and restaurant was historic for more reason than being the inaugural partnership for the Tribal Beverage Network.
It was also the first facility in the US to legally produce alcohol on tribal land. Heritage co-founder Justin Stiefel says that his company assisted the Chehalis Tribe with lobbying Congress for the repeal of a law that banned such production in 2018.
From there, Heritage advised the Chehalis Tribe on many aspects of developing the distillery and spirits production.
Two years later, the Chehalis Tribe and Heritage realized the fruits of their labor with not only the opening of Talking Cedar but the inspiration to make the same opportunities available for other Indigenous Peoples Groups.
“We grew up in the west and learned from an early age the importance of tribal history and contributions the tribes have made in society,” Stiefel said of his co-founder wife, Jennifer, and himself. “We also saw the growth of the Tribes as they invested in and diversified around manufacturing, natural resources, commercial and retail development, gaming, and hospitality. Because they already operate their own casinos, hotels, golf courses, arenas, resorts, and retail spaces that sell adult beverages, this is the next logical extension of their development. For 184 years, tribes have been shut out of the spirits industry by Andrew Jackson and Congress. Now they are in catch up mode just as the industry is hitting a growth cycle.”
While producing alcohol can be a new revenue stream, it’s a highly regulated industry like gaming. Tribal gaming authorities are no strangers to such regulations. That’s why the Tribal Beverage Network can be of great value.
What the Tribal Beverage Network brings to the cask
Groups like the Chehalis Tribe and the Tonto Apache Tribe are under no obligation to form a sort of alcohol compact with Heritage like they do for gambling with respective state governments. They are free to embark on making spirits at their pleasure.
However, Stiefel thinks partnering with Heritage gives such enterprises a head start of sorts.
“The tribes know that creating a brand from scratch in a very competitive industry is risky and expensive,” Stiefel explained. “That is why they like the Heritage brand. Heritage Distilling as a brand works everywhere. They also know that with our more than 10 years of operational experience, our existing stable of recipes and awards, and our patented Cask Club program, they get a turnkey solution to get to revenue and profitability faster. There is a lot that goes into this industry; federal permitting, equipment selection, recipe development, formula approval, label approval by the federal government, sourcing of raw ingredients, quality control, marketing support, training, and compliance. They would rather tap into our knowledge base and leverage our resources than try to build everything from scratch.”
Stiefel added that “we have been inundated with requests for information and partnering with tribes from across the country.” For that reason, tribally produced spirits could be coming to a casino near you. That convergence results in synergy for the tribal casinos and the groups they support.
Greater revenues, more self-reliance
Stiefel stated that under the partnership with Heritage, facilities like Talking Cedar and the forthcoming location adjacent to the Mazatzal Hotel and Casino can produce a variety of beverages like bourbon, gin, rum, rye, and vodka. The production facilities are more than just a place to manufacture the spirits, though.
Stiefel says Tribal Beverage Network partners “get access to our patented Cask Club, where members join up, get their own barrel of custom aging product and work with our Cask Club staff to create a product unique to them.” The diverse revenue streams improve partners’ economic capabilities.
“When a tribe gets into the business of producing their own products, they are entitled to sell those products on tribal lands directly to consumers,” Stiefel elaborated. “Our model allows tribes for the first time to get into the business in an expedited way, create their own products, test those products directly with patrons on their property and sell products to those same patrons. This allows the tribes to capture more of the economic value while creating unique offerings and creating new jobs on tribal lands.”
“Our model also includes a real tasting room, in the casino, where patrons can get drinks, sample spirits, join our Cask Club to produce their own custom spirits and buy bottles to go,” Stiefel continued. “These are high margin operations that also allow the tribes to collect and keep spirits taxes on top of the great margin. This also allows the tribes to exercise sovereignty vis-à-vis the states they sit in and collect and keep spirits taxes. If a particular product becomes popular, those products can then be sold through distributors into the rest of the state.”
Stiefel’s perspective isn’t unilateral. Johnson sees the same opportunity.
“We are working to build a tribal economy and all these things are necessary,” Johnson said. “We will be the first Heritage Distilling location in the southwest and we are excited to offer this new amenity to our current patrons and the next generation of patrons we know are coming. With Heritage we will be producing their current lineup of award-winning spirits and working with their team to develop brands unique to our tribe. For us this is a chance to manufacture on site, interact directly with our consumers, attract new consumers, and collect tribal tax.”
Products like spirits allow groups like the Chehalis Tribe and Tonto Apache Tribe to not only support themselves but also not be completely reliant on gaming revenues for that support. Spirits also naturally complement their gaming businesses. With Heritage as a partner, the tribes can build new heritages of their own.