Thursday, May 29, 2014

Diageo Announces New $115M Kentucky Distillery


Diageo says it will spend about $115 million on a new, 1.8-million-gallon whiskey distillery in Shelby County, Kentucky. The site will cover 300 acres and include a distillery and six barrel storage warehouses, Diageo North America president Larry Schwartz announced earlier today. The exact location has not yet been determined but Schwartz said they expect to begin construction this year and start distilling by late 2016.

This project will “cement our commitment to expanding our share of the American whiskey category,” said Schwartz.

Journalist Fred Minnick reports that the new distillery will be on Benson Pike and include a 100 acre buffer zone to, among other things, avoid whiskey fungus issues with neighbors.

Diageo’s North American whiskey portfolio includes Bulleit Bourbon and Rye, I. W. Harper Bourbon (not sold in the U.S.), Crown Royal Canadian Whisky, George Dickel Tennessee Whiskey, and Seagram's 7 Crown American Blended Whiskey. Both Crown Royal and Seagram's 7 use bourbon whiskey as an ingredient.

Currently, Diageo has a maturation and blending facility, but no distillation, at the Stitzel-Weller Distillery in Louisville. The George Dickel Distillery in Tullahoma, Tennessee, has distillation, maturation, and hand-bottling. Most of Diageo's bottling for North America is done in Plainfield, Illinois, outside Chicago. Diageo is based in London. Its U.S. headquarters are in Norwalk, CT.

At 1.8-million-gallons, Diageo's new distillery will be the smallest major producer distillery in Kentucky. It will have about the same capacity as the Charles Medley Distillery in Owensboro, which was recently acquired by Terrasentia.

Tuesday, May 27, 2014

Orphan Barrel Project Shows Diageo Disrespects American Whiskey



The way Diageo presents its 'Orphan Barrel' whiskeys is an insult to American whiskeys and the people who drink them.

The bourbon itself is interesting. Some is from the old Bernheim Distillery, which stopped distilling in about 1988. The rest is from its replacement, which started in 1992. The soon-to-be-released Rhetoric, also from the early days of New Bernheim, has a different taste profile than Barterhouse, according to Diageo. No word yet on Strongbox.

The problem is that while these products have interesting true histories, Diageo isn't emphasizing that. Instead, they made up a front company to sell them, coined some jokey names, and designed some retro-style packaging, all of which is silly and belittling to the ostensibly fine bourbon inside. This is an example of a scotch company treating American whiskey like flavored vodka. Do you think Diageo would do something like this with whiskey from Oban, or Talisker, or Lagavulin? They give even Johnnie Walker more respect.

As interesting as the true stories are, it was like pulling teeth to get Diageo to reveal them. They started out pretending that they didn't know where the 'orphans' were made, an obvious lie since the distillery's name is always stenciled on each barrel head.

It wasn't just bourbon enthusiasts who complained about the secrecy and phoniness. Customers pushed back too and Diageo changed its tune, a little.

One can speculate about why nobody bottled these whiskeys before now. What we know is that the Old Blowhard is some of the last whiskey distilled at Old Bernheim, while Barterhouse and Rhetoric are some of the first whiskey distilled at New Bernheim. We also know that Diageo calls these products 'limited,' which anything finite is, but they won't say how many bottles have been released. For comparison, the 2014 release of Four Roses Single Barrel Limited Edition is 5,000 bottles. Diageo's 'Orphans' appear to be many times more than that.

With Rhetoric, they have so much they're not even going to bottle it all now. They're going to let some of it keep aging so they can release a 21-year-old next year, and how many more after that? Limited? Not so much, it seems.

When Old Bernheim distilled its last it was like many American distilleries at that time, silent more often than not. Diageo predecessor United Distillers (UD) was buying companies to get brands and in the process it was getting whiskey and distilleries it didn't want. In the late '80s it was making rye-recipe bourbon at Old Bernheim primarily for Old Charter and I. W. Harper; and wheated bourbon at Stitzel-Weller primarily for Old Fitzgerald and W. L. Weller. Then it bought Glenmore in 1991 and made its rye-recipe bourbon at Glenmore's Medley Distillery in Owensboro.

When New Bernheim opened in 1992, they started to make everything there, closed Stitzel-Weller, and sold Medley. The master distiller at New Bernheim was Ed Foote, who was at Stitzel-Weller before that and may have overseen the making of the Old Blowhard at Old Bernheim. Foote is still with us, living in Louisville. Fred Minnick interviewed him recently at an event at the Kentucky Derby Museum. He's retired so Diageo could have recruited him to do some events and talk about the whiskey he made.

They didn't.

Diageo sold the Bernheim distillery -- and the Charter, Weller, Rebel Yell, and Fitzgerald brands -- in 1999. With each sale of brands, the buyer got some aging whiskey. Why these barrels stayed behind is unknown.

Diageo retained ownership of I. W. Harper Bourbon, but hasn't sold that brand inside the United States for several decades. It sold Charter to Sazerac and can't even use 'Bernheim' because Heaven Hill has rights to that. So Diageo genuinely cannot use any of the original names as brand names (which doesn't prevent them from telling the stories), but was 'Old Blowhard' really the best they could do?

