Wednesday, February 14, 2018

Do You Have a National Distillers Dusty?


Jim Beam Brands Co. recommended Bourbon Section shelf set for 1989-90.
Start talking about old whiskeys and pretty soon someone will mention National Distillers, usually in the context of Old Grand-Dad Bourbon or Old Overholt Rye. But National had a lot of bourbon brands including Old Crow, Old Taylor, Bourbon DeLuxe, Bellows, and other regional cats-and-dogs.

In 1987, the James B. Beam Distilling Company, a subsidiary of American Brands Inc., acquired the spirits division of the National Distillers and Chemical Corporation for $545 million. Included were three Kentucky distilleries, two of which were still active, although Beam immediately shut them down. The sale also included a lot of aging whiskey stock, at a time when American whiskey sales were in the doldrums and everyone had too much, what we call today 'the glut era.'

Enthusiasts of National Distillers whiskeys distilled before 1987 are constantly trying to figure out if bottles they have are National-distilled or Beam-distilled. It isn't easy, but some context might help.

One of the costs in whiskey-making is the cost of moving whiskey around while it is in the barrel. In a perfect world whiskey is barreled at the distillery and the barrel is moved to a nearby warehouse where it remains undisturbed until it is withdrawn years later for bottling, also nearby.

The point is that Beam's determination as to what whiskey went into what bottle was based primarily on the location of the whiskey to be bottled and the location of the bottling plant to be used. After the National acquisition, Beam bottled whiskey at two locations, its existing Jim Beam Distillery at Clermont, Kentucky, and what had been National's Old Grand-Dad Distillery at Forks of the Elkorn just outside of Frankfort.

In those days, the same bottling crew spent a few days at Clermont, followed by a couple at Frankfort. They did that because it is cheaper to move people than whiskey. The whiskey distilled by National was aging at the distillery where it was made, either Old Grand-Dad or Old Crow, which was also in the Frankfort area. Some of the whiskey distilled at Old Crow was aging in warehouses at Old Taylor, right next door. Some Beam-distilled whiskey was sent to Frankfort to age, but little if any went in the other direction.

To this day, those are Beam Suntory's two bottling plants. Each one has been substantially upgraded over the years. They run full time now and have their own crews, but the fact remains that what is aged at Frankfort is bottled at Frankfort and what is aged at Clermont is bottled there. Beam Suntory's Maker's Mark has its own bottling plant at the distillery in Loretto. The company's largest Kentucky distillery, Booker Noe at Boston, has warehouses but no bottling. Whiskey aged there is bottled at Clermont.

For reference, the distance between the Clermont and Booker Noe plants is about ten miles. The distance from either of them to Frankfort is about 75 miles. Beam has several other maturation facilities but most of them are close to Clermont, not Frankfort. Consequently, most of the whiskey bottling happens at Clermont. Frankfort bottles other things, such as DeKuyper liqueurs.

After Beam stopped distilling at Frankfort, it started to make the high-rye Old Grand-Dad recipe at Clermont, so Old Grand-Dad would have been bottled at Frankfort until the Frankfort-distilled Grand-Dad ran out, and thereafter it was bottled at Clermont. For everything else, Beam used Frankfort-distilled and Clermont-distilled whiskey interchangeably, without regard to brand, depending on where it was being bottled. This was even true of Old Overholt, as Jim Beam has always made rye whiskey in addition to bourbon.

Nothing has been distilled in Frankfort since 1987 so everything in those warehouses now comes from either Booker Noe or Clermont, but if it is aging in Frankfort it will almost certainly be bottled there too.


I know more about the period following the National acquisition than most people because I was in the room for some of it. Two years after the acquisition, Beam was still struggling to integrate the two product portfolios. I was part of a team that developed the document above, a comprehensive manual for off-premise retail merchandising of the combined Beam-National line.

The manual explained the principles of effective merchandising and where to place each major Beam brand. It included advice like this:

"The Jim Beam shelf set should begin immediately to the right of the Jack Daniels set. Jim Beam White Label should be first, immediately to the right of Daniels. Place Jim Beam Black Label to the right of White Label. Place Beams Choice to the right of Black Label.

"The Old-Grand Dad set should be placed to the left of Daniels, with all three proofs on the shelf, from left to right: 86°, 100° and 114°. This is the ideal shelf position for Jim Beam's two most important bourbon brands."

That's right. In 1989-90, Old Grand-Dad was second only to Jim Beam in importance in Beam's portfolio. That is because Old Grand-Dad still commanded a premium price and was, therefore, one of the most profitable brands on the market.

No one then could have predicted how different the bourbon landscape would look 30 years later.

