The Failure of Diageo's Orphan Barrel Project

Diageo's 4th release of their Orphan Barrel Project is called Lost Prophet, a 22-year-old bourbon distilled in 1991 at what is now the Buffalo Trace Distillery in Frankfort, Kentucky. The retail price will reportedly be $125.

Whether or not Orphan Barrel is successful financially is unknown and while that's probably all that matters to Diageo, as a concept it's already a failure. Yes, there is a portion of the market that responds to anything very old, limited, and expensive, but that's all the Orphan Barrel bourbons are. People already feel burned by the 'limited' claim, but what the series really lacks is the transparency and authenticity true whiskey enthusiasts crave.

Although the whiskey is real, just about everything else about this 'project' is phony, starting with the designation 'orphan barrels.' All four releases were distilled by or, in this case, for United Distillers (UD), which was the distilled spirits arm of Guinness. In 1997, Guinness merged with Grand Metropolitan to form Diageo. Therefore, the 'parent' of these whiskeys didn't so much die as remarry and take a new name.

The first three 'orphans' were all made at UD's Bernheim Distillery in Louisville, which is now owned by Heaven Hill. That distillery was completely demolished and rebuilt in 1991-92, giving us 'Old Bernheim' and 'New Bernheim.' Old Blowhard was distilled at Old Bernheim. Barterhouse and Rhetoric were distilled at New Bernheim. Although UD sold the distillery and several brands in 1999, along with some whiskey stocks, it retained ownership of what it's now calling 'orphans.' The Bernheim whiskey was originally aged in the masonry warehouses at Bernheim, but moved to the steel-clad warehouses at Stitzel-Weller (SW) after Bernheim was sold.

The whiskey now being bottled as Lost Prophet was distilled at what is now Buffalo Trace in Frankfort on behalf of UD while Bernheim was under construction. It was originally aged there, but also moved to SW at some point. There was also a stock of whiskey made at SW, some of which sojourned in Canada for a time, before returning to Kentucky for sale to the makers of Jefferson's Bourbon. Whether or not Diageo has any of that whiskey left is another unanswered question. A stock of rye whiskey made at Old Bernheim was sold to Julian Van Winkle, then by him to Kentucky Bourbon Distillers. It is unknown if Diageo retained any of that either. How many other orphans is it sheltering in Shively? No one outside the company knows.

Shortly after the whiskey for Lost Prophet was distilled, ownership of the Frankfort distillery passed to Sazerac, the current owner. Until 1983, both Buffalo Trace (then known as the George Stagg Distillery) and Bernheim were owned by Schenley, another Diageo predecessor company. After the mid-1970s, American whiskey was in the doldrums and many distilleries only operated for a few months each year. Schenley operated Bernheim and Stagg as if they were one distillery, taking turns meeting the company's limited needs for new whiskey. None of the company's Kentucky brands had a true home. If they needed to make some of a particular recipe, they did it at whichever distillery was operating at that moment.

In 1983, Schenley sold the Stagg Distillery and Ancient Age brand to Ferdie Falk and Robert Baranaskas. They called their new company Age International (AI). In 1987, the rest of Schenley was acquired by UD.

Falk and Baranaskas were longtime industry veterans. Falk was the CEO of Fleischmann’s, a division of Standard Brands, and Baranaskas was the company's president. Falk was also a former executive at Schenley. When Fleischmann’s was sold, Falk and Baranaskas wanted to stay in the business so they persuaded Schenley to sell them the Ancient Age brand and Stagg distillery.

Falk and Baranaskas made money however they could during what was a very hard period for American whiskey makers. They did a lot of contract distilling and sold bulk whiskey. As such, their relationship with Schenley and then UD continued more or less unchanged, as they could make all of Schenley/UD's products.

In the mid-1980s, international sales of American whiskey began to pick up, particularly in Japan. Falk and Baranaskas, and their former Master Distiller Elmer T. Lee, created Blanton's Single Barrel Bourbon, primarily for the Japanese market. It was a hit. Other single barrel, super premium brands followed, including one named for Mr. Lee.

In 1991, Falk and Baranaskas sold a 22.5 percent interest in AI to Japan’s Takara Shuzo, with right of first refusal to purchase the remaining shares. In 1992, Falk (35.1 percent) and Baranaskas (33.9 percent) sold their shares to Takara for $20 million. Takara immediately sold the distillery to Sazerac but retained the corporate entity and brand trademarks. All of the AI brands continued to be made at Buffalo Trace, as they are to this day.

The ultimate failure of Diageo's Orphan Barrel Project is that you didn't learn any of this from them. Instead you get silly names, cute but meaningless label designs, and other made-up stuff. All of these whiskeys have a real story behind them and, presumably, at the prices being charged, it's information consumers would like to know. For instance, all of the Bernheim whiskey was made during the tenure of Ed Foote as master distiller. Gary Gayhart was master distiller at Stagg when the Lost Prophet whiskey was made.

The above is history, public information. What isn't known is the mash bill, the barrel char level, and other specifications of each product. Diageo knows all of this, why aren't they saying? They also haven't explained why none of this whiskey was sold before now, even as Diageo was contracting with other distillers for millions of gallons of spirit to support Bulleit and its other brands. Despite Diageo's use of the term 'limited,' this is clearly a very large stock of whiskey. How much more is there? Wouldn't you like to know?

Diageo could have told us interesting, true stories about these products. Instead they give us fantasy and look like they have something to hide.