At some point after 1999, the barrels Diageo still owned were moved to Stitzel-Weller, which Diageo uses for maturation and blending. It's interesting that they aged for part of their existence in the masonry warehouses at Bernheim (which current owner, Heaven Hill, refuses to use for its bourbon) and for the rest at Stitzel-Weller, which are traditional steel-clad rackhouses and very well regarded. Since whiskey typically ages more slowly in masonry warehouses, that may be why these whiskeys are drinkable at such advanced ages.

You are, of course, learning all this here, not from Diageo.

Should you buy or avoid these products? That's up to you. If you have the opportunity to try them, by all means do. If you like them and think the price is fair, then buy them. The concerns expressed here are with Diageo, not with the whiskey.

CORRECTION: It wasn't anyone from Diageo, but writer Fred Minnick did mention Ed Foote at the Orphan Barrels launch event in Louisville on March 12.

Thursday, May 22, 2014

Think You Know Jim Beam? Take the ADVANCED Course, Tuesday, 5/27 at Fountainhead


Another week, another Fountainhead School of Spirits session. Here's what we're up to this coming Tuesday, 5/27, at 7 PM.

TITLE: American Whisky 150: The Whiskeys of Jim Beam -- Advanced

TASTING: (1) Jim Beam Black Label Bourbon  (2) Old Grand-Dad Bourbon  (3) Basil Hayden Bourbon  (4) Maker’s 46 Bourbon (5) Knob Creek Rye

DESCRIPTION: In this session, we taste the step-up versions of the Beam whiskeys from the basic course. The black label is aged twice as long as white, as is Basil Hayden compared to Grand-Dad. Maker’s 46 undergoes a unique wood treatment after aging. Knob Creek Rye shows how the Beam rye recipe changes as the whiskey matures.

Class starts at 7:00 PM and wraps up about 8:30 PM. Fountainhead is at 1970 Montrose Ave on Chicago's North Side. It's a bar and restaurant. We have a private room for the classes. Don't take the word 'classes' too seriously. It's a small group (about 20-25 people) and very informal. I encourage questions and discussion. Also, Fountainhead has very good food, so don't worry about having dinner first. Click here for tickets.

NOTE: My apologies to anyone who tried to buy tickets to "The Whiskeys of Diageo" for Tuesday, 5/20. We actually cancelled that class two weeks ago due to a scheduling conflict at Fountainhead, but I forgot. Entirely my fault. Sorry for any inconvenience. "The Whiskeys of Diageo" will be rescheduled.

ANOTHER NOTE: If you have attended any of the classes and have suggestions for improvement, or if there are some topics you'd like us to cover in a class, please let me know. You may comment below, or email me at ckcowdery@gmail.com.

Tuesday, May 20, 2014

Talking Shortage But Thinking Glut


The inherent impossibility of accurately predicting whiskey sales five, ten, or fifteen years from now means that both shortages and gluts are inevitable. The best we can hope for is that both will be brief and mild.

So even though supplies are tight right now, it's appropriate to start thinking about the next glut.

Naturally, the whiskey guru downunder, Chris Middleton, has been thinking about this too.

"I’ve been closely tracking investment in new production capacities globally for some years now," writes Middleton. "In the U.S. over the past three years, over $430 million has been announced by the big eight distilling companies in plant and equipment for their distillery operations. Total capacity over the next five years may well double. Production may grow 50 percent or more over this period."

Middleton's records show that over a similar period, scotch producers have invested over $3 billion and increased production by over 20 percent. A dozen new malt distilleries are being built and many more are being expanded or brought back into production. 

Whiskey-makers in Japan, Ireland, and Canada are growing too. So are hundreds of new craft distillers in more than 30 countries. Total investment worldwide: about $4 billion. In the five major producing countries, aging warehouses now contain more than eight billion liters of whiskey at various ages. Meanwhile, the best estimate for consumer demand growth over the next five years is about five percent per year.

Consumers may welcome a glut, as they usually start with a price war. But if producers have badly overestimated their needs it will be bad for whiskey lovers, as companies turn away from whiskey and look elsewhere for profits. So let's all pray for a short glut -- something to take the edge off -- then back to the uncomfortable tightness we're experiencing now. And, as always, pray for robust growth in China and India, upon which all of this depends.

Monday, May 19, 2014

How Bad Is the Worldwide Whiskey Shortage? Not So Bad, Actually


Suddenly the media is awash with stories about a worldwide whiskey shortage. Most are exaggerated, many are poorly informed. Just Google 'whiskey shortage' and you will have no shortage of choices. It's on the editorial radar.

There are problems with all of these, but here is a quick sampling from Philadelphia Magazine, Time Magazine, and Australian Broadcasting.

Any report you see that says or gives the impression that we are 'running out of whiskey' is wrong. We're not. There is a shortage affecting the trade, but what 'shortage' means to them is that producers and distributors are unable to fill some orders for some products some of the time. These 'outs' are generally short term.

For consumers, this 'shortage' is having either no effect or they occasionally find stores out of something specific they want to buy. These are brief, localized shortages of certain products. Nothing worse than that is coming either, although it may get a little worse before it gets better.

If you only drink one brand and that brand is one of the ones affected, you might feel very inconvenienced, but most of the people reading this are whiskey enthusiasts who like many different products. I have yet to hear of a whiskey enthusiast who went into a store and couldn't find anything he or she wanted to drink.

