A spirits group aiming to fill the need for “consciously produced beverages” has launched with a $4 million seed round and the acquisition of a historic Texas distillery.
Created by former team members of On The Rocks (OTR), the ready-to-drink cocktail brand sold to Suntory Spirits in 2020, High Basin Brands (HBB) marked its launch in the Lone Star State by announcing an agreement for an asset purchase of Dripping Springs-based Treaty Oak Brewing and Distilling, one of Texas’ oldest distilleries equipped with a 25-acre campus.
The team, whose oversubscribed seed round doubled due to “robust investor interest,” includes: Steve Ousley, former partner and CCO of OTR; Kelly Smith, formerly of OTR; Jordan Rothschild-Noomé of Suntory and OTR; Alex Fauveau, former CFO of OTR; and entrepreneur LaMont Herman. Other former OTR leaders have gone on to develop Gin & Juice By Dre and Snoop.
HBB has secured a partnership with Southern Glazers Wine & Spirits for “a strategic rollout,” according to the release.
HBB’s debut product, Ghost Hill Organic Vodka, will launch in early 2025, joining craft and smaller brands like Prairie Organic Spirits and Frankly Vodka that are also hoping they’ll be well positioned to meet a consumer interest in sustainable and wellness-oriented products. In a category with few ways to climb up the price segment ladder, Belvedere Vodka also transitioned to organic last year, positioning its new label as an enhanced signifier of luxury.
Plans are underway to secure organic certification for Treaty Oak, positioning it to become the largest such distillery in Texas. The site produces three of its own bourbon lines, as well as Waterloo Gin, which was recently sold to billionaire spirits empresario John Paul DeJoria.
“Acquiring Treaty Oak is a transformative step in expanding our portfolio and leading the industry toward more conscious consumption,” said Rothschild-Noomé. “With so few certified organic whiskey options currently available, we’re excited to fill that gap by transitioning Treaty Oak to organic production. By aligning our production with organic standards, we’re positioning Treaty Oak to meet the demand for spirits that prioritize both taste and environmental responsibility.”
HBB uses heirloom grains sourced locally from the Barton Springs Mill, one of the largest organic farms in Texas. By sourcing locally, the company said it cuts down on carbon emissions and “ensures an authentic, environmentally responsible product base for its spirits.” Further plans include securing ranch certification for sustainable farming practices.
The New Wave Of Buyers?
Treaty Oak is not the only Texas – or craft distillery – that has sold to emerging well-financed spirit groups in the past couple years.
Round 2 Spirits, another DeJoria business, acquired Muenster, Texas-based Whiskey Hollow Distillery, located roughly an hour north of Dallas in January. Whiskey Hollow, which sold for $6 million last year after filing for bankruptcy, fit the bill partly because its large footprint provided Round 2 Spirits room to expand production. Round 2 Spirits has since introduced Weber Ranch 1902 Vodka, a vodka distilled from 100% Blue Weber Agave, the source material for tequila.
Texas is one of the states with the most craft distillers, reaching 177 last year, up 8% from the year prior.
But as the spirits market faces its third consecutive year of declines, craft distillers have felt the squeeze. Since January 2023, at least 49 craft distilleries have closed and the rate of closures has accelerated in 2024, according to the ACSA. In 2023, craft spirits volume decreased 3.6%.
With larger spirit groups investing less in mid-size to large craft distillers, it’s possible a new wave of buyers or mini-conglomorates will begin to scoop up longtime distilleries looking for an exit or consolidate regional craft brands, that aren’t able to scale in the current distributor climate.