Jonesborough distillery eyeing expansion, hoping to remain in downtown

Jonathan Roberts • Oct 23, 2019 at 9:00 PM

Tennessee Hills Distillery is eyeing expansion, but whether that happens in Jonesborough or somewhere else depends on the town, says owner Stephen Callahan.

“We’re basically going to expand our footprint of our actual distillery here on site,” said Callahan, who’s also an alderman for the town of Jonesborough. “We’re going to create more room for production — that’s the first hurdle we’ve got to overcome.

“We’ve done a good job of creating demand, but over the last few years as the demand has grown, so has the need for production,” Callahan added.

The distillery’s current location, the 179-year-old Salt House overlooking downtown Jonesborough on Fox Street, is 3,360 square feet, but with two floors, it only leaves about 1,680 square feet on each floor for a storefront, tasting bar and distillery.

According to Callahan, that size severely limits just how much product they’re able to make on site — something that was put in the spotlight when a man named Josh Peters published a blog post lamenting how Tennessee Hills markets their bourbon and rye whiskey.

Peters’ post prompted Callahan to publish a response on the distillery’s Facebook page, saying that demand has “necessitated” that the distillery source some bourbon, gin, rye and base spirits from a third party until they’re able to either expand their current location or move to a larger one.

Speaking to the Press, Callahan said he didn’t want to address the article, but did say he “appreciates” what The Whiskey Jug was doing in “preserving some of the integrity of smaller distilleries,” but that Tennessee Hills has “always been truthful with what we’re doing.” He also said that going forward they’ll make sure there’s no confusion about which spirits they distill in-house, and which are sourced from third parties.

Currently, Tennessee Hills’ rum, vodka and corn whiskey are distilled in the Salt House.

Callahan is hoping that a $1 million expansion will allow Tennessee Hills to produce all its spirits on site, but notes that until that happens its hands are tied. Regardless, Tennessee Hills won’t be leaving the Salt House, though its use may change depending on what the town’s historic zoning commission allows the distillery to do, if anything.

“We’d love to stay here in Jonesborough, we want to stay here in Jonesborough and the town really fits well with what we’re doing here,” Callahan said. “But we are eyeing other properties now and kind of seeing what’s out there.”

On Wednesday, Tennessee Hills declined an opportunity to expand into Johnson City, saying it wasn’t the right time and the location being considered was more of another storefront that “would’ve intensified” the problem with production constraints, and that they want to give Jonesborough a chance to allow them to expand before they looking elsewhere.

“Whether we go into downtown Johnson City or out in the county, that’s kind of going to be in the hands of the historic (zoning commission) here,” Callahan added. “Jonesborough is my home, it’s the home of my business and we don’t want to turn our backs on Jonesborough by no means, but right now it’s coming down to a business decision.”

Still, Callahan is committed to trying to work something out in Jonesborough, saying he “wants to keep it in Jonesborough as much as I can.” 

“I think that’s what I owe the people of Jonesborough and that’s what I owe the people who’ve got behind us and have kept us in business,” Callahan said. “But like I said, some of the decisions coming up soon are going to be in the hands of others.” 

Callahan said he hopes to complete or finalize plans for expansion and, and that they’ll also be looking to hire six additional employees by mid-2020.