The bulky building with its 33-meter chimney is now Park Hotel Palmse.

Distilling vodka is not as old a practice in Estonian manors as is often thought to be. It became a central source of income only in the second half of the 18th century, especially after 1766, when the Russian market was opened to Estonian and Livonian liquor. Distilling vodka not only gave the manors a low-cost way to realize their grain harvest, but the leftover wash was also cheap fodder for fattening a great number of livestock whose manure, in turn, helped to make field more fertile. It is hard to imagine another production area that could have given the lords of the manor an opportunity to get more profit than from distilling vodka that was one of the main pillars on which the manor’s economy rested. In the end of the 18th century, Estonian manors distilled on average 1.4 to 1.6 million buckets of spirits (as 50% alc/vol vodka) per year. By the end of the 19the century, the number had grown to 3 million buckets a year, and by the eve of WWI, it was more than 4 million buckets a year.

The Palmse distillery has been in more or less the same location since 1736. The first building was made of wood, but the first stone distillery was raised already in 1774. The present bulky building with its 33-meter chimney was built in the 1860s and 1870s, and was not powered by a water wheel, but by steam. In 1890, Kotov, the governorate engineer, completed drawings for supplement the distillery with a new boiler room, but his project was never realised. When Lahemaa National Park became the owner of Palmse manor in 1973, the distillery was already mostly in ruins. It was renovated by 1995 and is now a hotel.