Telling Whiskey History in Tell City (Part 1)

The Krogman Distillery in Tell City, Indiana, post-Prohibition.

Matt Colglazier is Chief Merchandising Officer at Big Red Liquors, a chain of retail liquor stores with 103 locations throughout Indiana. 

If you know the name "Krogman's," it's probably from a side project Colglazier did in 2019, called Krogman's Old Master. Although the website is still there, the whiskey is long gone. Here's the story.

"Born in Tell City, Indiana, this pre-prohibition brand is back and better than ever! Two 90 proof expressions of bourbon and rye, along with the most unique single barrel offering in the country. Bottling nine different MGP mashbills as non-chill filtered, cask strength, single barrels, which are individually selected, and each given a unique nickname. Collect them all, and taste every recipe from one of the world’s premier whiskey distilleries. Hand-bottled in Bloomington, Indiana. No BS, just full disclosure barrel proof, single barrel all day long!"

An original bottle of Krogman's Old Master Bourbon.

It was an all-Indiana project. The MGP distillery, now sometimes known as Ross & Squibb, is in Lawrenceburg, on the Ohio River at the Ohio border, just west of Cincinnati. Bloomington, where it was bottled, is about 100 miles due west of Lawrenceburg. Tell City is on the Ohio River too, about 100 miles south of Bloomington. The Lawrenceburg to Tell City route is the hypotenuse of the triangle.

But there is more to the Tell City and Krogman's story. Much more.

In 1856, a group of German-speaking Swiss immigrants met in Cincinnati to organize the Swiss Colonization Society. They acquired 4,000 acres on the Ohio River between Louisville and Owensboro in Perry County, Indiana. They named it Tell City, after the mythological Swiss hero, William Tell. 

They considered sites in Kentucky and Missouri but rejected both because of slavery. “None of our colony would ever forget the sacred principles of Republicanism so far as to make use of such a privilege,” as one society member put it.

The plan was to quickly develop an industrial infrastructure, “organized more for the common benefit of the poorer class of our countrymen, which consists mostly of intelligent mechanics and farmers," according to official documents. It became a manufacturing center, mostly for furniture. Although the company that made them folded in 2011, solid maple Tell City chairs remain popular. 

There were breweries and distilleries in Tell City almost from the beginning but the biggest and most important one was August Krogman's. 

Not everyone in Tell City was Swiss. Krogman was from Holstein, in what was then the German Confederation, where he learned brewing and distilling. There had always been German immigrants in the Americas, but the trickle turned into a torrent after the unrest of 1848. Krogman came in 1855, at age 34. He worked at a brewery in Iowa before moving to southern Indiana.

Throughout that part of the state, coal seams are very close to the surface and easy to mine. Many farmers in the region also mined coal. Krogman was one of them and used those profits to start his distillery.

Like many, Krogman's distillery made bourbon whiskey but also apple and peach brandy. August ran the distillery successfully until his death in 1905 at the age of 84. His son, William ‘Will’ Krogman, took over and ran it until Prohibition. 

Will started out strong. He owned Tell City’s biggest distillery, and his father-in-law was the city’s biggest brewer. 

But Prohibition was in the wind and Will's problems began even before the drought, next time, in Part 2.

How Likely Is a Brown-Forman, Pernod Ricard Merger?

 

A rolling billboard for Old Forester and other Brown-Forman
brands at the company headquarters and distillery
on Dixie Highway in Louisville (1936).

Today Bloomberg and Reuters, two generally reliable news sources, reported that Brown-Forman and Pernod Ricard are in talks about a merger of some sort. The reports are based on anonymous sources and neither company has confirmed anything, but the story is being widely reported with headlines like this one from the Lexington Herald-Leader. "Reports: Kentucky whiskey company Brown-Forman, Pernod Ricard in merger talks."

This pops up whenever there is upheaval in the distilled spirits industry. On paper, Brown-Forman looks like a great acquisition. It has one superior brand and a couple of pretty good ones, primarily in the American whiskey space. It's a well-run company, profitable, and not overloaded with debt. 

Pernod Ricard is the world's #2 distilled spirits company after Diageo, with annual gross sales of $12.3B. It owns Absolut Vodka, Jameson Irish Whiskey, Chivas Regal Scotch, Martell Cognac, Havana Club Rum, and a bunch of others. Though well-endowed with Scotch and Irish whiskey, it is light on American whiskey, although it owns a few craft producers such as Kentucky's Jefferson's and Rabbit Hole, West Virginia's Smooth Ambler, and Fort Worth's Firestone & Robertson, which produces the TX Whiskey brand.

Usually when these Brown-Forman merger rumors appear the finger is pointed at Bacardi, sometimes Diageo. 

Is Brown-Forman in play? Probably not, inasmuch as these rumors have always fizzled in the past. Although publicly traded, Brown-Forman is still controlled by the Brown family. They're generally happy with things the way they are. It would be very hard, perhaps impossible, for a determined suitor to force a sale.

I've always heard that the Brown family doesn't like the Bacardi family, which is why that tie-up always falters. I don't know how they feel about the Ricard family.

An observation: When I made the "Made and Bottled in Kentucky" documentary, I mentioned in the script that Brown-Forman was then "a three-billion dollar company." If I remember correctly, that was their gross sales for the previous year. That was 30+ years ago. Brown-Forman's gross sales for 2024 were $5.32B. Considering inflation, the company may actually be smaller today. That may tell you more about the distilled spirits business than it does about one particular company.

