Rising Spirits

Correction appended: July 26, 2013

Moonshine has been distilled in backwoods Appalachia for centuries, but it’s only recently moved aboveboard. Loosened liquor laws and consumers’ love for all things artisanal have turned moonshine into one of the spirits industry’s fastest-growing categories–and with entrepreneurs profiting, Big Whiskey wants a taste.

By its original definition, moonshine means illegal spirit, and it was made at home without aging in oak barrels, the process that gives other whiskeys their golden color. Moonshine has evolved into a catchall term for unaged white whiskeys, many of which are made in Tennessee and the Carolinas.

When the Great Recession hit, those states, like many others, were looking for ways to generate employment and tax revenue. By opening dozens of previously dry counties to distilling, they could do both.

Between 250,000 and 285,000 cases of moonshine were sold in 2012, a jump from 50,000 in 2010, according to the food-and-beverage analysis firm Technomic. Ole Smoky Moonshine Distillery, which opened in 2010 in Gatlinburg, Tenn., last year accounted for about 100,000 of those cases, 65% of which were flavored moonshines.

Founder Joe Baker expects the company, which has about 150 employees, to sell 250,000 cases this year. It has gotten a boost from major retailers, including Walmart and Kroger, which have started carrying the spirit. Other distilleries that have opened in the past few years include East Tennessee Distillery, Short Mountain Distillery and Asheville Distilling Co. “There’s a bit of a gold-rush mentality,” says Frank Coleman, senior vice president of the Distilled Spirits Council of the United States.

Of course, fads in alcoholic beverages can dissipate as easily as they appear. And moonshine represents less than 1% of total whiskey sales in the U.S. But its growth has gotten the attention of some big industry players. Jack Daniel’s released its own white whiskey late last year, and Jim Beam did the same this February.

Some skeptics say mainstream moonshine is a contradiction. “There are people out there who feel that if you’re paying taxes on it, it’s not moonshine,” says Baker. “But I think most folks see that we do it the same way that it’s been done around here forever.”

In an earlier version of this article we stated that 130,000 cases of moonshine were sold in 2012. An estimated250,000 to 285,000 cases were sold in 2012, according to updated numbers by food-and-beverage analysis firm Technomic. Piedmont Distillers, which makes Junior Johnson’s Midnight Moon, sold roughly 130,000 cases alone last year.

FOR MORE STORIES ABOUT ENTREPRENEURS, GO TO time.com/smallbusiness