Maker's Mark is a good example. Not only is Maker's Mark on allocation, it has been on allocation for more than 20 years. (Allocation means that when a distributor places an order for a certain number of cases, Maker's Mark replies by telling them how many cases they can have according to the brand's allocation formula.) Supplies have gotten even tighter in the last three years, but how frequently is your primary watering hole completely out of Maker's Mark?

Part of the problem is that brands on allocation are allocated in part according to historic sales. Maker's Mark is a national brand but many brands are regional. W. L. Weller is a good example. Texas, where Weller has always sold very well, gets a lot of the Weller that's available. Recently people around the country have become aware of Weller as a Van Winkle alternative, so they're trying to find it in markets where Weller has not historically been sold. Retailers in those places, who have customers asking for it, can't get it from distributors because that city or state's small allocation sells out so fast.

Similarly, there are some very small brands that have always been in short supply, but you didn't know because you've never looked for them before. As American whiskey drinkers become more knowledgeable and go looking for the in-the-know favorites, shelves can empty fast. Producers will adjust but it may take several cycles.

And, of course, all of this talk about a whiskey shortage will prompt some extra buying, which will strain supplies even more.

Some people talk about the whiskey shortage and the barrel shortage as if they're part of the same problem, but there was no barrel shortage when the whiskey selling now was put away. The two shortages are unrelated.

The barrel shortage is mostly a problem for micro-distilleries. The big distilleries may not be able to get quite as many barrels as they want but they're getting a lot of barrels regardless, because they always have. Micros generally don't get their barrels from the same cooperages as the big guys. In some cases, micros are doubling or tripling their barrel orders as their businesses take off, and the small cooperages who supply them can't keep up. The big cooperages aren't in any position to help because their current, big distillery customers are taking everything they make, plus the big cooperages only make 53 gallon barrels while most micros use smaller ones.

The barrel shortage is mostly caused by a shortage of timber at the stave mills. Loggers have been unable to get enough trees cut and out of the forest, in part due to the recent long, harsh winter. It's not a tree shortage (there are plenty) or a cooperage capacity limitation, at least not at the big cooperages. Some have predicted this problem will last for as long as two years. It won't.

So, as a consumer, here is how you probably will experience the whiskey shortage. From time to time, you will go to the store intending to buy Old Frothingslosh, only to find them out of Old Frothingslosh. Maybe you will go to another store and they will be out of it too. The radical, earth-shattering solution?

Buy something else and come back in a month when Old Frothingslosh has been restocked.

If we all stay brave and strong we can get through this together.

Sunday, May 18, 2014

"The American Whiskeys of Diageo," this Tuesday Night at Fountainhead


Another week, another Fountainhead School of Spirits session. And this is where the difference between an independent and producer-sponsored tasting really kicks in, because it's well known that Diageo and I have our issues.

There's nothing wrong with their whiskeys, however, and Tuesday we'll taste an interesting range of them. Plus I'll tell you a few things that Diageo would rather I didn't.

TITLE: North American Whiskey 102: The American Whiskeys of Diageo

TASTING: 1. George Dickel No. 12 Tennessee Whiskey 2. Bulleit Bourbon 3. Bulleit Rye 4. Crown Royal Black Canadian Whiskey

DESCRIPTION: Diageo, the world’s largest drinks company, has a limited presence in American whiskey. It owns the George Dickel Distillery in Tennessee but its Bulleit whiskeys are contract- produced. Its biggest American whiskey is from north of the border, but has bourbon as an ingredient. This course offers a rich taste of American whiskey geography, moving from Tennessee whiskey to Kentucky bourbon and Indiana rye, and ending in Gimli, Manitoba, with the best-selling Canadian blended whisky.

Classes start at 7:00 PM and wrap up about 8:30 PM. Fountainhead is at 1970 Montrose Ave on Chicago's North Side. It's a bar and restaurant. We have a private room for the classes. Don't take the word 'classes' too seriously. It's a small group (about 20-25 people) and very informal. They have very good food at Fountainhead so don't worry about having dinner first. Click here for tickets.

Saturday, May 17, 2014

A True Taste of Kentucky Now Available in Chicago



Bourbon and cola is a very popular drink, but one most bourbon enthusiasts eschew. They prefer their bourbon neat or on-the-rocks, and if they want a mixer they know ginger ale is better. If they've spent any time in Kentucky, they know the best ginger ale with bourbon or rye is Kentucky-made Ale-8-One.

Ale-8-One is mostly sold in Kentucky only. You can buy it online, but the shipping costs are nuts. Slightly less nuts, if you're in Chicago, is a stop at Joey's Soda and Snacks, a tiny store at 1946 West Montrose. Look, you can even see it on the shelf in the picture on Joey's Facebook page.

In Kentucky, a six-pack of Ale-8-One bottles is about $3.99. At Joey's it's $9.99. But I'm not complaining. His cost to obtain Ale-8-One and the dozens of other regional favorites he sells must be astronomical. If you have some favorite from back home, check out Joey's, but don't delay. As Joey reports on his Facebook page, he turned 34 last Monday and he's thinking about selling the place.

The Northcenter neighborhood where Joey's is located is fun. I discovered Joey's because Fountainhead, the bar and restaurant where I teach whiskey classes, is just a few doors west.

