Sunday, March 16, 2014

What Would Ralph Say?

Schenley was one of the 'Big 4 'post-Prohibition liquor companies. In 1956, founder Lew Rosenstiel had his eye on a little Tennessee distillery that was doing well and needed money to expand. The Motlow family rejected Rostenstiel, turned to Kentucky's Brown family instead, and Brown-Forman bought Jack Daniel's.

In response, Rosentiel reached into his portfolio and found Cascade Hollow Bourbon, which he had acquired in 1933 from George Dickel's heirs. He'd show the Motlows. He'd send Cascade Hollow Bourbon, renamed George Dickel Tennessee Whiskey, back to Tennessee. He would make it in a brand new distillery he would build as close to the original as possible.

The man he chose for the job was Ralph Dupps, a mechanical engineer by training, who was then running the company's Bernheim Distillery in Louisville. Dupps moved his family to Tennessee and began building. He stayed on to run the new distillery and in 1958, they started distilling. They brought the first bottle of George Dickel Tennessee Whiskey to market in 1964.

Like Jack Daniel's, George Dickel Tennessee Whiskey followed all of the specifications for bourbon, including aging in new, charred oak barrels. They also charcoal filtered their product before aging. Most bourbon-makers charcoal filter too, but in a different way.

Dupps retired in 1977 and lived another 30 years. John Lunn, George Dickel's current master distiller, spoke to Dupps before he died. "Don't change a damn thing" was Dupps' advice.

George Dickel Tennessee Whiskey became part of what is now Diageo in 1987. The George Dickel Tennessee Whiskey you buy today is made exactly the same way as that bottle from 1964, but all of a sudden Diageo doesn't think new charred oak barrels are all that important. Used barrels will do just fine.

What's that you said, Ralph?

In Friday's press release from Jack Daniel’s, Master Distiller Jeff Arnett was the spokesperson. Lunn has been silent. He knows he can't make the same product with used barrels. Everybody knows that.

Diageo knows that.

So what is Diageo up to? Diageo and its predecessors have tried to take Jack Daniel's down since 1956. Diageo has failed in the marketplace. Jack is about to surpass Johnnie Walker, Diageo's flagship. Diageo can't beat Jack fair and square so it wants the Tennessee Legislature to gut the legal standards for Tennessee whiskey that Tennessee put in place a year ago, the exact same standards both Jack Daniel's and George Dickel have been following voluntarily for more than 50 years.

This, they believe, will weaken Jack Daniel's, and they'll gladly sacrifice George Dickel (and you too, Tom Bulleit) if it will save Mr. Walker.

I know, Ralph. I know. I feel the same way.


sku said...

I wonder if people are reading too much into this as an attack on JD, which is certainly how Brown Forman has categorized it. How exactly would this hurt Jack Daniel's? It would not change the way JD is made or require the reuse of barrels. If Dickel starts aging in used barrles, that hurt Dickel but not JD. Is the theory that altering the category somehow hurts all TN Whiskeys? I just don't see how JD would suffer if they didn't change their product.

Either this is a very silly attempt to hurt JD or it's really just that Dickel wants to reuse and keep the TN Whisky monicker because of barrel shortages.

Unknown said...

Sku's got a good point about who the change in the law would hurt the most – at least at the beginning. If JD can continue using new barrels then their product won't suffer. However, if Dickel does start using used barrels and quality declines there's potential for the category of TN whiskey to start getting a bad reputation. It would take quite a bit of bad press around TN whiskey to start affecting JD in terms of sales but it's definitely something I would worry about as a brand if I was in their shoes.

The other thing that concerns me is simply setting a precedent of change in the definition. Once you starting make changes it's easier for subsequent changes to be made. What happens if they allow used barrels and then in 3 years want to allow TN whiskey to be distilled in KY but aged in TN? It's a long shot that this would happen but each time Diageo does this it distracts JD and forces them to spend money defending it. Major pain in the ass.

We'll see where this one nets out but I think Diageo needs to quick screwing around and put their focus on just brining good stuff to the market and let the best juice win. If they're going to focus on simply wringing a few extra cents out of what they've already got the market will declare the winner in time.

ad said...

I doubt it would crush JD, but certainly there is some damage to be done--especially internationally--if the concept of "Tennessee Whiskey" is cheapened considering JD is basically synonymous with that moniker in most people's minds.

sam k said...

I can't imagine the legislature would buy into this concept, especially after having just established the current definition.

As Arnett says, they aren't required to use new barrels at present, they just can't call it Tennessee whiskey.

