Cover – Cayce Kovacs – July/Aug 2019

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IIf you’ve been to Comfort for some window-shopping, odds are you have stopped into Hill Country Distillers. You’ve raised your eyebrows when you see the selection of “moonshine” because it conjures images of backwoods guys making illegal ‘shine, but then you try some…and you raise your eyebrows again because it’s wonderful. With flavors such as Jalapeno, Cactus, and even a Lime variation, Hill Country Distillers have been busy changing your perception of the old-time “moonshine” drink.

The main force behind the business is Cayce Kovacs, who along with her husband John, have taken a simple appreciation for the drink and carved out one of Comfort’s most well known businesses.

Born the daughter of a father that worked at the Army base in the Corpus Christi Naval Depot and her mother a homemaker turned nurse, Cayce Kovacs fully intended to follow her mother in a medical field. She begins, “I was always going to go into a medical field. That was my original plan and then computers were just coming into the world and that caught my attention – I’m a little on the nerdy side. I moved into more Business studies and I started in Corpus at Delmar JUCO and got an associates degree. I was working so I went to school at night. I wanted money and so my job came first. I worked at a veterinarian’s clinic, then I worked at Nueces County and then I was in the State Appeals Court System, which I did for 7 years. It ultimately took me 10 years for my degree.”

After a divorce, Kovacs used her experience in the Appeals Court to make the move up to San Antonio and was brought on board with the 4th Court of Appeals. She continues, “I went to St. Mary’s and got my BA in Administration with Computer Information Systems. I transferred and worked for the 4th Court of Appeals so when I got here I started working for them. I did all my classes on Monday/Wednesday/Friday mornings, and then just worked the rest of the time. I enjoyed it and I was only there at the 4th court for about 2 years and built some more long lasting relationships with lawyers and judges and they all wanted me to go to law school but I had no interest.”

After meeting her husband John in 1990, and marrying him in ’93, Kovacs continued to progress through her career. “I left Bexar County in ’92 and went to work for a company that ended up being bought by Diamond Shamrock – they did pay phones and inmate prison phone systems – North American Intelecom. When they got the deal with Bexar County pay phones and courthouses…remember that we’re still right before cell phones…but we got that deal including much of their internal phone systems for prison. They quickly learned that inmates like free phone calls even though they’re supposed to call collect…and that was one of the most rewarding jobs I ever had.”

John’s business had grown and he had added staff as an independent representative, and things were growing for his company. “The thing about the independent representative business is that you’re spending your time and your money on going out to help build their brand and to drive sales, and you get paid commission. What tends to happen is that if you do a really, really job and getting huge checks, the company decides that they can just put an employee in to service the account and you get fired.” As this is exactly what happened to John, the duo began to put together a plan to move forward.

Ultimately starting a manufacturing business, the two began working together at the business, which grew quickly and required more and more space. They found a manufacturing space in Boerne, while still living in San Antonio, but they both had their eyes on the Comfort area. “He had been a pharma rep back in his younger days and he had the territory of the Hill Country and always liked it and he wanted to move up here. We bought an old house in Center Point and had that for 3 years. We did a big renovation, lived in it for a bit, but it was just way too old for us. It was an 1898 farmhouse. It was a maintenance nightmare. Everybody’s grand idea of being out in the Hill Country is 5 or 10 acres and river frontage and we found that. That became a weekend project for us and we drove all around the area looking for the right place for us and we didn’t like the traffic coming out 281, nor 35, so this section of the area looked a lot better for us. But the business was taking up so much of our time and it was just too much.”

John had recently lost both of his brothers to different ailments and he was feeling like he was caught in a bit of a rat race, so with some evaluation and soul searching, the pair bought their house in Comfort approximately 5 years ago where they have lived since.

One of Cayce’s passions has been dachshunds, and would ultimately prove to be the catalyst for Hill Country Distillers. “A dachshund was the inspiration for the Distillery. I’ve had dachshunds all my life and while we were living in SA in 2000, I got involved in a rescue group. I’ve been with them ever since, and ended up meeting a volunteer from Bandera in 2012. She and I would swap foster dogs up here in the area, but I took a dog to her place one day and she asked me if I’d ever had some moonshine before. So in a mason jar, I go home with some. I finally tried it, but I cannot say that I had ever been a fan of moonshine, but I was up for trying new things in the spirits world. I loved it.”

