COVER STORY: Spirited progress

CASSELTON, N.D. -- When it comes to processing fruit into adult beverages on the fruited plains of North Dakota, Greg Kempel is getting to be one of the state's bona fide experts.

In the past eight years, Kempel and his Maple River Winery has become one of the few wineries in the state making locally produced fruit into wines. The winery has grown to nearly 30,000 bottles of wine per year and has shown a flair for attracting tourists.

Today, Kempel is breaking new ground again. This time he's making cordials, vodkas and brandies in his new companion business -- Maple River Distillery. The two businesses are a couple of doors apart on historic Front Street in Casselton.

The Kempel's new products, also made from the region's signature fruits -- rhubarb, chokecherries and plums -- are on shelves in North Dakota liquor stores.

"With the winery, there were a lot of butterflies -- fear of the unknown," Kempel says. "There's a lot of butterflies here, too. There's no comparison right now."

Another challenge

A brief refresher on alcoholic beverage production: There are three kinds of manufacturing: brewing (beer), fermenting (wine) and distilling (spirits). Kempel is involved only in the latter two.

Each production system carries its own licensing requirements -- federal, state and city.

The distilling process starts with the fruit itself and then a fermenting and boiling process, and then uses "condenser" to capture the alcohol.

Kempel's is the only fully licensed and operating distillery he knows of in North Dakota, other than what's used for making fuel alcohol in entirely separate kinds of business.

The new distiller is in a former flower shop that includes about 2,700 square feet upstairs and a basement, for a total of more than 5,000 square feet.

Kempel says the licensing is a considerable challenge, with lots of rules and regulations. Among other things, he must keep track of every pound of fruit that comes into the business to make spirits.

"We pay $27 per gallon to the federal government in excise taxes," he says. "Because of that, you have to account for every product that comes in and account for every drop of product you produce."

Producing spirits

In the summer, Kempel acquires fresh fruit that is brought in and purchased by the pound from the public.

He counts on some 300 suppliers, some of whom are area farmers.

"We're always looking for more suppliers because Mother Nature is the wild card," he says.

Production comes from planted shelterbelts, but also in wild areas along rivers and other places. Some of the chokecherries are from Canadian cherry trees.

"They make wonderful wine when blended with other chokecherries," he says.

One year, people were planning to bring him a tree belt full of apricots, but they were destroyed by hail.

"I could see in the future that there'd be chokecherry orchards," he says. "There's been more of a 'buzz' about 'local' foods, where you use local produce, rather than going for Smucker's grape jelly."

The standard price is $1.50 a pound for chokecherries and 50 cents a pound for rhubarb. Some "U-pick" strawberry farms will bring in berries when they have more they can sell otherwise.

About 50,000 pounds of fruit were acquired by the winery in 2009.

"This year, we'll bring in more fruit -- rhubarb, chokecherries, strawberries, plums and apricots," Kempel predicts.

The rhubarb and chokecherries are available every year, but the plums and apricots vary by year by growing cycles and weather conditions.

Kempel's employees accumulate the fruit daily and take it Union Storage in Fargo, N.D., where it's kept frozen in pallets. It's taken out as needed, as production is year-round.

Rhubarb is a big part of the total.

Rhubarb's appeal

Kempel says that the two companies together will bring in about 40,000 pounds of rhubarb in 2010. Some suppliers have one-acre plots, others small patches.

"It takes a lot of rhubarb, because with our products, we want to make sure you taste the fruit," Kempel says. "That has made our rhubarb wine so popular."

In either process, the work starts the same.

Kempel and his employees take an amount of frozen fruit -- say 1,500 pounds of rhubarb.

After that's thawed, they put it through a press that can push out 55 gallons of juice at a time. The press is a tank with a bladder that expands with water pressure.

"We pack it full of rhubarb, hook the bladder up to city water and that inflates with water pressure and pushes out the juice against the sides," he says.

The press moves back and forth from the winery to the distillery as needed, but is only needed at the winery for the apples.

A 1,500-pound rhubarb session yields about 100 gallons of juice.

"Then we add some sugar to it," Kempel says. "And it's not just any sugar. It's locally grown sugar." American Crystal Co. sugar, of course, is made in the Red River Valley.

The distillery lets the sugared juice ferment for a time -- 12 hours to four days for vodka, depending on the recipe; six to 12 hours for cordials. Eventually, the company will incorporate sugar beets, potatoes or corn a base.

"That's when we put it in the still to distill the alcohol out of it,'" Kempel says.