A few generations ago, most products were local. Every town had its own local brewery, bakery, dairy, meat packer, candy maker, snack maker, and soda maker. Coke and Pepsi started the trend toward big, national brands, many of which are now international brands. What gets lost are the emotional connections and, often, some unique products and tastes. Although Joey is struggling, Ale-8-One itself seems to be doing okay. So are the makers of Jones Potato Chip, made in my hometown of Mansfield, Ohio, and still the best potato chip in the world. (They're marcelled.)

Friday, May 16, 2014

Four Roses 2014 Limited Edition Single Barrel Is a Tribute to Bourbon Fans


Four Roses Bourbon has two annual limited edition releases, a Single Barrel in the spring and a Small Batch in the fall. This spring's Single Barrel is an 11-year-old OESF, which means it's their 20 percent rye mash bill with their herbal essence yeast. (Four Roses makes ten different bourbon recipes.) It's also barrel strength, which will range between 108.3° and 127.6° proof (54.15% ABV to 63.8% ABV).

"This year's Limited Edition Single Barrel is a tribute to the loyal following we are so fortunate to have," said Master Distiller Jim Rutledge. "This bourbon went into the barrel and was put away at a time when Four Roses had just returned to the states and it's remarkable to see how far we've come as a company since then."

The bottle proclaims the tribute by including a toast submitted during the Year of the Toast campaign that celebrated Four Roses 125th anniversary. The winner, from Frank Wheatley of Louisville: "If I could age like bourbon, I wouldn't mind getting old."

'Limited,' in this case, means 5,000 bottles. It should be in stores by Father's Day.

Wednesday, May 14, 2014

Secret Mash Bills Are Stupid


Everyone knows the rye whiskey made at MGP of Indiana, sold as Templeton, Bulleit, Redemption, George Dickel, and many others, is made from a mash bill that is 95 percent rye and 5 percent barley malt. MGP, which is a contract distiller and bulk whiskey seller, publishes all of its mash bills.

Many people also know that most major distillery straight ryes are 'barely legal' at 51 percent rye. This is true of Heaven Hill (Rittenhouse), Jim Beam (Jim Beam, Old Overholt, Knob Creek), and Buffalo Trace (Sazerac). In all three cases, this was confirmed to me by the Master Distiller.

The only rye Brown-Forman makes is the new Jack Daniel's product. The first batch hasn't reached maturity yet but they've announced the mash bill -- 70/18/12.

Someone asked me recently, what about Wild Turkey Rye? I'd never asked them specifically, so I did, via the PR channels I'm supposed to use. Can't tell you, proprietary, they answered. Okay, can you tell me if it's more than 51 percent? Yes, it's more than 51 percent.

They attributed the answer to Eddie Russell, but keeping the mash bill a secret isn't Eddie or Jimmy Russell's decision, it's corporate.

As it happens, the second part of that answer satisfied my curiosity but it also got me thinking about the policy of keeping mash bills secret. Producers of pretty much everything like secrets as a marketing gimmick. A secret recipe suggests the product is special, unique, and can't be duplicated. Coca-Cola and Kentucky Fried Chicken are two famous examples of brands that have made a secret recipe part of their image.

That might be fine for soft drinks and fast food, but whiskey is different. Whiskey fans like to know what they're drinking. The more information, the better. Plus of all the things you might want to keep secret about how your whiskey is made, few are less important than the mash bill. Nobody can duplicate your product just because they know your mash bill.

Fred Noe, Master Distiller at Jim Beam, told me once that mash bills aren't even that rigid. They vary from time to time and no one can taste the difference. So between what we can surmise and how little it matters, keeping your mash bill a secret probably does more harm than good. It looks like you're hiding something.

Although Four Roses doesn't make a rye, they do make two different bourbon mash bills. They publish them on a card they pass out at tastings. It helps them tell their '10 Recipes' story.

Mash bill is primarily useful as a way of classifying the whiskey. A 95 or 100 percent rye is expected to taste a certain way, a 51 percent rye is expected to taste a different way. There is certainly room in there for a third classification and Wild Turkey Rye would be unique if it occupied that ground -- say, 65/25/10. They might actually be losing something while gaining nothing by keeping it a secret.

So the message to all distilleries is this: tell us your mash bills or come up with a damn good reason why you won't.

Tuesday, May 13, 2014

TTB May Crack Down on Section 5.36(d) Violations


Tasseography is a fortune telling method that interprets patterns in tea leaves, coffee grounds, and wine sediments. It's unfortunate that bourbon enthusiasts are so often forced to engage in divination to figure out where certain whiskeys are made, but it has always been so.

The Federal regulator, the Alcohol Tax and Trade Bureau (TTB), is supposed to help by requiring producers to put certain information on their labels. Section 5.36(d), for example, requires that "the State of distillation shall be shown on the label of any whisky produced in the United States if the whisky is not distilled in the State given in the address on the brand label."

So since Templeton Rye's label gives its address as Templeton, Iowa, but its whiskey is distilled in Lawrenceburg, Indiana, the words "distilled in Indiana" should appear somewhere on the Templeton label, but they don't. That's a violation of Section 5.36(d).

Templeton is far from alone. Other producers with one or more whiskeys not in compliance include Whitmeyer, Troubadour, Yellow Rose, Red River, Witherspoon, Rebecca Creek, and Treaty Oak.