Kovacs continues, “After the economy tanked in 2008, we were talking with our financial advisor and I asked if we could invest in alcohol because it does well no matter what. We took a hit pretty good in 2008. We suffered, but we had a variety of products that we manufactured and they weren’t all for the same market. Some were for new construction, some were for rehabs, some were for energy saving. We fared better than some others, because nobody was building anything new, so that product line suffered a lot, but the others did ok. The distillery was in the back of my mind, not John’s, so I finally tasted that moonshine and it was great. It had flavor to it and it was not what I expected it to be. John wouldn’t taste it, but I got more moonshine from my friend, and I asked her what it was made from and she said cactus. Her husband has been messing around with it and he was trying some recipes and she gave me strawberry moonshine and I loved it. I finally get John to try the cactus and he was amazed.”

With their new appreciation for the moonshine, the Kovacs saw what they thought could be a business opportunity. “It was very uniquely Texas, the moonshine. I certainly had never heard of anybody else making alcohol out of cactus. The thought was that we would also work with local fruits like strawberries, apples, peaches…it was going to be all Texas stuff. That was our original plan, which was just to make it as uniquely Texas as we could. We would take some of the produce that the areas were known for and we wanted to celebrate that. We are born and raised Texas and we thought that it was truly something unique and we liked building things and creating things and so that was a fun progression for us. We like the creation process. Most distillers have their products created elsewhere, but this is as Texas it comes. I asked my friend if she had thought about going into business and they didn’t have the money to do anything with it. We started kicking it around such as ‘What would it take? Permits? Fees’? We started conversations as investors – because we didn’t want to do any of the work because we still had the manufacturing business. So we make a handshake deal with them to be the majority owners and we would invest in re-doing a horse barn on their property and turning it into a distillery.”

Unfortunately, things did not go as planned and the partnership was vacated hastily. Kovacs explains, “The partnership didn’t go as planned so we lost a ton of money. We owned the stills, the incorporation, the logos, the tshirts, etc…so we took the inventory and the equipment and we left that deal. We called the people that built the stills and asked if they wanted to buy it back and they tried talking us into doing our own thing. They offered to help, but we still had the manufacturing business and didn’t really have the time. But we went to a class with those guys that taught us how to run the still, and we actually mailed our cactus to them so that we could begin to figure out how to make it. I ended up having to learn a whole lot more ab

out the industry than was planned. We were going to be mostly financial investors, and we weren’t supposed to be in on the day to day operations. I had to learn the rules and regulations from the State and the Feds about alcohol and reporting and it’s a lot. It forced me to create a much larger base of knowledge.”

Kovacs continues, “We got back with some skill and we needed a location. We figured that if we could find the right location that we could afford, we’d move forward. We looked everywhere so we’re driving by one day and this current location had been Comfort Cellars Winery but it had been closed, so we see that there was a car here and we pulled in. We knocked on the door and we approached the owner and asked if she would be willing to sell it. She liked our plans for the place, and she liked that we were small business owners, and we closed on it in October of 2013.”

After some remodeling and renovat

ion, business set up, and infrastructure to create what you see today, Hill Country Distillers was ready. The Kovacs had sold the manufacturing business in 2016, so they now had the freedom and motivation to pursue their new dream.

The Kovacs would be the first to tell you that things have not been easy for them. From lower tourism than some other Hill Country towns to archaic legislative challenges, they’ve been in an uphill battle. Cayce explains, “This is a HARD business. Esmeralda runs the bar. James and Steve run the distillery. The rules and restrictions are extremely difficult on us, and it makes it very hard to make things work. The wholesale side is so competitive, but the retail is good. However, it’s Comfort so we don’t have traffic that some places get, though our overhead would be so much higher in a busier spot. That said, the community has been wonderful and I don’t regret putting this in Comfort. When we had the manufacturing business, we were involved in the community here, but now we have brick and mortar in town. And now I see how many people want to move here. It’s a little scary. People resist change just like every town, and I think Comfort will have some issues that will keep growth slower, but we know that it’s coming.”

