Thursday, January 21, 2016
A Healthy Bourbon Business Is Good for All of Us
This week, Heaven Hill's Elijah Craig dropped its 12-year old age statement. Both Fred Minnick and Bernie Lubbers wrote about it.
The loss of age statements is mourned by bourbon enthusiasts for good reasons. We like information and age statements on labels, because they are regulated by the government, are generally trustworthy. A label age statement tells you the age of the youngest whiskey in the bottle, which is almost surely most of the whiskey in the bottle, so it's useful information. Heaven Hills says that Elijah Craig going forward will be "a composite of 8- to 12-year-old barrels," and I'm sure that's a true statement, but if it's not on the label you can't hold them to it. And since the youngest whiskey in the bottle is no longer 12-years-old it's a downgrade no matter how you look at it, yet the price remains the same.
I'm cynical by nature but as I get older I try even harder to find silver linings. I think there is one here. As American whiskey consumers, we are met with higher prices, frequent out-of-stocks, degraded products, and other irritations. What could possibly be good about that?
Like those other afflictions, the need to stretch limited stocks of older whiskey indicates a robust market and a healthy business, in which demand is out-stripping supply in just about every category. If we like bourbon and like having a bourbon marketplace in which just about every variation on the theme is available, this is the price we have to pay.
At least for now. The aging cycle means you can't ramp up bourbon availability as quickly as you can vodka but you can ramp it up over time. Because of the huge investment required, bourbon makers are cautious, but they are investing. As this becomes the new normal, availability should get better.
Consider what the bourbon market was like 40 years ago. Sales were plummeting, brands were disappearing, producers were merging, and the product was blah, pretty much all the same. Producers considered it a commodity. They were making it as cheaply as they could so they could sell it as cheaply as possible. It was a race to the bottom and a good time to drink scotch.
Today, while your favorite brand may be in occasional short supply, you have plenty of choices. Bargains are rare but depending on what you like, you can still buy a lot of very good bourbon for less than $35 a bottle. And when it comes to 'what you like,' it's pretty much all out there for you. If it's in short supply now (like bourbons aged 12 years or more), wait a while. When the business is as healthy as it is now, producers feel good about producing a lot and letting more of it get very old.
Despite the problems, it's a great time to be a bourbon fan.
While I'm referring you to recent articles, Kevin Smith has a good op-ed piece in the Louisville Courier-Journal today about what Kentucky's government needs to do to keep bourbon booming. Smith now has the awkward title of vice president of Kentucky Beam Bourbon Affairs at Beam Suntory, but I remember him as the master distiller at Maker's Mark. He may be a corporate spokesperson now but he's not a bullshitter. He makes a strong case.
I assume the bourbon barons are a little nervous right now. When Smith writes, "we’re pleased that the recent growth of the bourbon industry has been built in a spirit of true partnership with the commonwealth," he is largely talking about the previous administration, of Steve Beshear (2007-2015), a Democrat. Kentucky's new governor is Matt Bevin, a far-right Republican. While you may think of Republicans as pro-business, and Bevin ostensibly is, his base includes many social and religious conservatives who are stridently anti-alcohol. Beshear cut a lot of ribbons and handed out a lot of plaques to bourbon folks. Bevin will be watched closely and nervously, both for his actual policies and for the optics.
And while we're at it, Steve Coomes and I share both a love for Kentucky country ham and admiration for Jay Denham, a master butcher, curer, and entrepreneur who experienced a recent setback with the USDA. As people like Kevin Smith work to elevate Kentucky's bourbon business, Jay Denham is similarly dedicated to elevating the region's production of artisanally cured meat. Those are both names to watch.