By contrast, Brown-Forman's principal rival in the American whiskey space, Suntory, is much bigger than Jim Beam Brands was 30 years ago, but they have grown by acquisitions more so than by growing their core business. Brown-Forman has bought some brands over the years, but I don't think they've bought a rival company since the 1950s, when they bought Jack Daniel's. 

Booze is a good business but it's not AI. There's not a lot of potential for growth. The market generally dislikes diversification so that leaves acquisition as the only path to growth, and the liquor business seems to be hard on its #2. When Diageo passed Seagram's as #1 at the end of the 20th century, Seagram's went out of business.

One peculiarity of the American whiskey business is that the four largest distillers, who together make about seventy percent of America's whiskey, are all closely held. Some of Brown-Forman's stock is publicly traded. The other three, Suntory, Sazerac, and Heaven Hill, are entirely family owned. In all three cases, the principal shareholder is a man in his 80s. 

Stay tuned.

UPDATE: Late today, after this posted, Brown-Forman confirmed that it is exploring "a merger of equals" with Pernod.

Pride Goeth Before the Fall

 

Fawn Weaver and company, startled by the Harold Washington
animatronic at the DuSable Museum in Chicago, June 25, 2024.

The Uncle Nearest saga began eight years to the day before the above picture was taken.

That was when Clay Risen revealed Nathan 'Nearest' Green's story to the world, or at least to readers of the New York Times, in an article headlined "Jack Daniel’s Embraces a Hidden Ingredient: Help From a Slave."

Fawn Weaver credits that article with inspiring her to create the Uncle Nearest whiskey brand. These days, she and the brand are in a heap of trouble.

Eight years is a good age for American straight whiskey. At least to my taste, eight to twelve years is the sweet spot for whiskey aged in new, charred oak, which bourbon and whiskeys like it must be.

But I digress.

To build a premium whiskey brand from nothing to approximately 150-thousand cases a year seems like a remarkable accomplishment, especially for someone with no previous industry experience and little more than a good story. The liquid, though perfectly fine for what it is, is not extraordinary. That's not why people buy it. It's the story or, I should say, stories, Green's but also Weaver's. 

They are inextricably linked.

From the beginning, I've been impressed by Weaver. She seemed to make all the right moves and experience nothing but success. Seeing her perform in person, during her 2024 book tour, just increased my estimation, even though by then I had heard troubling rumors that all in Tennessee was not as it appeared.

But, in person, Weaver absolutely owns the room. She's dazzling. She casts a spell and makes you want to believe. She held her own last night and two weeks ago on ABC's "Shark Tank" TV show. (Both episodes were recorded last summer, before the current troubles.) 

There have been many facts and counter-facts floating around. Weaver is all over social media but the receiver and the bank she owes $100M+ to only speak through their filings with the U.S. District Court for the Eastern District of Tennessee, where Case No. 4:25-cv-38 is being adjudicated.

Let's focus on that $100M number, which is closer to $200M when you add the unsecured creditors. I have it on good authority that she raised a similar amount, about $200M, from investors. Suddenly, that 150-thousand cases per year after eight years doesn't seem so impressive, if they spent $400M to get there. For all intents and purposes, the company is broke. Like everything else, the value of its tangible assets is in dispute, but it's way south of $100M, let alone $400M.

Even more disputed is the value of its intangible assets, specifically the Uncle Nearest brand, which ranges from zero to infinity.

My previous post on this subject was a reaction to those who assume the whole thing was a scam from the beginning. If it was, it was a poor job, because that money appears to be gone and not in anybody's pocket. Judge Charles Atchley Jr., who is presiding over the case, used the "out over your skis" idiom at one point. Based on everything we know, that seems as good an explanation as any. 

Judge Atchley is expected to rule soon on Weaver's motion to end the receivership and the receiver's motion to add seven other Weaver businesses to the package.  

Weaver's latest gambit, filing bankruptcy for a company she no longer controls, which didn't last 48 hours, and also filing a defamation suit against the bank which, even though she is a Californian whose company is in Tennessee and the bank she's suing is in Kentucky, she filed in New York. It all just seems weird at this point, like she's grasping at straws. 

Self-confidence will only take you so far. 

Don't Judge Uncle Nearest Too Harshly

 

The Uncle Nearest Distillery in Shelbyville, Tennessee.

I'd like to take a moment to offer some perspective on the Uncle Nearest situation. This is especially for folks who jumped to the conclusion that it was a scam from jump.

FAT Brands is a global franchising company in the fast-casual, quick-service, casual dining, and polished casual dining segments. Some of their better-known brands are Fatburger, Johnny Rockets, Ponderosa and Bonanza. (Those last two are revivals of brands from the 60s.)

FAT is bankrupt and their debt is so big, even debtors who thought they were safe may be impacted.

According to Bloomberg, FAT has $1.4 billion in bonds supported by just $40 million in annual earnings. Like Hooters and T.G.I. Fridays before it, FAT pledged virtually all its earnings to a debt structure that became too much to bear.

It's not the same as Uncle Nearest, of course, but in both cases the scheme fell apart when the market for the company's products suddenly changed, and they didn't have enough wiggle room in their financing to adapt.

That doesn't change anything. I'm just saying many businesses are a house of cards in the sense that a sudden change beyond their control can bring it all crashing down.