You can view the list and a thread about it on straightbourbon.com here. They found at least 29 offenders. That list has been provided to TTB, at their request.

Some producers have already caught on. Smooth Ambler's first Old Scout releases didn't show the state of distillation but the more recent ones do.

This has come to light because so many small producers are getting their whiskey from the same distillery, MGP of Indiana. In many cases, the omission may be a mere oversight. In others, it looks like a deliberate attempt to convey a misleading impression about the whiskey's origins, exactly what 5.36(d) is intended to prevent.

Communicating with the TTB about these issues requires some divination too, as it is their policy never to discuss enforcement activities. An email yesterday to Tom Hogue, TTB's point of contact for all media inquiries, asked if we are interpreting 5.36(d) correctly. "5.36(d) is pretty straight forward and it sounds like you are reading it correctly," he replied. "If there are concerns about the accuracy of specific labels, please let us know and we will address the issue as appropriate directly with the affected industry member(s)."

Finally, since so much of this sourced whiskey is coming from MGP of Indiana, perhaps they should be encouraged by TTB to alert their non-Indiana customers to this requirement.

If your reaction is "So what? It's just a bunch of little guys I've never heard of," consider this. Through action by the Tennessee ABC, it was revealed that Diageo is distilling whiskey in Tennessee that it is aging in Kentucky, in violation of Tennessee law. All Diageo has said about this whiskey is that it is not intended to be sold as George Dickel Tennessee Whisky. It appears that none of this whiskey has been COLA’d yet, but when it is TTB should be alert to the potential for a 5.36(d) violation.

As we wrote last month, TTB fails like this have become all too frequent as the bureau has been bombarded by thousands of COLAs from hundreds of new, small producers. It matters because it undermines confidence in the TTB's entire consumer protection mission.

Monday, May 12, 2014

"The Whiskeys of Four Roses," Tomorrow Night at Fountainhead


Fountainhead School of Spirits is back. Tomorrow, Tuesday, May 13th, I'll be presenting 'The Whiskeys of Four Roses' in Fountainhead's Barrel Room.

TITLE: American Whiskey 102: The Whiskeys of Four Roses

TASTING: 1. Four Roses Yellow Label Bourbon 2. Four Roses Small Batch Bourbon 3. Four Roses Single Barrel Bourbon 4. Four Roses Single Barrel Fountainhead Selection

DESCRIPTION: Although it is a very old brand, Four Roses Bourbon was not sold in the United States until a decade ago. The Four Roses Distillery is unique because it makes ten different bourbon recipes, all rye-based. The yellow label combines all of them. Small Batch is a mixture of four. Single Barrel is just one. In this session we will taste a variety of these mashbills and yeast strains. 

Fountainhead is at 1970 Montrose Ave on Chicago's North Side. It's a bar and restaurant. We have a private room for the classes. Don't take the word 'classes' too seriously. It's a small group (about 25 people) and very informal. They have very good food so don't worry about having dinner first.

Click here for tickets.

NOTE: We intend to finish before the puck drops.

Sunday, May 11, 2014

Is This Church the Birthplace of Bourbon?



They may not have been Kentucky's earliest distillers but the English Catholics who migrated to the American Holy Lands beginning in 1785 played a disproportionate role in establishing the bourbon industry there. Many of the names of those First Families are familiar to bourbon fans today.

Holy Cross parish, in Marion County, is known as the birthplace of Catholicism in Kentucky. It was established in 1785 when “a league” of sixty Catholic families was formed in Maryland. Each pledged to migrate to Kentucky and agreed to settle in the same area for mutual support, to increase their chances of getting a priest, and to establish a church.

Until 1787, Mass was held in private homes. Under Father William DeRohan, the first chapel was built at Holy Cross. A grotto today marks where this structure, the first west of the Alleghenies for Catholic worship, was built. The present brick church was built in 1823.

The whiskey families associated with the Maryland migration include the Beams, Boones, Cecils, Dants, Haydens, Mattinglys, Medleys, Pottingers, Wathens, Wheatleys, and Willetts. They mostly settled in Nelson, Marion, and Washington County.

(Holy Cross history is courtesy of the Archdiocese of Louisville.)

Saturday, May 10, 2014

KDA 'Fantasy Camp' Starts Wednesday, 5/14


The Kentucky Distillers' Association (KDA) likes to describe its Kentucky Bourbon Affair, which begins next Wednesday, as "a fantasy camp for bourbon lovers." Fantasy camps are a thing. The term usually describes an expensive meeting of has-beens and wanna-bes which due to its high cost is a true fantasy for most, reality for only a privileged few.

The true theme of the Kentucky Bourbon Affair, therefore, is insiders versus outsiders, and the only way to be an insider is to pay KDA, either in cash or fealty.


That is how KDA plays the game. It's not enough that insiders win, outsiders must also lose.

An article in Louisville's Courier-Journal this past Tuesday put that strategy on display like never before. In it, KDA President Eric Gregory is quoted as follows: "What makes our Kentucky Bourbon Affair unlike any other whiskey event in the world is the fact that Kentucky distillers are hosting this, not an event firm or some other group," Gregory said.

"Event firm" is a dig at FSA Management Group, which along with Bourbon Review Magazine, had the nerve to produce the Bourbon Classic for two years running without KDA's permission.