Friday, February 9, 2018

"Bond. Bottled-in-Bond"



If the only Bond you know is James, you're not alone. Once considered the epitome of 'the good stuff' in American whiskey, the 'bonded' or 'bottled-in-bond' (BIB) designation fell into disuse. Old Grand-Dad Bonded, the best-selling bond for many years, was one of the few nationally-distributed bonded whiskeys that remained. Heaven Hill had a stable of inexpensive bonds (Heaven Hill, J.T.S. Brown, J.W. Dant, T. W. Samuels) sold primarily in Kentucky. Sazerac's Very Old Barton, another mostly-in-Kentucky brand, had a bonded expression. Old Fitzgerald Bottled-in-Bond (the green label) was also available here and there.

But bottled-in-bond is back in a big way. Beam Suntory, which makes OGD Bonded, has recently introduced Jim Beam and Old Overholt BIB expressions. Brown-Forman has launched bonded versions of Old Forester and Early Times. Heaven Hill has a super premium bond in Henry McKenna. They also make Mellow Corn, the only bonded corn whiskey on the market, and Rittenhouse, the top-selling bonded rye.

Recently, several micro-distilleries have introduced bonds as a way to proclaim, "Look! We actually have whiskey that is more than four years old." They include Kings County, Laws Whiskey House, Mountain Laurel Spirits, FEW Spirits, and Tom’s Foolery. Typically these are limited releases, some sold only at the distillery.

What does 'bottled-in-bond' mean? Its roots are an 1897 Federal law called the Bottled-in-Bond Act. It was America's first 'truth in labeling' legislation. In return for allowing the Federal Government to monitor their operations and adhering to a strict set of rules, producers could label their products 'bottled-in-bond,' which the government considered a guarantee of whiskey authenticity. Though guaranteeing quality per se was never the intention, it became that de facto.

The most obvious characteristic of a BIB is its proof, 100°, which means one-hundred degrees of proof, also known as 'full proof,' which is 50 percent alcohol, 50 percent water. Though essentially arbitrary, this was long believed to be the ideal alcohol concentration for a whiskey. Modern tastes seem to prefer a milder 40/60 mix, but bonds must be 50/50, no more, no less.

A bond must also be at least four years old but it can be older. The Henry McKenna Bond, for example, is 10-years-old.

The lesser known but more interesting characteristic of bonds is their singularity. A bond must be the product of a single distillery and a single distiller during a single distilling season. A 'distilling season' is a six-month period, either January-June (Spring) or July-December (Fall).

Think of bonds as 'single batch' whiskeys. The singularity rule means producers can't 'correct' a bottling batch by mixing in older or younger whiskey, or whiskey from another distillery. This makes barrel selection critical. If you really want to experience a distillery's house character, drink one of their bonds.

Although bottled-in-bond whiskeys were made and sold pre-Prohibition, it was only after the drought that they came into their own. Prohibition, the Great Depression, and World War II all kept the American whiskey industry from building up a solid stock of fully aged whiskeys for more than 25 years. In a market chock full of immature spirits, the words 'bottled-in-bond' became a Holy Grail in the late 40s and 50s, and into the early 60s. Then the whole American whiskey market crashed. Instead of being desirable, bonds came to be considered old-fashioned. One after another, major producers discontinued their bonds in favor of 80° proof expressions.

In today's crowded whiskey marketplace, new products are the easiest and surest way to grab attention. The long whiskey aging process makes it hard to develop products that are from-scratch new. For large producers especially, bonds are a way to create a new product from existing inventory. Bonds appeal to newbies and veterans alike. Truly, bonds are back but there is no way to know if they are here to stay.

Thursday, February 1, 2018

TTB Goes After Pay-to-Play



The principal Federal regulator for whiskey and other distilled spirits sold in the United States is the Treasury Department's Alcohol Tax and Trade Bureau. In this space, you often read about TTB's role in regulating labeling and marketing practices, but that is not all they do.

For fiscal years 2017 and 2018, Congress has given the TTB $5 million of specific funding for "the costs of programs to enforce trade practice violations of the Federal Alcohol Administration Act."  According to the TTB, trade practice investigations are extremely resource-intensive. They are conducted by investigators and auditors who must obtain evidence through field investigations involving interviews and analyses of business records, and significant attorney support from the Office of the Chief Counsel.

At the top of the TTB's trade practices agenda is pay-to-play.

