Tuesday, March 11, 2014
I've often said that whiskey producers will rarely lie to you but they will spin like dervishes. That's not fair to dervishes, whose spinning dance is part of their religious worship. Whiskey producers, on the other hand, spin to deceive.
Recently, Brown-Forman Master Distiller Chris Morris was quoted in Las Vegas Weekly as saying, “First off, we don’t buy or sell whiskey to anyone.” Since it is well known that the Brown-Forman Distillery has performed contract distilling for Heaven Hill, Diageo, and others, what's he talking about?
The fine point here is that distillate is not whiskey, as a spirit is not whiskey until it has touched wood. What Brown-Forman made for those other producers was distillate, not whiskey, it was spirit distilled from a whiskey mash, but technically not yet whiskey. (I asked the Brown-Forman PR department to confirm that's what Morris meant but they didn't get back to me.)
If this seems like a distinction worthy of Bill Clinton, it's not quite so bad. For one thing, I'm only singling Morris out because there's a recently published quote from him on point. He may have made a more nuanced statement than the publication reported or he may have been speaking just about the Woodford Reserve Distillery and not the Brown-Forman Distillery in Shively, where the contract distilling takes place. Also, you'll get a statement more-or-less like that from all of the big distilleries, because nobody wants to talk about either the contract (selling distillate) or bulk (selling whiskey) business.
One can even argue that the customer isn't buying distillate, they're buying distilling services.
So nobody sells whiskey, except we know the whiskey being sold by non-distiller producers (NDPs) didn't all come from MGP of Indiana, the only major distillery that will proudly admit to the practice.
Another distinction some distilleries make is between whiskey (i.e., aged whiskey) they sell in the normal course of business and whiskey they sell to make an inventory adjustment. Right now, all of the major distilleries are making so much that occasionally they over-produce, even though overall industry inventories are considered very tight. Since they're always projecting their future needs based on actual and projected sales, and adjusting those projections every few months, they can find themselves with a few hundred extra barrels here and there. Brokers buy those extras and sell them to non-distiller producers.
There may be some distillers -- Maker's Mark comes to mind -- who never do this. Most of them do, but none want to talk about it.
So nobody is lying, but in every case there is an attempt to create a false impression about how the industry really works. Distiller or NDP, there isn't a producer out there who doesn't have some happy fiction they'd prefer you believe instead of the unspun truth.
Monday, March 10, 2014
Bulleit Distilling Company, which we hunted for last Thursday, is hardly the only phantom bourbon distillery. The Old Evan Williams Distillery doesn't exist either, except as an assumed business name for Heaven Hill.
Each phantom distillery is different. In the case of Evan Williams, we know exactly where each phase of the production process takes place despite the fanciful name. We don't know that with Bulleit Bourbon. That's the difference.
Which brings us to Michter's. Like Bulleit, they are a non-distiller producer (NDP). The identity of their distiller or distillers is a secret, at the insistence of said distiller or distillers, which we can't confirm because we don't know who they are. NDPs either buy whiskey when it's distilled (contract), which gives them the opportunity to customize it, or they buy it fully aged and ready to sell (bulk). Michter's gets most of its whiskey via contract, although its older expressions are bulk.
Lots of bloggers write about Michter's. Two I can point you to are The Coppered Tot and What Tastes Good. They recently received virtually the same presentation from Michter's that I did. I also toured Michter's work-in-progress facility in Shively, Kentucky. We may not know where Michter's is distilled or aged, but we know where it is dumped, processed, and bottled. That is now taking place in Shively.
Michter's has appeared in this space before, most notably in 2012 when Wine Enthusiast Magazine named them Distiller of the Year. Then as now, Michter's is not a distiller. As noted above, Michter's gets most of its whiskey via contract.
With contract distilling, an NDP has significantly more control than when buying bulk product but that doesn't make them a distiller. The 'cooking in someone else's kitchen' metaphor is valid to a point but a distiller has a distillery at which it mashes, ferments, and distills alcohol. An NDP does not. Calling someone an NDP is not derogatory, it's a statement of fact. Distiller/Non-Distiller is a clear, unambiguous, and useful distinction. Let's not screw with it.