It's no secret that the name at the top of KDA's blacklist is Sazerac, which operates the two big Kentucky distilleries (out of ten) that don't belong to the KDA. That's understandable, since member dues used to be the sole revenue source for the KDA, before it became an event firm. The estimated take from the 3-day Affair will be about $400,000, which will be used to promote the member distilleries even harder.

The KDA doesn't have an exclusive franchise to promote bourbon and bourbon tourism, and most of those other individuals and groups have no gripe with Sazerac, its Buffalo Trace distillery in Frankfort, or its Barton 1792 distillery in Bardstown, but anyone who fails to treat Sazerac and its properties like pariahs risks the KDA's wrath, which usually comes on little cat feet in the dark of night.

This crazy bourbon boom, which nobody saw coming and nobody can claim credit for, should make everyone happy. It looks like there should be plenty of opportunity to go around, but when the stakes go up, the powerful get greedy. "We're the goose that lays them," think the big distillers. "Why shouldn't we keep all the golden eggs?"

The thing is, that's our gold, not yours. Bourbon buyers and bourbon drinkers and bourbon tourists created that wealth, not you and your politician buddies. Remember, not 20 years ago you were drowning in the stuff and if you continue to kick regular, day-to-day bourbon fans to the curb, China and India won't save you.

Friday, May 9, 2014

My Recommendation for a Mother's Day (or Father's Day) Bourbon Gift


My suggestion for the perfect gift is bourbon, of course, but with a twist. A bottle of one of the limited editions like the Parker's Heritage Collection 13-year-old wheat whiskey is a great gift, but this is different.

Micro-distilleries aside, every drop of American whiskey (bourbon, Tennessee and rye) is made by eight companies at 13 distilleries. The gift? A sampler of one bottle from each, either the eight or the 13.

Put them in a big basket if you want to.

For example, one from each of the eight companies: Maker’s Mark (Suntory Beam), Woodford Reserve (Brown-Forman), George Dickel No. 12 (Diageo), Bulleit Rye (MGP), Evan Williams Single Barrel (Heaven Hill), Four Roses Single Barrel (Four Roses), Buffalo Trace (Sazerac), Rare Breed (Wild Turkey).

One from each of the 13 distilleries: Maker’s Mark (Maker's Mark), Knob Creek (Jim Beam Clermont), Bookers (Beam Booker Noe), Woodford Reserve (Woodford Reserve), Old Forester Birthday Bourbon (Brown-Forman), Jack Daniel's Single Barrel (Jack Daniel's), George Dickel No. 12 (George Dickel), Bulleit Rye (MGP), Evan Williams Single Barrel (Heaven Hill), Four Roses Single Barrel (Four Roses), Buffalo Trace (Buffalo Trace), Ridgemont Reserve 1792 (Barton 1792), Rare Breed (Wild Turkey).

Okay, so we can't be sure what, exactly, comes from Beam's Booker Noe Distillery, but its namesake bourbon seems appropriate. And MGP doesn't own Bulleit Rye, but it is made there and Diageo actually admits it, which is something rare and special in itself.

You can, of course, modify the selections based on price or personal preference, but doesn't mom (or dad) deserve the best?

This gift, of course, is for moms and dads who value good bourbon over rarity and fancy packages. If you don't have a parent or spouse who appreciates that, buy it for yourself.

Thursday, May 8, 2014

Buffalo Trace Addresses Bourbon Shortage


According to Buffalo Trace Distillery, in a press release today, the bourbon boom shows no signs of letting up and Trace, like all producers, is having trouble meeting demand. Although Trace continues to take steps to mitigate the problem, shortages remain.

About a year ago, Trace warned consumers a shortage was looming, but many markets across the nation are just now feeling the full effects. “We're making more bourbon every day. In fact, we’re distilling more than we have in the last 40 years,” said Harlen Wheatley, master distiller. “Still, it’s hard to keep up. Although we have more bourbon than last year when we first announced the rolling blackouts, we're still short and there is no way to predict when supply will catch up with demand.”

Along with increased production, adding more bottling lines, and hiring more people, Buffalo Trace has hired a full-time barrel allocation manager, as the company announced it would last year. The new allocation manager will balance bourbon inventory with sales volume. Monthly allocations will ensure all markets get some Buffalo Trace, Eagle Rare, and Blanton’s, preventing long periods when these brands are unavailable.

“We taste, approve and bottle what barrels we have available each month. There are shortages because Buffalo Trace, Eagle Rare, and Blanton’s sell out quickly, but no shortage should last more than one month before reinforcements arrive,” said Kris Comstock, bourbon marketing director. “We're asking for continued patience from our fans. The recent surge in demand is quite flattering, but we just need to keep in mind these bourbons were put into the barrel many years ago.”

Comstock added that other highly allocated whiskeys such as Pappy Van Winkle and the Antique Collection will continue to be released annually every fall.

Despite the increase in distillation over the past few years, bourbon demand still outpaces supply. The overall bourbon category is experiencing 5 percent growth, but premium brands are up nearly 20 percent from last year. Bourbon must be matured in new oak barrels and Buffalo Trace ages many of its whiskeys for eight to ten years, some for more than two decades.

