Tennessee Hills to make multi-million dollar splash on West Walnut Street

The Willy Wonka factory of alcohol is coming to West Walnut Street.Stephen Callahan, the owner of Tennessee Hills Distillery in Jonesborough, is partnering with Scott Andrew, head of Retail Service Systems, on a multi-million dollar project that could involve three properties along the corridor.The business partners have purchased the assets of JRH Brewing at 458 W. Walnut St. and the Preston Woodworking property at 620 W. Walnut St. They also have an option for the Accurate Machine Products building at 710 W. Walnut St., which the partners plan to execute in April."We have a perfect storm to build a brand that's brewing right there on the West Walnut Street corridor," Callahan said.The first phase of the project will involve transforming the JRH Brewing building into Tennessee Hills Brewing and Distilling, which will open in late May or mid-June. The primary focus of the building will be to brew beer, but they will also have space to produce spirits, which will allow the company to expand its distribution radius.Callahan said Tennessee Hills will distill products at 458 W. Walnut that it will sell, but the space will also allow the company to test and perfect recipes before they enter wider production.The building will also include a taproom and cocktail bar for visitors, and a preliminary design shows the spot will feature a small stage for music and outdoor seating.The Preston Woodworking building at 620 W. Walnut, which is also part of the first phase of the project, will fill a multi-faceted role, consisting of a museum, a restaurant and space for distilling, brewing and the production of wine.Visitors stopping by the building will be able to receive a tour and learn about the production of alcohol from milling all the way to bottling.The building will also serve as the company's main production facility, where Tennessee Hills will can wine, sangrias, seltzers, beers and ready-to-drink cocktails. Additionally, Callahan expects his company be able to produce about 50 barrels of whiskey a day out of that location."That's basically a tractor and trailer load of booze every day or two," he said.Callahan anticipates the company's distilling operations at 620 W. Walnut will be up and running in late spring or early summer of 2022."It allows us to cast a pretty broad net and be a little more agile going forward," Callahan said of the facility, which he compares to the factory operated by the eccentric Willy Wonka in "Charlie and the Chocolate Factory.""The alcohol business can go from one hot thing to the next, so what our factory will allow us to do is pivot and go whatever direction we want to," he said.Phase two of the project will involve constructing a unique, boutique-style hotel at 710 W. Walnut that ties into the Tennessee Hills brand. The partners currently plan to demolish the existing building and design a new structure shaped like a barrel barn.Callahan said phase one of the project will cost about $12 million to $13 million, and phase two will likely carry a similar if not larger price tag.The partners have also worked with East Tennessee State University to create a distillation and fermentation sciences minor, which will accept its first class of students this fall. The company's presence along West Walnut Street will allow it to take on interns from the college, providing them with hands-on experience in a facility producing alcohol at a large scale.This investment occurs as Johnson City gets ready to revitalize West Walnut Street, which will involve tearing up the existing streetscape and replacing it with a more pedestrian-friendly roadway. City officials expect work will begin on the roughly $25 million project in June.Callahan revealed last summer that he had partnered with Andrew on plans to bring a second location of his distillery to Johnson City.Andrew's company, Retail Service Systems, is the parent company of BoxDrop, a mattress and furniture company, and bioPURE Services, a cleaning company that recently opened its new corporate headquarters in Johnson City.Last year, the City Commission reevaluated Johnson City's restrictions on liquor manufacturing, ultimately lifting them in September.Callahan said Tennessee Hills will continue operating as normal out of its site in Jonesborough, where it recently added a cocktail bar. Some production, mostly small-batch items, will occur out of its Jonesborough site, which will continue to offer a full tasting experience and a small tour."Jonesborough is our home," Callahan said, "and without Jonesborough I don't think we would've been able to grow our brand like we have over the past five to six years."Why did JRH Brewing sell?JRH Brewing founder John Henritze, who owns the brewery with his wife Jill, told the Press his company started 2020 strong. And then COVID-19 hit.Like many business across the U.S., JRH Brewing saw sales drop significantly, and even with government assistance, Henritze said they weren't sure when the brewery would make a full recovery.The company reached out to a couple larger breweries at the end of 2019 to look at forming a partnership. That included contacting Callahan. Near the end of 2020, Henritze said, Callahan and Andrew offered to purchase the company's assets.Tennessee Hills bought the brewery's equipment and has the rights to JRH Brewing's recipes for three years."We thought it was a good fit," Henritze said, adding that he feels Callahan and Andrew will do JRH Brewing's name and recipes justice.