In July 2017, TTB announced a joint investigation with Florida State Alcohol Authorities in the Miami area. In September it followed with a joint investigation with Illinois State Alcohol Authorities in Chicago, the Quad Cities, and Peoria.  Both investigations are focused on 'pay to play' schemes in which illegal 'slotting fees' are charged. A 'slotting fee' is a sum charged by a retailer which a producer pays to get a product into an account. Since slotting fees are illegal, they are off-the-books and made under the table.

In past trade practices investigations, the TTB has focused on two areas: 'slotting fee' payments for product placement and consignment sales for malt beverages (beer) in the context of 'freshness dating' returns.

Other examples of trade practice violations include Exclusive Outlet (Section 205(a)), Tied-house (Section 205(b)) with seven specific types of means to induce, and Commercial Bribery (Section 205(c)).

Friday, January 19, 2018

Pay Attention to Lux Row Distillers Right Now



Lux Row, the new bourbon distillery in Bardstown, Kentucky, set its first fermenters today. In a few days, that liquid will be distilled, entered into barrels, and placed in the new warehouse to age.

Lux Row is the first distillery for Luxco, a long-time non-distiller producer (NDP), and the seller of such bourbon brands as Ezra Brooks, Rebel Yell, Blood Oath, and David Nicholson. Announced in 2016, it is now open for business. Although nothing made at the new distillery will be available for purchase until 2022 or so, now is a good time to pay attention because Lux Row Distiller John Rempe and his team are documenting their progress on Facebook, Instagram, and their own web site.

As of today, they are transitioning from construction to production.

Luxco, which is based in St. Louis, has been selling bourbon, and a portfolio of other distilled spirits products, since 1958; as the David Sherman Company until 2006. For most of that time they were a regional company. About 20 years ago they acquired several minor but national bourbon brands. They have been building on that to become a significant player, especially in American whiskey. Rempe is their long-time blender, R&D, and quality control guy. He has moved to Bardstown where he retains those roles with the added responsibility of distiller.

When Lux Row claims to be 'family-owned,' they are talking about the Lux family, Luxco's owners.

As an NDP, Luxco purchases the whiskey it sells in bulk from distillers. They typically buy it long before they intend to sell it. As such, they have an aging inventory of about 50,000 barrels.

After 60 years as a successful NDP, Luxco decided to take the plunge and become a distiller because its usual suppliers could no longer provide enough whiskey for Luxco's needs. That is a testament to how robust the American whiskey industry is right now. Their intention is to make all of the whiskey for their four principal brands at Lux Row.

Although it is not yet open to the public, Lux Row/Luxco is a member of the Kentucky Distillers' Association and will be a stop on the official Kentucky Bourbon Trail.

Friday, January 12, 2018

Should You Decant Your Whiskey?



Doesn't that look nice? Sure, but does decanting do anything for the whiskey?

With some wine, decanting prepares the wine for serving. It does this in two ways. First, proper decanting keeps sediment in the bottle. Second, it aerates the wine. Neither is an issue with whiskey.

Because we call the second container a decanter, people tend to apply the wine analogy. Whiskey is more robust than wine. There is very little you can do to hurt it or help it. Decanting whiskey has no practical value.

So why decant whiskey? The sole reason is so you can serve it from an attractive decanter rather than a tacky bottle.

It is more about decorating than drinking, which is not to say decorating is a trivial thing.

To personalize this, I have a lot of whiskey around the house. Some of it is in cabinets but some is out in the open, in several different rooms, in bottles. Sometimes I wish I was the guy who keeps a nice decanter of fine bourbon on a silver tray with a few matching glasses, on a spiffy side table in my elegantly furnished sitting room. Maybe two decanters, the other one with the house cognac.

In my imagination it is a Victorian scene, but there are modern equivalents.

For better or worse, I am not that guy.

If you are that person, I salute you. I may not practice elegance, but I respect it. There is nothing wrong with decanting, but don't believe anyone who says it affects the whiskey one way or the other. It doesn't.

From a lifestyle perspective, maybe the way you enjoy whiskey (or any fine spirit) is to buy a bottle, drink it until it is gone, then buy another one of the same or different provenance. If you are that person, the decanter model works great for you. Again, there are times when I wish I was that person, but I'm not. If you are, God bless you. That is a perfectly fine way to be too.

So, to decant or not? As with most whiskey-related questions, the only right answer is to do what pleases you most.

Wednesday, January 10, 2018

Come Drink with Me in Peoria on Thursday, January 25



HopScotch is an adults-only evening to benefit the Peoria Playhouse Children's Museum in Peoria, Illinois. They invite a few of their favorite local restaurants and breweries to bring in signature whiskey cocktails and locally-crafted brews. The event also has live music, a silent auction, and hands-on activities. Food too.