Wednesday, May 7, 2014

What Effect Will Suntory Have On Beam?



This is the third ownership change I've been through with Beam. That may sound odd, since this is the first time Beam has been sold, but stay with me.

In 1987, Beam parent Fortune Brands bought National Distillers and merged it with Jim Beam. National was the larger company and had many more brands, but since it was failing hardly any of its management was retained, although some of the sales force was. I was working for a Beam agency at the time and worked on the transition directly.

In 2005, Fortune and Pernod teamed up to dismember Allied Domecq. Again, Fortune added its parts to Beam. Lots of management came over too. I was doing then what I do now and didn't have many friends at Beam, at least not in Deerfield. One man changed that.

Last month, Suntory closed on the purchase of Beam Inc. Suntory is much more than a distilled spirits company but its distilled spirits business will be attached to Beam and not the other way around. The new company will be headquartered at Beam's headquarters in Deerfield, Illinois. Its 'new' president is Matt Shattock, who has been running Beam since 2009.

Before the 1987 merger, Beamville was a one horse town. It sold Jim Beam bourbon and not much else. Although Jim Beam was doing better than most, the bourbon category was struggling. Beam was interesting in acquiring some big brands that were growing. The prize at National? DeKuyper Schnapps, a line of liqueurs with some very hot flavors. DeKuyper Peachtree Schnapps was, all by itself, a million case brand.

Suddenly having so many brands in so many categories was a shock to the system. My contribution was a merchandising manual to show salespeople where, ideally, each of their new wards should be placed on store shelves. It was the same people running things after the merger as before, but the culture changed because they were forced to take a much broader world view.

My transition from sales promotion supplier to spirits journalist was rocky at Beam. There were some misunderstandings that left me on the outside. I had great relationships with production people in Kentucky but the Deerfield folks barely spoke to me. It wasn't a big problem for me, but one of the managers who came over from Allied decided it was a problem for them. He was the VP of Corporate Communications and reached out to me in a very personal way to mend fences.

He's gone now, but he and the other Allied transplants changed the Beam culture again. They took a company that had become very self-satisfied and made it try new things. Suddenly, the most influential person in the company creatively was Maker's Mark president Bill Samuels, himself an Allied transplant.

It's hard to predict how Suntory will change Beam. It's easy to say it won't, since on the ground it looks like Beam took over Suntory and not the other way around. It surely will. It may make Beam more effective in those parts of the world that aren't North America, Europe or Australia. Since it is no longer publicly traded, it might be able to think more long term. Those would both be good things.

One thing I've learned about Beam over all these years is that while I may not always agree with them, I'm reluctant to bet against them. They survived and controlled their destiny during a very rough patch in the distilled spirits business. They have both grown their mainstays and created successful new brands. They have made money for their investors. They'll get through this too.

Monday, May 5, 2014

What If Distributors Were Optional?


As American laws go, the 21st Amendment to the Constitution is stunningly brief, not even 100 words and most of them are boilerplate. The first section repeals the 18th Amendment. The third section sets out the window for ratification: seven years. It's the second section that concerns us today. What it says in 31 words I can say in eight: states may regulate alcoholic beverages however they want.

Although each state does it differently, a key feature common to most is the three-tier distribution system. The three tiers are producers, distributors, and retailers. The issue with the three-tier system is not whether or not the system provides value, it's whether or not requiring the 3-step process is justified. If I can streamline the process by eliminating the middle man, what is the public policy benefit of preventing me?

Pre-Prohibition, 'tied houses' were a common feature of the retail landscape. A 'tied house' was a saloon owned by a producer. It was widely believed that when producers controlled retailers in this way, consumers and communities suffered because all the far-away producer cared about was increasing sales and profits. After Prohibition, it was believed that preventing the tied house and keeping retailers as far away from producers as possible would prevent those abuses.

Today, because so much has changed, distributors (for beer, wine, and spirits) can sometimes seem like a vestigial organ. Big producers would love to be able to sell directly to large chain retailers. Brown-Forman would love to distribute Jack Daniel's to Walmart through Walmart's distribution system, not through 50 different distributor locations in 50 states. They'd love to be able to do the same thing with TGIF and Chili's. They can't.

Big producers essentially do sell directly to national customers, but distributors have to handle the paperwork and, more importantly, physically move the product. Is there a genuine public policy justification for requiring that? Probably not.

One reason the present system seems like a waste of money is how easily most of the rules are circumvented, at least for some purposes. 'No cross ownership' is a joke. They have to look separate on paper, but distributor/producer cross-ownership is common in fact. Distributors as in-state businesses? Also a joke. Most distributors are national or nearly so, they're just separately incorporated in each state where they do business. Does it make sense that a distillery gift shop has to buy its own distillery's products through a distributor?

Okay, so if the current law makes no sense, why not change it? That's easy to say, virtually impossible to do. Most states have made very few changes to their laws regulating alcoholic beverages since Prohibition ended 80 years ago. That's because distributors and government (both the elected part and the bureaucracy) have a vested interest in the status quo. Small retailers do too.

Producers of all sizes and large retailers would like to see the distributor made optional, not mandatory.

How would small producers benefit? One of the reasons small producer products are expensive is that they need those prices to interest distributors. Most micro-producers in most places have no trouble getting distribution because at current prices it's a very profitable business for the distributor. If micro-producers could sell directly to retailers, some might be able to build a respectable business just by keeping the ten (arbitrary number) bars and liquor stores closest to the distillery supplied and happy.

