$12 million West Walnut Street investment includes distillery, brewery expansions, museum

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JOHNSON CITY, Tenn. (WJHL) – Johnson City’s past as a moonshining and bootlegging mecca is set to come to life again in a $12 million project just a few blocks from where Al Capone holed up on his alleged Prohibition-era stops in “Little Chicago.”

Entrepreneur Scott Andrew and Tennessee Hills Distillery founder Stephen Callahan are teaming up on the project’s first phase, which will incorporate two properties flanking the Model Mill on West Walnut Street.

It’s the first major project announced as the City of Johnson City prepares to begin work on a $30 million overhaul of the Walnut Street corridor bounded by University Parkway on the west, Buffalo Street on the east and Walnut and State of Franklin Road on the south and north.

“The city’s doing such an amazing plan with the … West Walnut Street redevelopment project, we couldn’t wait to acquire some property and locate this here to elevate and scale Stephen and Jessica Callahan and the Tennessee Hills brand,” Andrew said.

Johnson City Mayor Joe Wise sounded pleased but not shocked that the city’s investment was already paying dividends.

“When the city makes its commitment to public infrastructure and redevelopment of the right of way, I believe you incentivize and create and environment in which private industry follows that investment,” Wise said.

Andrew is an experienced entrepreneur who has scaled up several small companies into large franchises — most recently, Johnson City-headquartered Biopure. Callahan is a Jonesborough native and grandson of a moonshine-making preacher who opened Tennessee Hills Distillery in Tennessee’s oldest town back in 2014.

Stephen Callahan’s spirits-making business is expanding at the former JRH Brewing — before it expands even more.

“The gun went off and we were lucky to have a few good brands that caught traction and now we’re able to kind of reset and understand who we are as a brand,” Callahan said. “With a Scots-Irish background coming from the mountains of East Tennessee and a name like Callahans it makes sense to do a single malt whiskey, which ties in perfectly with our abilities here at the brewery.”

“The brewery” is JRH, flanking the Model Mill on the east at Sevier and Walnut streets. Andrew and Callahan’s newly formed Tennessee Hills Brewing and Distilling purchased the business and equipment from founder Jon Henritze recently.

The pair are betting that craft Tennessee whiskey represents a huge untapped market.

Stephen Callahan is banking on Tennessee whiskey’s potential to explode on the craft market — and counting on the marriage with a brewery to create the right ingredients for some fine single malt.

“You know you got to Kentucky there’s craft bourbon everywhere,” Callahan said. “Well you go to Tennessee and there’s a handful of craft Tennessee whiskeys and those that are out there aren’t that good.

“And what I think we could do is we could really elevate the quality of Tennessee whiskey and get it right up there with bourbon.”

They think pairing high-level chemistry, old school methods and a branding approach highlighting East Tennessee’s rugged and grain-soaked past can catapult Tennessee Hills from a small but growing regional presence to a national one.

To that end, they’re retrofitting the just-purchased Preston Woodworking building at West Walnut and Watauga Avenue into a beer and spirits factory — with winemaking capacity thrown in for good measure.

When completed, potentially as early as summer 2022, the location will also include a bar/restaurant where visitors can taste the wares, and the beginnings of a museum highlighting the area’s hardscrabble, can-do heritage.

In the meantime, the pair are working out of JRH.

Much more equipment is on the way for both brewing and distilling, as Scott Andrew and Stephen Callahan hope to see East Tennessee State University conduct coursework in fermentation

Busy concocting new brews and fiddling with Callahan’s spirits are former JRH assistant brewmaster Danny Smith and Dave Lawrence, a chemist who’s spent the past several years teaching in the brewing, distillation and fermentation program at Asheville-Buncomb Tech.

The brewery at Walnut and Sevier streets will reopen in late May or June and feature both beer and cocktails. But Callahan said it will serve an even greater purpose as work progresses up the street that will give Tennessee Hills the capacity to produce 50 barrels a day — nearly 120 times Callahan’s current output.

“What’s that’s going to allow us to do is increase our production, kind of let us reach out farther into the market and continue to build our brand while we’re building a factory,” Callahan said. “That way when we build the factory and we finish it we’ve got the demand ready to go.”

Andrew, a bundle of enthusiasm whose scaled up several small companies into much larger franchise operations, is bullish on Callahan, the Tennessee Hills brand’s potential and Johnson City in general.

Scott Andrew

“East Tennessee’s one of the most rugged places full of a lot of brilliance, a lot of hard work and a lot of grit,” Andrew said.