If you want to know more about Michter's, "Michter's: From Way Back When, to Not Long Ago and Today" is one of the front page stories in the new issue of The Bourbon Country Reader.
Happily, a subscription to The Bourbon Country Reader is still just $20 per year (six issues) for addresses in the USA, $25 for everyone else. The Bourbon Country Reader is always independent and idiosyncratic and has no distillery affiliation. It is published six times a year, or thereabouts.
Click here to subscribe with PayPal or any major credit card, or for more information. Click here for a free sample issue (in PDF format). Click here to open or download the free PDF document, "The Bourbon Country Reader Issue Contents in Chronological Order." (It's like an index.)
If you prefer to pay by check, make it payable to Made and Bottled in Kentucky, and mail it to Made and Bottled in Kentucky, 3712 N. Broadway, PMB 298, Chicago, IL 60613-4198. Checks drawn on U.S. banks only, please.
Saturday, March 8, 2014
This helpful tip came yesterday from the U.S. Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB). "Persons wishing to distill spirits legally are encouraged to visit the TTB distilled spirits homepage at http://www.ttb.gov/spirits/index.shtml for guidance and to apply for a permit."
That helpful tip came at the end of this news release.
"This week. Alcohol and Tobacco Tax and Trade Bureau (TTB) investigators conducted a joint operation with special agents from the Florida Division of Alcoholic Beverages and Tobacco targeting illegal possession of stills and illegal production of distilled spirits.
"The joint operation resulted in 8 arrests and seizure of 46 stills by Florida authorities.
"The possession of unregistered stills and the production of distilled spirits without a Federal permit and without payment of tax are Federal felony offenses which may result in the seizure and forfeiture of land and other property associated with the illegal activity."
Friday, March 7, 2014
This year is the centennial of the start of World War I. Also at war during that period were the drys and wets, in the run-up to National Prohibition.
The Prohibition movement was largely a religious movement, spearheaded by Protestant Christians. There were medical authorities on both sides. While Prohibitionist doctors said whiskey was poison, other doctors said it was a useful tonic that they often recommended to their patients.
So strong was the pro-whiskey position among doctors that an exception was written into the Prohibition law. Within certain limitations, doctors were permitted to write prescriptions for whiskey which patients had filled at a pharmacy just like any other prescription. Today, while most doctors are not hostile to alcohol, and many scientists say moderate consumption is healthier than abstinence, officially whiskey has no medicinal value. That wasn't the case a century ago.
Ten medicinal licenses were authorized but only six entities applied for and received them. They were Brown-Forman, Glenmore (now part of Diageo), Frankfort Distilleries (Four Roses now), Schenley (also part of Diageo), American Medicinal Spirits (AMS, which became National Distillers, now part of Beam) and A. Ph. Stitzel Distillery (predecessor to Stitzel-Weller, also now Diageo).
Of the six, Brown-Forman is the only company that still exists, with the founding Brown family still at its helm.
Brown-Forman had been a distiller before 1920 and had its own whiskey to sell medicinally. So did the others except AMS. It had been formed after Prohibition began as a consolidation warehouse in Louisville, which the government mandated because it was so hard to secure whiskey stored in rural warehouses. The license AMS had came via one of the companies it bought to get whiskey stocks, Pennsylvania's Old Overholt. Treasury Secretary Andrew Mellon, who gave out the licenses, gave that one to himself as the owner of Old Overholt.
A medicinal license entitled you to sell whiskey made before Prohibition went into effect, which you could legally buy from the whiskey's producer. The license did not entitle you to distill until 1929, when the government allowed three million gallons of spirit per year to be produced by the medicinal license holders. A. Ph. Stitzel, by then under the control of Pappy Van Winkle, was the first distillery to take advantage of that opportunity. Since Prohibition was repealed four years later, little if any of that post-1929 distillate was sold until after repeal, but it gave Stitzel and others a nice head start.