I'm disappointed but not surprised by this destructive move from Diageo, which seems to be intentionally ignorant of the damage from self-inflicted bad press.

Tom said...

So Diageo's angle is to make Dickel taste so bad people will stop buying Jack? Doesn't that sound like the sort of scheme Bingo Little would propose to Bertie Wooster to come up with the scratch to bet on a sure thing at Ascot?

I'd first read the JD press release as Brown-Forman's way of saying, "Hey, we just bought that law!" But if they think this is a deliberate attempt to tank the Dickel brand, maybe they're saying, "Oh no, don't throw Tennessee whiskey in the briar patch!"

Justin Victor said...

As a Tennessee whiskey, Dickel is so far removed form competing with Jack Daniels that it is quite difficult to speculate on what exactly Diageo is trying to do here. For Dickel's sake, I wish Diageo would simply sell the brand to someone who gives genuinely cares about it.

Michael Soo said...

As others have mentioned, I think Diageo has 2 motives in trying to change the law to allow the re-use of barrels: 1. Makes it easier and cheaper to make Dickel; 2. Make the Tennessee Whiskey designation less prestigous, which could hurt Jack Daniels in the long run.

Motive 1 has clear advantageous for Diageo. This allows them to keep Dickel a TN Whiskey while using less expensive cooperage.

Motive 2 is more of a side effect. If they can make Dickel cheaper and also tarnish JD then that's a win-win. However, I'm not sure how well it will work since I would gather most JD drinkers are pretty loyal to the brand and would not notice a difference in quality of the whiskey

Chuck Cowdery said...

The so-called 'barrel shortage' argument is a red herring. The 'barrel shortage,' such as it is, is a very short term problem. Demand has grown tremendously in a very short time and there have been some bottlenecks in the journey from forest to distillery, but the forests are healthy and the cooperages will catch up. Justifying a standards change because of the 'barrel shortage' would be a massive overreaction.

Anonymous said...

I very much like Dickel No. 12, and I am beginning to wonder if I should buy a case or not. Question, does this all mean that the No. 12 will end up in second use barrels, and should I legitimately consider stocking up? Any thoughts would be very much appreciated.

Chuck Cowdery said...

I can only comfort you with this. The change is not imminent.

Anonymous said...

Chuck, when you state that "Most bourbon-makers charcoal filter too, but in a different way," can you elaborate? I only know of one bourbon that is charcoal filtered - Ezra Brooks. I have never heard of any others...unless you are referring simply to the charred interior of a new oak barrel.

AaronWF said...

If Jack and George weren't so intent on not calling their straight bourbon straight bourbon, the question of which type of barrel it's aged in would never become an issue. I guess they couldn't call it Tennessee Straight Bourbon Whisky, but what about Straight Bourbon Tennessee Whisky?

Chuck Cowdery said...

Most whiskey (all kinds, bourbon, rye, scotch, Irish) is chill-filtered before bottling to remove amino acids that can cause the whiskey to appear cloudy at low temperatures. Most chill filtration systems contain charcoal. It is different from what the Tennessee distilleries do, but it is charcoal filtering nonetheless. When Ezra Brooks puts 'charcoal filtered' on its label, this is the charcoal they're talking about. Same with Jim Beam green label.

scott said...

I was visiting the Dickel distillery this morning and lucky enough to have a short conversation with John Lunn. He said there are no plans to change Dickel whiskey. He seemed a little perplexed as to why the story is being spun as a Diageo vs Daniels thing and said they just don't want the government dictating how to make whiskey . CBS news on the Nashville country station is spinning this as the micros against Daniels, which makes more sense to me. Sounds to me like Daniels is trying to peg it on Diageo. The fact that Dickel has plenty of supply, isn't looking to go international with it, and makes so little whiskey there compared to Daniels output, makes me not worry at all about the future supply and quality of Dickel whiskey. That Diageo has always ignored Dickel, such a tiny tiny backwater in their empire, seems like fabulous good luck to me, and I hope that continues! The distillery is tiny and analog, no computers in the production process and fewer than 20 people running it. It's incredible when you think about it. A tiny charming place compared to Kentucky distilleries and Daniels. Maybe they want to bring back the Cascade brand with used barrels a la Early Times style, and call it Tennessee , or maybe they're just helping the micros take a stand against the big bully Daniels . For them to dilute the current Dickel line or for us to think they're trying to compete with Daniels over this or anything else seems absurd . They never have before and couldn't succeed at that anyway. They seem smart enough not to try anyway . So don't worry about your Dickel, it's going to be just fine!