"We'll cook it; heat it up to right at 173 to 174 degrees. The steam comes out, and that's where the 'good stuff' comes out. We don't boil it. Water boils at 212 degrees, but vodka is produced at this temperature."

And it has to be just right.

Alcohol produced under 172 degrees would be discarded because of impurities. Similarly, alcohol made at 180 or more includes something called "fusel oils," which tends to give the consumers a hangover, so it also is discarded.

The acceptable "distilled" alcohol is allowed to settle for two or three weeks.

"Then we use a carbon filter to take out more impurities," Kempel says.

This product is stored in one of the distillery's 80 5-gallon, stainless steel containers.

Later, the company uses a four-bottle filler to put it in bottles -- typically distinctive skinny 375-milliliter bottles or the larger 750-milliliter bottles that are similar to a wine bottle, but are custom-made with thicker glass. Labels, which are printed in Minot, N.D., are affixed and the product is ready for sale.

Wine is about 10 percent alcohol.

Cordials are about 15 percent alcohol, or "30 proof."

Vodka is about 35 percent alcohol, or 70 proof.

The consumer's hands

The value of all of this production is in the eye of the beholder and in the hands of the retailer and the consumer.

Products will be in retail stores for $14 to $18 for a 750-milliliter bottle. One gallon makes five of these bottles, so there's a retail value of some $90, when sold that way.

From that, the producer, distributor and retailer all must take their cuts.

Kempel acknowledges he needs to make a fair living. He says he's enjoying the business as anything he's ever done.

"It's fascinating," he says. "All of us have that streak in the spring where we want to grow something. We're making a cordial or spirit out of this area. It's new, exotic and fascinating. It's not something that only can come from California or France."

A native of Casselton, he grew up in a home where his parents ran the local Red Barron Pizza Pub, which is in a building next door to the winery. He was an only child. After graduating from high school in 1989, he worked at the Fargo Holiday Inn and then at the U.S. Post Office. He completed bachelor's and master's degrees at the University of Mary's Fargo location and started the business.

"I used my master's degree course to write the business plan for the winery," he says.

In 1999, he married Susan, a Nebraskan whom he'd met at a Jaycees national convention. They have three young daughters. Susan remains a librarian in the Fargo public schools system, which allows the family to have health insurance during the infancy of the winery and distillery businesses.

"It provides flexibility, which is not something every entrepreneur has," he adds.

Kempel sees a lot of potential in the winery and distillery business in North Dakota, but also a lot of competition. He doesn't grow grapes, saying the labor inputs don't pencil out.

"Why should we grow our own fruit when it's available?" Kempel says. "All we have to do is pay for it. There's plenty of supply out there."

On the wine side, he sees Australian wine bottles selling in retail stores for less than $5 per bottle and thinks about all of the middlemen who must take a cut -- growers, harvesters, bottle makers, transportation, the wholesaler, the retailer.

"I think a lot of that is government sub-sidy," he says.

"Anytime you have someone say, 'I have this great idea for starting a winery, or any small-scale agricultural processing,' I say, 'Look at the marketplace.' I get a lot of wine news, and I don't know how many hundreds of thousands of acres of grapes are being pulled out of the ground in Australia. What's the future? Is there potential for families with small farm wineries? I think there's potential, but the hard part is knowing what the marketplace is, understanding there's a lot of expense."

Kempel says new grape and chokecherry plantings take three to four years before a saleable crop is available.

"You have a lot of labor and expense with no income," he says.

When he was starting with rhubarb wine, it was a niche. "Now, in the Upper Midwest, you can go every 100 miles and find rhubarb wine producer. Is there potential? Yes, but it's difficult. There are a lot of wineries in California that aren't for profit, but for people who need a tax write-off. The joke is that if you want to make a small fortune in the wine business, you start with a large fortune."

Kempel says North Dakota state government -- tourism and agriculture departments, particularly -- have been "phenomenal" in helping his company grow. He distributes his products through Ed Phillips & Sons in Fargo, which is part of a larger, 39-state network. That's how he got his products in liquor stores.

He works with the Fargo-Moorhead Convention and Visitors Bureau, and his items are popular with tourists, including many from Canada. He says rhubarb and chokecherry products are signatures for the region, just as are Montana huckleberries, Georgia peaches and Michigan cherries.

How far the products will go depends on the consumers. He predicts the rhubarb and chokecherry vodkas will be popular.

"They've caught everybody's eye," he says.

In five years, Kempel hopes to continue slow, steady growth.

"We're optimistic," he says.