The whiskey sold during Prohibition 'for medicinal purposes only' was very standardized. It always came in a one-pint bottle, in a box of either cardboard or metal.
While whiskey bottled before 1920 is very rare, Prohibition medicinal whiskey is surprisingly common. A bottle of it is a nice historical artifact but little else. The whiskey inside is generally awful.
Thursday, March 6, 2014
As you can see, the label for Diageo's Bulleit Bourbon says the product is "distilled, aged and bottled by the Bulleit Distilling Co." It further states that the product is "distilled by the Bulleit Distilling Co. in Lawrenceburg, Kentucky." The 2013 Kentucky Bourbon Festival directory of participating bourbons gives the address of the Bulleit Distilling Co. as P. O. Box 136, Lawrenceburg, KY 40342. It also gives a phone number of 1-866-251-7200, which is answered "Bulleit Distilling Company Customer Care Center."
In light of what was reported here on February 26, you might want to call that number and ask them for the street address of the Bulleit Distilling Company in Lawrenceburg, Kentucky, so you can visit the Bulleit Distilling Company's distillery. They will tell you, of course, that they can't give out that information because, unfortunately, they are unable to offer tours.
Diageo wants to have it both ways. The "distilled, aged and bottled" statement is not required by regulators. Diageo chooses to put it there because they think it is wording the consumer wants to see. Likewise the second statement. Although they are required to put on the label a city/state in which the company has a place of business, the "distilled by" part is not required. Again, Diageo presumably likes the way it looks.
Yet Diageo continues to be secretive about where Bulleit bourbon is actually distilled, aged, and bottled. We believe it is aged at Stitzel-Weller in Louisville and bottled at Diageo's facility in Plainfield, Illinois, but Diageo won't confirm. Where is it distilled? Who knows? We know it has been distilled at Four Roses in Lawrenceburg in the past.
Diageo used to confirm that but no longer will. This sudden change is strong evidence that Four Roses is no longer selling distillate to Diageo.
This doesn't mean the label is wrong, since it reflects the truth of the whiskey in the bottle, which was distilled in 2010 or earlier. What we don't know is where it is being distilled today.
The Bulleit web site says nothing about production. It does, however, offer a new story about Augustus Bulleit, who in earlier iterations was a French brandy maker who immigrated to Kentucky, where he applied brandy-making principles to bourbon-making. In the new version he is a tavern keeper in 1830s Louisville, Kentucky, "dedicated to a single goal: the creation of a bourbon unique in flavor. After experimenting with countless varieties in small-batch trials, he finally came upon a bourbon with the character he had long sought after."
That doesn't sound like a distiller. That sounds like a rectifier. No matter, because there is no evidence that Augustus Bulleit even existed. Most property owners in Louisville in the 1830s show up in some official records. Not Augustus Bulleit. Everything about him is attributed to 'family stories.'
Comments to posts like this one often run along the lines of "what does is matter if the whiskey is good?" And the whiskey is good. It matters because Diageo obviously thinks it matters to consumers, because they put the information on the label, but while Diageo carefully stays within the letter of the law it is just as carefully hiding the product's true origins. Do you like to do business with companies that mislead you? Are you suspicious when a company won't even tell you where their products are made? Does that make you feel appreciated and respected as a customer?
Furthermore, the history matters because the bourbon industry is graced with several centuries of actual, fascinating history, some of it at the very heart of the republic's own story. Making stuff up and passing it off as history dishonors the real history and tends to confuse students of it. Again, Diageo disrespects its customers.
Unfortunately, it needs to be said again. There is no shame in being a non-distiller producer and if the actual producer won't let you reveal their identity, that's understandable too.
The shame is in not being honest about it.
Wednesday, March 5, 2014
As we learned last Wednesday, distilleries often produce spirit for customers who are also their competitors. Most businesses have no trouble competing on one level and cooperating on another.
