Friday, March 18, 2011

What Is Killing LDI?

My recent posts about Diageo’s Bulleit Bourbon, new Bulleit Rye, and the Indiana distillery where Bulleit Rye is produced, got a lot of attention. There are a few things to wrap up on the various subjects those posts covered. If you want to catch up first, the posts were on March 3rd, March 9th, and March 10th.

This post will be about Lawrenceburg Distillers Indiana (LDI). The next one will be about Bulleit, including some tasting notes on the new rye.

Although no one official at LDI talked to me, plenty of other people with knowledge about the place did. The main thing they told me is that LDI is for sale, with a deal likely to be concluded in eight months to a year.

Many of the people who contacted me, including some who commented publicly on the blog, asked what specifically do I want to know? I’d like to know everything, starting with facility specifications: How many bottling lines? How many and what types of stills? How many rectification plates in the whiskey still? How much copper? How much still capacity? How much fermenter capacity? How much maturation warehouse capacity? What type of maturation warehouse construction?

That sort of thing. Standard whiskey geek stuff.

Some of it is on the website but most isn’t and I doubt the website has been updated recently.

Most of all I want to know what they’re doing today? What’s their business model? What do they offer to customers? What do they offer to a prospective buyer? The website tells us what they make -- or at any event what they have made and can make -- but it says nothing about what they have to sell now. That’s what bulk whiskey customers want to know. How much 2-year-old 40% bourbon do you have for sale? How much 3-year-old? How much 2-year-old 95% rye? How much 4-year-old? Or did Diageo get it all? How much is in the pipeline for next year and the year after that?

Prospective buyers of the whole facility don’t just want to know its physical specifications. They want to know what kind of business it can be. They want to know if they’re buying a viable business or just a factory. There is a difference.

The General Manager at LDI is Rick Brock. Although he won’t talk to me, he gave an interview to Cincy Magazine just about a year ago. At that point things were looking bright. Now they’re on the sales block. What happened? Isn’t the economy in recovery? Hasn’t alcohol been strong lately? The Distilled Spirits Council says it has. Shouldn’t a company that was doing well in the spring of 2010 be doing even better today?

Either way, that’s an interesting business story.

According to my sources, LDI has seven bottling lines but runs only four on a typical day, and only on one shift. Lately they have been bottling a lot of Three Olives Vodka, which is a product of Proximo Spirts, a small New Jersey-based producer and importer of various vodka, tequila and rum brands as well as, just recently, Stranahan’s Whiskey. LDI bottles several other Proximo brands and some for Castle Brands too, a similar small producer and importer whose products include Jefferson’s Reserve Bourbon and Boru Vodka.

For drinks giant Diageo they bottle Moon Mountain Vodka, Godiva Chocolate-Infused Vodka, Bulleit Straight Rye Whiskey, and Seagram’s Seven Blended Whiskey.

Absent from these mentions is Seagram’s Gin, which used to be a mainstay of LDI. At 2.8 million cases sold per year, Seagram's is America’s #1 gin.

The Seagram’s Gin and Vodka lines are owned by Pernod Ricard, which owned LDI until 2007. Before it sold LDI, Pernod moved most of its bottling to Fort Smith, Arkansas, where it also manufactures its Hiram Walker cordials line. But LDI still made the gin and shipped it by tanker to Fort Smith. Did LDI lose that contract?

Presumably, all or most of the products they bottle at LDI are made there as well. The distillery and maturation warehouses are about a mile from the bottling hall and finished goods warehouse.

Last year at this time, Brock said they had about 185 employees. They have fewer than half that many now, according to my sources, and many are temps.

Is LDI’s secrecy what’s killing it? There’s seems to be no problem with their products, which are doing well for companies such as Diageo, Proximo Spirits, Castle Brands, Tipton Spirits (Harrison Bourbon), High West Distillery, Templeton Rye Spirits, Dynamic Beverages (Redemption Bourbon and Rye), Big Bottom Whiskey, and no doubt others. Their fully-aged whiskey, in its various guises, is the darling of international whiskey enthusiasts and their young bourbons and ryes, again in various guises, are hot properties with today’s most creative and celebrated mixologists.

Shouldn't somebody be able to make a profitable business out of that? I suppose they would have to know about it first.

10 comments:

Wade said...

Wow! Chuck you are the bomb! Keep the info flowing on the press on full.

Joe G said...

Stranahan's? Really? Stranahan's is shipping to Indiana from Denver just for bottling? That's got to be over 1,000 miles.

Chuck Cowdery said...

I just mentioned Stranahan's to give whiskey people a way to relate to Proximo. I haven't heard of any Stranahan's sightings at LDI.

Joe Greenia said...

Ah, Proximo the distributor that has purchased Stranny's. I see.

That probably has something to do with why Binny's has stopped carrying it too...

Scott L Stursa said...

LDI is for sale? Dang, how much is the current Mega Millions jackpot? Lemme check....304 million.

Guess I'll buy a ticket on the way home!

Chuck Cowdery said...

I'd love to see you get it.

Anonymous said...

LDI still has almost 180 employees

Chuck Cowdery said...

Thank you, that's good to know. Am I correct in assuming that's full- and part-time?

I'm working on an article about LDI and management there still won't talk to me. Will you? Email me at cowdery@ix.netcom.com.

Anonymous said...

Why so many questions about LDI?

Chuck Cowdery said...

LDI is the only major whiskey distillery in the USA that keeps its activities a big, dark secret. Hopefully that will change under the new owners.