I don't know how hands-on you'll want to get, but I am one of the activities. Holders of a VIP ticket can hang out with me in the VIP Whiskey Lounge and sample a selection of fine bourbons. My books will be available for sale and signing. I'll be there to pour the drinks and talk about all things American whiskey.

The whole event sounds like fun. "HopScotch is our annual adults-only event that helps us kick off the new year. The Cookery returns providing guests with savory and tasty selections while you explore the museum, participate in the activities, and make new friends. You will see Noir and Hearth again this year providing their delicious whiskey cocktails. We welcome Edge, Tannins and Hops, and Zion to this year's event and couldn't be more excited. Our beer presenters won't be outmatched and are offering several options for the beer lover. Half Acre has come back to play and new to the group are Destihl and Triptych. This year is going to top last year's event with the exciting auction."

Tickets are here.

About that auction, one of the items on offer will be this very bottle of Maker's Mark Private Select, Curmudgeons Edition.


This is from the barrel created by me and fellow writers Lew Bryson, Fred Minnick and Michael Dietsch last summer. We won't be pouring it in the Lounge, but you can bid on it in the Silent Auction. While it is not quite one-of-a-kind, you won't find it in any stores. You'll be the pride of Peoria if you place the winning bid.

Peoria, Illinois, and the nearby town of Pekin, were once whiskey producers on a scale that rivaled Kentucky. The infamous 19th century Whiskey Trust was based there. The town still produces a lot of ethanol. If you're in central Illinois, come say hello and benefit a worthy cause.

Monday, January 8, 2018

My Vintage Spirits Wish List



There is something new to do when you visit Kentucky, drink vintage spirits. Kentucky's Vintage Spirits Law is just a few days old, but I've been working on my personal wish list. These are all whiskeys I have had at some point and would like to have again.

Where I have indicated a label, that wording identifies the distillery where the whiskey I tasted was made, to distinguish it from other versions of that brand made at other distilleries.

"What is vintage?" is still a wide-open question, until the Kentucky Alcoholic Beverage Control Department issues some regulations. All they have released so far is the following, elaborating on the new law's notice provision.

"Effective January 1, 2018, a retail licensee selling vintage distilled spirits purchased from a non-licensed person must give the Department prior written notice of the proposed retail drink or package sale, which includes the following information:  (1) name and address of seller; (2) the quantity and name of the alcohol product being sold; (3) the date of the sale; and (4) name and license number of retail licensee."

I will here express again my hope that Kentucky will be truly conservative and regulate this trade as little as possible. So far so good. Let's hope they continue to let the market work its magic so millions of bottles now gathering dust in attics and basements can soon be liberated, freed to fulfill their noble destiny, all nice and legal like.

Back to my list. I believe these qualify as 'vintage.'

Antique Bourbon, Athertonville label
Henry McKenna Bourbon, Fairfield label
Very Very Old Fitzgerald 12-year-old
Old Fitzgerald Bottled-in-Bond, DSP-16
A. H. Hirsch Reserve Bourbon
Old Grand-Dad, Frankfort label
Parker's Heritage #6, a Blend of Mashbills
Evan Williams Single Barrel Vintage, 1994

Before anyone contacts me with offers to sell any of the whiskeys on my list, don't bother. Transactions between non-licensed people are still illegal everywhere. If, however, you are a licensed Kentucky retailer engaged in vintage spirits reselling, and you have any of the above to sell, let me know.

Although the word 'vintage' suggests age, there is nothing in the new law that requires the bottle to be old. Mainly, the product cannot now be available in Kentucky through normal channels.

My main interest is American straight whiskey, but Kentucky's new law encompasses all distilled spirits, so scotch, cognac, rum, Chartreuse; it's all in the game.

So much remains to be seen. This isn't just bars, remember, selling by the drink. Package stores may buy and resell whole bottles. Not every retailer will participate. Many will wait until the rules are clearer, but some will jump right in. Most of the risk is on them.

If you have some vintage spirits you might want to sell, is now the best time to liquidate your collection? Maybe, but probably not. If the whole thing goes bust (a possibility), now might be your only chance. Otherwise, it probably makes sense to at least put a toe in the water, if only to find out who is buying and how much they might be willing to pay. Pick a few bottles you can part with easily. Keep your gems in reserve.

If you do, please remember that the buyers are businesspeople. They expect to make a profit, so they will price the bottle they bought from you at price higher than what they paid you, possibly a lot higher. That's how it works. I regret that it is necessary to explain this but from experience I know it is.

I can't emphasize enough what a big deal this is, potentially. It could be huge. It might even be the first wave in the ultimate legalization of the entire secondary market.