But sometimes, for one reason or another, a deal can go bad. When Beam Inc. bought Ireland's Cooley Distillery in 2012, it decided to stop producing for other companies to concentrate on its own portfolio. One of the losers was Sidney Frank Importing Company (SFIC), which used Cooley whiskey for its Michael Collins Irish Whiskey brand.
In March of 2013, SFIC filed a lawsuit against Beam, Inc. alleging that Beam improperly sought to destroy the Collins brand and seeking $100 million in damages. Last week, the judge in that case ruled that SFIC's suit can continue.
In response, SFIC released the following statement by its Chief Executive Officer, Lee Einsidler: "We are pleased by the Court’s ruling although not surprised, as the facts are known and they will speak loudly for themselves. The fact that the Court ruled completely and entirely in our favor on all three causes of action clearly shows that, given our day in Court, we will establish that our long-term contract with Cooley Distillery was in full force and effect, and that Beam wrongfully terminated the contract by unilaterally cutting off the whiskey supply at the source.”
According to SFIC's statement, the judge denied Beam’s motion to dismiss, rejecting Beam’s argument that no long-term contract existed between the parties as a matter of law. The judge further rejected Beam’s bid to dismiss claims for unfair competition and tortious interference, stating that SFIC sufficiently alleged quantifiable economic injury caused by Beam’s actions. He also ruled that the complaint alleges valid claims that Beam “unilaterally and wholly without justification abandoned its supply contract with SFIC,” and that Beam monopolized its distillery production capacity for the benefit of its newly acquired portfolio of Irish Whiskey brands.
Finally, SFIC sufficiently alleged that Beam launched a campaign to undermine SFIC’s wholesale and retail distribution networks by telling key wholesalers and retailers that “[t]here is no doubt Michael Collins is going away.”
SFIC's statement goes on and on about how wonderful SFIC is and how badly Beam has behaved. All that has really happened here is that the judge ruled there is enough substance for the case to go to trial. Nothing was decided.
Beam's retort is short and to the point: "This claim is without merit. We will defend this case vigorously and we are confident that we will prevail."
Normally, when you buy a business, any existing contracts that business has come with it. They aren't cancelled by the sale. SFIC says there was a contract, Beam says there wasn't. Unless the parties settle, that's what the trial will decide.
Tuesday, March 4, 2014
(Warning, no bourbon content.)
So I'm browsing a popular social media site and, of course, it is peppered with advertising. I see a small ad for a furniture manufacturer. I like the design of the furniture in the small ad and would like to see more, so I click on it.
What I have done, of course, is normally considered marketing gold. After viewing a small sample of the company's wares, I have elected to voluntarily look at more of their advertising material. In any normal world and in any normal advertising medium, the advertiser would move heaven and earth to put nothing between me and the further consumption of their advertising.
But not this advertiser, and not in this medium.
The advertiser actually blocked the content and demanded my email address first.
Are they insane?
This is not the first time this has happened to me on this particular site and I'm sure people are doing it elsewhere too. It appears to be the new paradigm. Too bad it is fundamentally wrong.
I certainly understand the value of capturing email addresses. When people buy from me I like to capture their email addresses so I can, as they say, inform them of additional products and service that they may find interesting. But requiring an email address just to look through the window? That is the stupidest business model ever.
Businesses large and small generally go wrong when they put what they want over what the prospective customer wants. I always tell my marketing clients, don't think about what you want to tell the customer, think about what the customer wants to know. Anticipate and answer the customers questions and you'll get the sale, whether or not you ever get a chance to make your 'pitch.'
That wisdom is as old as the hills and nothing about all this new technology has changed that or any of the other basic principles of selling. Shame on whoever thought of this and shame on the advertisers who are accepting it. Sure, I could give them a gmail address I never use, but if their business instincts are so poor, I have no interest in doing business with them.
Looking at it that way, maybe they did me a favor. I'm sure it wasn't on purpose. If you believe you know the rationale for this, please feel free to share it, but I doubt you'll convince me it's a good idea.