Jon Dyer, left, and Dewey Winkle partnered with other local businesses to put together gift baskets including items such as Bloody Mary mix from Hell, Mich.

Laura Blodgett | For AnnArbor.com

Ugly Dog Distillery in Chelsea, owned by Jon Dyer and his business partner Dewey Winkle, opened this year to great response.

“We started out the first month with sales that were more like month six or seven in my business plan,” says Dyer. “We have been scrambling ever since to increase production and keep up with demand.”

The idea for a micro-distillery came out of a camping trip with old friends that took place seven or eight years ago.

“There is this group of eight of us who have been bird hunting together in northern Michigan for years,” explained Dyer, who is a 1981 graduate of Dexter High School.

“One night we were sitting around the campfire drinking and telling lies about moonshine and booze, and one of my buddies said to me ‘you should distill and make whiskey.’”

“Prior to that, I had never made beer or wine or anything, but he knows I like to build and engineer things,” said Dyer, who holds a degree in firearms technology and previously worked as a director for various manufacturing companies.

But when he began looking into what it would take to produce liquor commercially, he learned that the cost for the state license was $10,000 a year — prohibitively expensive for him.

“Then one day, my wife showed me an article about a coffee meeting taking place in town to discuss a new distillery bill that representative Barb Byrum was trying to introduce,” Dyer said. “She wanted to create a micro distiller license category similar to the microbrewery one and create a growing industry like that in Michigan.”

“When I heard about this, I lit up like a light bulb. I showed up at that meeting — which ended up being just me and another guy who wanted to talk beer — and basically got to have a private meeting with her.

"The fee for the micro distillery was going to be just $150. I followed the bill through the House and Senate, and the day that it passed, I was off to the races.”

He started the business in summer 2008, incorporated in February 2009 and opened May 2010. It took about 11 months just to get all federal paperwork done.

Named after the German wire haired pointer Dyer has raised for more than a decade, the Ugly Dog Distillery produces a “top shelf vodka at a mid-shelf price,” according to Dyer, with a bottle priced at $19.97.

This business has been nothing if not a labor of love for Dyer who regularly puts in 20 hour days, and has a mattress in the office to accommodate his unconventional schedule which revolves around the distillers and fermenters’ timers, not daylight hours.

Not only did he create the secret recipe for the vodka, but he designed and built the distillers and fermenters himself, producing 150 gallons a day.

The product has sold tremendously well right out of the gate. “Every batch we made was sold before the next one was done,” said Dyer.

Part of its success was due to its location in a renovated former gas station out at 14495 N. Territorial at Stofer Road.

“This is the second or third highest traffic count in Dexter Township — the traffic never stops here,” says Dyer. “We found once we opened up that people come from great distances because of the nearby lakes. We get people from places like Monroe, Garden City and Chicago, all on their way to their summer homes or to camp at the campgrounds.”

Dyer says it slowed down quite a bit in the fall as soon as the weather changed, but at that point they were moving product into the state distribution system which augmented counter sales.

Since launching the distribution side in September, they are now in roughly 80 points of sale, most recently closing a deal with Meijer Inc.

“When we started doing sales calls, the large retailers were not the first places we went because our production was low, and we didn’t want all of it sitting in six Meijer stores,” says Dyer. “We wanted to create a grass roots following in Chelsea and the surrounding areas by having product sitting in local bars, restaurants and liquor stores.”

Ugly Dog vodka can be found in the Common Grill, Chelsea Grill and the Inverness Inn in Chelsea; Red Brick, Dexter Pub, Bob’s Party Store, Country Market, CJ’s Party Store and Terry B’s in Dexter; A & L Wine Castle on Stadium, Ann Arbor Party Center, Scio Foods Party Store, Weber’s, Baxter’s Party Store, Ann Arbor Wine and Spirits, Creekside Bar and Grill, Metzger’s and Barton Hills Country Club in Ann Arbor; Village Party Store and Lodi Food Mart in Saline; and Keg Shop and Williams Party Store in Ypsilanti.

Dyer now has three sales people independently working on different distribution fronts across the state including large retail outlets, restaurant chains and liquor stores. He would like to be at 200-250 outlets this next year.

“People have been very receptive particularly to a Michigan made product,” he says.

Success for Dyer is measured by the response he gets from customers.

“People say it is better than Grey Goose, and they won’t spend $30 for that product anymore. I hear a lot of stories from customers who have had taste tests at parties with Grey Goose, Belvedere’s, and ours and ours always comes up the winner.”

Next up? Dyer will be adding to his product line, introducing a gin and a rum after the first of the year.

“I’m still tweaking my recipe. Then I have all the federal paperwork to do, label approval and formulation approval. But they should hit sometime in 2011.”

Laura Blodgett is a freelance writer for Ann Arbor.com.