More About Tennessee Whiskey, From Down Under

Chris Middleton is a former Jack Daniel's executive who lives in Australia, where he writes and teaches about whiskey history. He has an amazing stock of knowledge and continues to teach me a lot. He intended the following as a comment to the recent posts here about Diageo's efforts to gut the Tennessee whiskey standards adopted last year at the behest of Jack Daniel's, but had technical difficulties so he just emailed his observations to me directly. As always, his insights are illuminating.
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I was tempted to cite the Early Times case study of what happens to a leading bourbon brand that turns to second-use barrels. The irony is that the demand for ex-bourbon barrels by Scottish and Irish distillers, rum and others will soon start outstripping supply. Over 95 percent of Scotch first fill is now ex-bourbon and with the new distilleries and increased capacity by the existing ones (Diageo alone is investing $2.5 billion over the next 3 years in Scottish plant, you’d think they would be sucking Cascade dry), so bourbon wood is going to get expensive (COGs impact) and distilleries without contracts will find it difficult to guarantee supply, let alone the quality.

Lem Motlow’s first legal run-in with Schenley was 1931 when they attempted to claim usage of the Jack Daniel’s trademark. Although 892 barrels of the Jack Daniel’s whiskey were illegally siphoned off from a bond store in St Louis for George Remus’ illicit trade in 1923, there was considerable remaining stock left to be sold under medical prescription. I believe Schenley Products was contracted by Lem Motlow to sell some of this stock from his closed distilleries in Birmingham, AL (1915) and St Louis, MO (1917). The whiskey was sold under the Jack Daniel’s label during the Prohibition years.

Your recent post noted six of the ten Government licenses were used, Schenley with 25 percent of stored whiskey inventory was the largest business dedicated to supplying whiskey ‘For Medical Purposes Only’ (6 million gallons were prescribed during Prohibition). With Prohibition’s repeal in sight, Schenley attempted to seize the trademark in 1931. The brand must have been well received when they distributed to doctors (16,000) and druggists (57,000) through the 1920s.

Lem Motlow fought back and secured his trademark rights, which he claimed were never surrendered under the bottling agreement and were also kept in a legal coma under his Lynchburg mule business.

After Prohibition, Motlow raised the finance to invest in rebuilding the distillery and forced Moore County to hold a referendum to permit distilling in the Lynchburg Hollow, which restarted October 1938.

During the capital raising period he allegedly wrote to Schenley to enquire whether they would be interested in becoming shareholders in the new distillery. They declined; however in 1936 he negotiated royalty fees from Schenley to sell Jack Daniel’s whiskey under his license, using his remaining whiskey stock, now at least nineteen years old. I do not know if this transpired.

Diageo’s alleged attempt to amend the bill I too find perplexing. Diageo, like B-F is a responsible liquor company so I am yet to understand their motive, given Dickel is their only operating whiskey distillery in the US.