Some of that grit and brilliance went into making liquor during two prohibitions, Andrew noted. One occurred after the Civil War, the other in the ’20s.

“One of the things to bring people into the region, we needed a distillation and fermentation sciences program,” Andrew said. “And it need a craftsman like Stephen Callahan and Tennessee Hills Distillery but you also needed a university with professors and the right kind of people in chemistry.”

To that end, Andrew said plans are in place to offer a minor in distillation and fermentation at ETSU, and Lawrence and Smith are about to have some pilot equipment for students to use. His plan is for coursework to be offered in the coming fall semester.

“We’ve hired (Lawrence) to head up our chemistry division of it and they’re going to be working with students to make small specialty craft brews and small specialty craft spirits as a part of the program that gets started here this fall.”

Callahan said while beer will be the primary product at the former JRH, “the advantage we have as a company is we’re able to use this equipment and essentially start playing around with some single malt whiskeys, some apple brandies and kind of see where we can go moving forward.”

By the time the 28,000-square-foot Preston building reopens, Andrew expects Tennessee Hills already to have made its mark in a wider pond. No chemistry slouch himself, Callahan has a degree in the field from Emory and Henry College — and the kind of name and background that makes Andrew think the business the Callahans will make quite a mark in a $200 billion-plus industry.

Sharing the culture, expanding the plan

Seemingly not one to limit the scope of his vision, Andrew is thinking much broader than “just” three types of alcohol production and a university partnership.

Part of the plan at the west end — along with the production and the tasting room — is a museum space dedicated to celebrating East Tennessee’s special culture.

“We’re gonna repurpose it into an amazing outdoor-indoor walking experience with rollup doors and a 50-foot continuous column still and a glass tower. It’s gonna be a beacon.”

Along with the Model Mill, Andrew said he’s hoping the project will spark development that truly connects ETSU with downtown through the corridor long seen as holding great potential.

Entrepreneur Scott Andrew and Tennessee Hills Distillery founder Stephen Callahan are making a big play on whiskey, beer and East Tennessee’s rugged heritage — moonshine included — in a major investment along Johnson City’s West Walnut Street corridor.

“Four or five years from now people are gonna walk down this street and they’re just gonna be amazed.”

“The university and the city and their vision for West Walnut Street and their willingness to do projects like the Ashe Street courthouse, help us with what we’re doing here with a couple of properties and moving a media company here,” Andrew said. (Yes, another of his projects, Rugged E-TV, is moving into an additional building he’s purchased on West Walnut.)

“It’s so awesome to be able to be part of a story that I can see looks like this now and then to take a strong regional brand built by a couple of rugged entrepreneurs and scale it nationally … it’s gonna be one of the most fun things I’ve ever done.”

If the fun thing takes off like the Asheville, N.C. native expects it to, a phase two on adjacent property that Andrew’s got an option on will result in at least double the first phase investment. He’s picturing a hotel with architecture based on the “rickhouses” that serve as spaces for aging whiskey.

“We wanna build the Tennessee Hills rickhouse hotel and make this a whole land of Tennessee experience and culture and do it with cultural tourism and link them together and long term this’ll be an iconic anchor spot just like the Model Mill.”

Wise, Johnson City’s mayor, said people are “beginning to recognize we’re nearer to the end perhaps than we are to the beginning of the pandemic.” And he said Johnson City has positioned itself well for investment with a stable business climate.

“There will be opportunities at the end of that tunnel and people are beginning to look around to see where those are,” Wise said. “And some of them are finding them here in Johnson City.”

Involving the neighbors

Andrew said he and Callahan have already included some people from the neighboring Tree Streets in early meetings, and that they’re planning to ramp up that effort.

“We know this is a good idea for us business wise, we know it’ll provide jobs, we know we can create an education program here and we’ve met with all the people that would contribute to that,” Andrew said. “But we’ve also reached out to the community and plan to do more of that as a part of our project with converting JRH to the Tennessee Hills distillery and brewery.”

“We want it to elevate the community in a way where it feels good…. We want you to walk down or ride your bike down, come see the tour, come hear the bluegrass music that’ll be in the indoor-outdoor space…”

As for the large production space, “our goal is to get this part of it, phase I, completed as soon as we can into next summer.

“We’ve been told we can achieve that based on all the equipment we’ve started ordering comes in, but it’ll be fun to see it if it opens in the summer. If not we’ll be looking to open it by Christmas of 2022.”

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