Saturday, September 13, 2014

We Pause to Collect Our Thoughts About 5.36(d) and Potemkin Distilleries

It has been an interesting two weeks, and an interesting seven years.

I coined the term 'Potemkin Distillery' in January of 2008 to describe a producer that does everything it can to convince you it distilled something when it didn't. This blog goes back to 2007 and it's searchable, so you can follow the progression if you wish.

Templeton Rye started it, so maybe it's nine years, since they began in 2005. I first tasted Templeton at WhiskeyFest. My first words were, "that's good, but it's six years old at least. They didn't make this." That began the quest to figure out who did. At the time, the former Seagram's distillery in Indiana wasn't on anyone's radar because only a few people knew the new owner, Pernod, was selling bulk whiskey, something Seagram's never did. Templeton kept the source a secret as long as it could.

Two weeks ago the owner of Templeton Rye, Vern Underwood, admitted that the whole Templeton Rye story has been a lie from the beginning. They don't make it in Templeton, Iowa, and it isn't made from a secret, Prohibition-era family recipe.

Templeton Rye also has never followed TTB Rule 5.36(d), which requires that the state of distillation be disclosed on the label if it is not the same state as the address on the label. Templeton's label is required to say 'distilled in Indiana,' but it doesn't.

When asked about that by the Des Moines Register, Underwood said the label had received approval without qualms from the TTB. The motivation for the label change came purely from a desire to address confusion, not after inquiries from the TTB, he said. That's a poor excuse. You'll see why in a minute.

On Tuesday, September 2, Tin Cup was in the spotlight, as that seemingly Colorado-made whiskey is also a proud product of Indiana and the company behind it is Proximo, which is not exactly your neighborhood craft distiller. Proximo is based in New Jersey. Its portfolio includes Stranahan's, which is made in Colorado. It also includes Jose Cuervo Tequila, a mega-brand.

Tin Cup's face is Jess Graber, who made whiskey once. He is now a brand ambassador, like Tom Bulleit.

The point once again is that every effort is made to convince the consumer that Tin Cup is a Colorado product when it is not. Tin Cup's label also does not obey 5.36(d).

On Wednesday, it was Widow Jane's turn. We got another bite at that New York apple on Friday. Between Wednesday and Friday I communicated with someone at Widow Jane who wrote, among other things, "It does not make sense to me that they [TTB] approve labels that lack information they claim to require."

Well, here's the thing, Jane. Every single person who has submitted a COLA to the TTB has signed the following declaration:

"Under the penalties of perjury, I declare: that all the statements appearing on this application are true and correct to the best of my knowledge and belief; and, that the representations on the labels attached to this form, including supplemental documents, truly and correctly represent the content of the containers to which these labels will be applied. I also certify that I have read, understood and complied with the conditions and instructions which are attached to an original TTB F 5100.31. Certificate/Exemption of Label/Bottle Approval."

In other words, as a DSP license holder, you are expected to be familiar with the law and to follow the law in every particular. You or your agent signed a declaration (above) to that effect when you submitted your Certificate of Label Approval (COLA). You are supposed to be motivated by the fact that your license can be revoked if you screw up too much, which will put you out of business.

If you had a lawyer prepare your COLA, and that lawyer knew your state of distillation and your label address didn't match, and he or she didn't tell you about rule 5.36(d), that lawyer has some explaining to do. This is not legal advice, of course, just a little general information for the education and edification of the public.

Mixed in there over the last two weeks was an announcement about a new ethics code proposed by the American Craft Spirits Association but not yet adopted by its members (which include Widow Jane), and an announcement that virtually every trade association in the alcoholic beverage industry is urging Congress to fix TTB right now by giving it enough money to do its job.

I have no illusions that our little grassroots 5.36(d) movement influenced the united front on TTB funding, or anything else, but it was an interesting convergence of events nonetheless.

Finally, if you don't care about this issue, why on earth did you read this far? The easiest thing in the world is to not know something. Drink what you like, pay what they ask, believe their story or don't. The drinking helps with the not caring and not knowing. If you don't care then I didn't write this for you. I wrote it for the people who do.


James Milles said...

I would hate to think that the lobbyists for the big alcohol corporations have any influence on non-enforcement of this particular regulation.

John Pomeroy said...

Thanks for this, Chuck. Really nice to hear someone else talking about this issue. Please come and join me at my bar in San Carlos, The Rail Club, at 612 El Camino Real. Would love to hear your thoughts on the whiskey selection I've curated. Cheers!

Matt L said...

+1 for the people who care. Thanks for being all over this issue Chuck.

Anonymous said...

The TTB may in fact be underfunded, however, all they would need to do is make an example of one company to bring the rest into line. Amazing how large fines and/or threatened jail time for the executives brings people around.

I am not a big fan of "big government." Yet, this is a good example of how we sometimes cannot allow businesses to necessarily do the right thing or police themselves.

For now we have to rely on folks like Chuck to help bring these issues to our attention and for us to use our voices and online presence to put pressure on these companies to do it right the first time.

Funky Tape said...

I tend to think the Feds are complicit in this. Let's see; don't allow a bunch of violators and collect less taxes or allow and keep the gravy train heavy?

Power to the people, not the Man. You write this blog for whisky drinkers and you're giving us more power with better knowledge. Caveat Emptor.

Josh said...

"I have no illusions that our little grassroots 5.36(d) movement influenced the united front on TTB funding, or anything else..."

To be frank I think you're selling yourself and the collective whiskey community short on this. Without folks like yourself, SKU and the rest of the collective passionate whiskey community making such a fuss about it I think it would have kept on going on without anyone knowing or caring except for the dedicated few.

While I don't think you can easily or directly tie one specific post, blogger, chat or event to it being launched to a bigger stage and larger political conversation I can't help but think it absolutely wouldn't have happened if everyone sat idly by and said nothing because without any pressure why would they "distilleries" ever change their practices?

If no one cared and no one was outraged then newspapers and larger media sites would never have picked up the scent that something was amiss and brought it up to a wider audience. That doesn't mean we should all go around boasting and pointing to what's happening now and saying "Oh look what we did", but I do think the people who do care, the people you wrote this post for, should feel some small sense of pride that at least now the issue is being discussed in places other than our local whiskey clubs.

Sam Komlenic said...

Maybe the best last paragraph of any blog post, ever.