Cayce expresses surprise at the high amount of tourism that Comfort captures during the week, as well as the numbers of people coming up out of Houston, however, their challenges continue to loom. “We’re not breaking even at this yet. That surprises people, but it’s the truth. This is a crazy hard business. With Texas law I’m limited to 2 bottles per visit per 30 days. It’s insane. So we’re stu

ck with things like that that don’t help us so our goal right now is to get into the black! I have always insisted that the bottles we buy are made in Missouri; my T shirts are made in USA. We buy so much of our stuff from the U.S., and that doesn’t help our expenses, either. Even our barstools are from Kansas. It would be great to find some investors that want to help with marketing because there are so many people that still don’t know we’re here. It’s so expensive. Legislative changes would help. Word of mouth we need more of. We’ve had growth year over year but we’re still not there yet, though we are confident that we will get there.”

The marketing angle for the distillery is a work in progress as well as they transition away from the word “moonshine”. Kovacs continues, “Texas Prickly Pear Spirits is what we actually call it, instead of the word moonshine. It’s a double edged sword. It makes some curious, and it scares some off. It’s really challenging figuring out the wholesale side of things as well, though we’re doing pretty good. There’s a limited amount of shelf space. We’re all fighting for the space. If your product doesn’t move, it’s going to get bumped. It’s very hard to get in, and the distributor is supposed to help you do that, and they will help you early on but then when they find out we don’t have $1m to spend on marketing, they back off a bit. You have to keep your own interest high via your own marketing and events and we work tirelessly at that because that drives the consumer to buy it off the shelf, which in turn keeps the product on the shelf.”

The growth has been steady, and has been helped simply by a new industry of craft distilleries that are raising awareness and interest in their products. “We love our mom and pop little liquor stores that carry us, and it was a huge help to us when some of the larger places have picked us up. Total Wine & More picked us up and they have a great philosophy on what they carry, and they focus a lot on the local producers and markets. They came and found us and they have treated us incredibly well. I’m in over 200 liquor stores throughout Texas. We’re in many bars and restaurants, probably 40 or so across the state. The wholesaling has gone well, and as the industry has grown, and it’s gotten more competitive, but we’re doing pretty well. Many of the states around the country have loosened their liquor laws that has helped new distilleries open, and so there’s many more of us out there. These craft distilleries are popping up all over the place. We were license #34 in Texas in 2014, and now there’s over 150 of them. It’s not getting easier, but the newer market has helped because people are seeking products like ours and is definitely what a lot of people are looking for now. The vast majority of our feedback from people that come and take tours and tastings is extremely positive, and we just continue to work hard to provide an experience that is memorable for people and to help them gain education on our products so that they’ll buy it from their market store and continue the growth.”

Small business is hard. Small business that is heavily regulated is very hard. The Kovacs have a lot of challenges to their business model, but they have a history of simply persevering through challenges and finding a way to make things work. With a close-knit team of employees, a growing team of devoted regulars and fans, and their own “roll up your sleeves” mentality, the pair are on the cusp of truly establishing themselves as the premier moonshine distillery in Texas. Cayce finishes with, “I’ve loved everything about running this business. These employees are truly family, I’ve gotten to know so many of the customers and consider them friends, and I’m just so excited at what the future holds for us. If it was easy, everybody would be doing it. If it had been easy, we probably wouldn’t have done it. It’s fun to wake up every morning and see what’s going to happen today, and we get to talk to a lot of so many different people, from so many different walks of life, and that will never get old. No matter what kind of day you might have had, I’ve never been in any kind of job where I’ve had that opportunity to meet our customers so closely and get to know them, and it’s so enjoyable. I love seeing people’s faces when they try our drinks and are amazed at our ingredients, and I’ll never get tired of that. ”


by Ben Schooley

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