It could be a kind of partnership, nothing like the tied houses of old. If the producer could charge the same wholesale price to the retailer that they were charging to the distributor, the retailer would be able to charge less and sell more. That scenario does nothing for the distributor but it could be terrific for the producer, its preferred retailers, and their customers. It's not a model that would work for everyone but right now it can't work for anyone because it's against the law.

Our interests as consumers are supposed to be paramount to the regulators, but a more efficient system would surely benefit consumers in terms of lower prices and greater convenience. More liberal laws in general would liberate the creativity of producers, in terms of better fulfillment of consumer wants and needs. Policies intended to limit the harm caused by alcohol abuse could be focused directly on the problem instead of on a very broad proxy for it.

Many of our liquor laws, directed as they are at 19th century problems, badly need a 21st century upgrade.

Saturday, May 3, 2014

Time Is Running Out to Join the Chuck Cowdery Magical Mystery Bourbon Tour, June 11-13



If you're thinking about joining me in June for my exclusive, 3-day tour of Bourbon Country, reserve your spot now by calling Josh Dugan at 502-583-1433, ext 107, or email him at josh@mintjuleptours.com. Time is running out.

The format is simple. Each morning we meet at The Galt House Hotel, board a clean, comfortable Mint Julep Tours bus, and head out to a distillery or some other cool place. If it's a distillery, we don't take the standard tour, we're treated to something special.

But we don't just visit distilleries. We go to Vendome, where the stills and other equipment are made. Vendome does not normally give public tours, but it's a place every whiskey fan should see. We also see how whiskey barrels are made, visit a couple of historic sites, and lunch each day at some characteristic Kentucky eatery. I'm with you the whole time. Since it's just 20 people, we all get to know each other and I have time to answer everyone's questions.

We cram a lot into each day without it seeming rushed. Mint Julep is very accommodating, so if the day runs a little long, everybody is okay with that. We usually get back to The Galt House by about 7 PM and the rest of the evening is yours. There are several restaurants and bars in The Galt House and many others within easy walking distance. Louisville also has a 'trolley' that circulates around downtown for a modest price.

Lodging is your choice, but Mint Julep is happy to make suggestions. They also receive preferred rates from several hotels. Simply call Josh Dugan at 502-583-1433, ext 107, or email him at josh@mintjuleptours.com.

The first Chuck Cowdery tour, back in March, was a lot of fun. I promise that this one will be equally fabulous.

Friday, May 2, 2014

In Which I Help Pick Your Next Bottle of Booker's


A few weeks ago, I participated in a tasting panel to select the next batch of Booker's Bourbon. This is the third Booker's panel of which I have been a part.

The backstory is that Booker Noe would choose the whiskey for Booker's with help from an informal panel of friends, assembled around his kitchen table. We do it over the phone. It's Booker's son, Fred Noe, and three or four writers. Usually some Beam PR folks are on the line too.

We are sent three samples to taste. Fred explains the provenance of each (distillation date, warehouse, warehouse location, barrel proof, that sort of thing). We taste, discuss, and ultimately vote on which of the three should be the next Booker's.

Booker's was the first bourbon to use the term 'small batch.' Beam never explained what the term meant unless asked. Many people assume it means small from beginning to end, starting with a unique recipe and a small fermentation and distillation. The producers are happy with that misinterpretation, but it's not that and never has been. 'Batch' means bottling batch, the contents of one bottling run, which in turn means the contents of one tank into which some number of barrels have been dumped.

Just as the whiskey from each barrel is unique, so is each combination of barrels, and it is that combination that allows a batch to be tweaked to better match the brand's profile.

In the case of Booker's, a batch is 360 barrels and lasts about three months at retail. Although Beam Suntory (we might as well get used to it) has rackhouses at various locations in Kentucky, the whiskey for Booker's always comes from Clermont, usually from the older, seven to nine story, rack-style houses.

Since they're only sending us three samples, all three are pre-determined by Fred and his panel at the distillery to be suitable for the Booker's profile, yet one of the most revealing parts of the experience is how different they can be. This is why single barrel bottlings are interesting too. I've participated in private barrel selections at several distilleries and had the same experience. Even within a brand profile there is a lot of variation. So, yes, it is possible that the bottle of Old Whatever you bought last week tastes a little different from the one you bought two years ago.

Matching a brand's profile is how whiskey-makers ensure consistency from batch to batch and no taster for that purpose works better than a human one. The large producers typically have a rotating panel of tasters, maybe 30 to 40 people. They are employees who normally work in some other part of the operation. They receive special training and every few weeks they participate in a tasting.

It's a little different from what we did, as we were given three choices and asked to pick the one we liked best. Tasters at the producer are usually given a glass of the standard and two candidates, and asked to pick the candidate that best matches the standard. Or they may be given three or four candidates and asked to rate each one's similarity to the standard on a four-point scale.

Every company does this for every brand they sell, but it's fair to assume they use more care with their best-selling and highest-priced products than they do with their cats and dogs. Still, it's reassuring that humans still do this job better than any known machine.

Booker's puts the batch number on the label. The batch I helped select will be Batch No. 2014-4.