Much Ado About Nothing: Cane Neutral Spirits.

There is much weeping and gnashing of teeth in some quarters about something Beam Global recently did. You see, all labels for alcoholic beverages have to be approved by the U.S. Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB). Companies typically get labels approved way in advance and sometimes on the if-come.

That's what Beam did with labels for three of its blended whiskeys. The United States has this crazy rule, rejected by the rest of the world, that says a mixture of 80 percent vodka and 20 percent whiskey may be sold as blended whiskey. It's crazy but it's the rule, a political compromise made more than 100 years ago.

By vodka I mean neutral spirits. Another equally silly part of the compromise says that if neutral spirits are used, the label must say what kind of neutral spirits they are, i.e., from what raw material they were made. If made from grain it has to say grain neutral spirits. If made from fruit it has to say fruit neutral spirits. If made from potatoes it has to say potato neutral spirits. And if made from sugar cane it has to say cane neutral spirits.

This is true for any beverage that contains neutral spirits, not just blended whiskey. The same rule applies to vodka, gin and most liqueurs. That's all Beam was doing, getting labels approved that say 'cane neutral spirits' instead of 'grain neutral spirits.'

Why might they want to use cane spirits instead of grain spirits? Beam, like most beverage companies, doesn't make its own neutral spirits. Neutral spirits are a commodity, sold strictly on price. Becauses of this, neutral spirits distilleries tend to be where the raw materials are, so the companies that make grain neutral spirits tend to be in Indiana, Illinois, and Iowa; and the companies that make cane neutral spirits tend to be in tropical areas where sugar cane is grown.

Years ago the U.S. government came up with an idea to help fund development in Puerto Rico. Instead of distilleries there paying federal excise tax like all U.S. distilleries do, they pay a special federal tax that goes directly into the budget of the island's government. Eventually the U.S. Virgin Islands (USVI) got the same deal for its distilleries. Everyone was getting along fine until USVI decided to lure Diageo, the world's largest drinks company, to USVI by rebating half of the tax back to the company.

Since neutral spirits are a commodity this tax advantage gives neutral spirits produced in the islands a significant price advantage over neutral spirits produced in the Midwest, probably more than enough to offset the shipping cost. Since blended whiskeys are themselves extremely price-sensitive, blended whiskey producers such as Beam Global may have no choice but to switch to cane neutral spirits. Vodka, gin and liqueur makers will too.

To those doing the weeping and gnashing, this is a bad thing because "whiskey is supposed to be made from grain." I would argue that whiskey is not supposed to be made by flavoring neutral spirits, but that horse is not just out of the barn, it has died of old age as have all its offspring to seven generations. Since whiskey-flavored vodka can be called blended whiskey, how much can it really matter what kind of neutral spirit it is?

Some weepers and gnashers have compared this to India, which would like the rest of the world to recognize its cane-based imitation scotch as whiskey. Europe and much of the rest of the world is holding fast to the rule that not only must whiskey be made entirely from grain, and not be neutral, it must be aged in wood for at least three years. Morally, the U.S. has less of a leg to stand on but it too refuses India's appeals. Although if the Indians want to sell us very cheap cane neutral spirits we'll be glad to use it in our blended whiskeys, because there is nothing in the rules about U.S. origin either.

I'm all for calling out any producer, big or small, who does something bad for whiskey and whiskey lovers, but this just isn't worthy of our outrage.

What is Indian Whiskey?

The United States consumes a lot of whiskey. Know what country consumes more? If you said, “India,” you would be both right and wrong.

Probably you have heard about the booming Indian economy. Even in the current malaise, India is booming and creating unprecedented economic growth. That’s thirsty work. India has a domestic distilled spirits industry but her vast consumer markets are being eyed eagerly by the big international drinks companies like Diageo and Pernod Ricard too.

Whiskey is very popular there. Unfortunately, most of what they call whiskey is not the same as what we call whiskey.

Although a few snobs believe that only a distillate made from 100 percent malted barley should be called whiskey, most Americans and Europeans agree that whiskey is any spirit made from grain, distilled at a relatively low proof, and aged in wood. India prefers a more expansive definition. They recognize our kind of whiskey but they call un-aged spirits made mostly or entirely from sugarcane whiskey too.

Not only do they call it whiskey, they color and flavor it so it resembles scotch, which was introduced to India during the British colonial period. Many brands have Scottish-sounding names and use Scottish imagery in their packaging.

India has made distilled spirits from sugarcane for centuries, since even before the Raj.

Neither the European Union (EU) nor the United States will permit non-grain whiskey to be imported into our markets and sold here as whiskey. This is only a problem because it is getting in the way of our desire to sell our whiskey to them. EU regulations have become very influential internationally and other countries have adopted them too, creating a de facto world standard, with India on the wrong side of it.

In 2007, India’s UB Spirits Company bought Scotland’s Whyte & Mackay for $1.5 billion. The sale included 115 million liters (30.4 million gallons) of aging scotch whiskey. The Whyte & Mackay line was launched in India early this year and already has a 13 percent market share, according to the new CEO.

Not all domestic Indian ‘whiskey’ needs finger quotes. Amrut is made from malted barley grown in Punjab and Rajasthan. It is a two-million case brand, big by anybody’s standards. It is available in the United Kingdom, but I haven’t seen it here.

A Question for Craft Distillers: Where’s the Craft?

All of a sudden, in the past few years, small "micro" distilleries have popped up all over the country. The first ones were associated with wineries and made brandy. More recently, and in much greater numbers, people with brewery backgrounds have begun to make grain spirits.

There is no question that these operations are universally small. A few years back, one of the big distilleries tried to pose as micro, but was quickly exposed. No, the micro distilleries really are little.

But are they really craft? Are they truly artisanal?

In most cases, the answer is no. If you add the word "traditional" to the equation, that no is even more emphatic.

To reach that conclusion, compare the practices of micro-distillers to those of America’s big distilled spirits producers, whiskey-makers such as Jim Beam, Jack Daniel’s, and Wild Turkey; rum-makers such as Bacardi and Cruzan; and brandy-makers such as Gallo, Christian Brothers, and Paul Masson. Who employs more craft, those big guys or the micros?

This critique is not across the board. A small number of craft distillers take a back-to-basics approach, with no short cuts. More common are the ones who put a lot of craft emphasis on one or two parts of the process, but also use short cuts. An even larger number use every short cut they can to make products that barely meet minimum legal requirements for distilled spirits, let alone qualify as craft or artisanal.

One issue is ingredients. Rum, by law, is a distilled spirit made from sugar cane, but for hundreds of years the actual base material in rum production has been molasses, a by-product along the way from cane juice to table sugar. Molasses can be hard to handle. It’s much easier to dissolve table sugar in water and ferment that, which many so-called craft distillers do. Bacardi and Cruzan don’t, they use molasses.

But at least the table sugar-users do their own fermentation. Many of the micro distillers who make whiskey buy their wash—beer before it has been hopped and carbonated—-from a brewery. Of necessity, this means they are making malt whiskey, like they do in Scotland and Ireland, rather than corn whiskey like Jim, Jack, and all those other guys do here.

You can’t entirely blame them. It’s what their fledgling trade association tells them to do. "Why reinvent the wheel?" asks Bill Owens, President of the American Distilling Institute.

He recommends that you put your distillery next to a brewery, contract with them for wash, and start making whiskey. There’s nothing wrong with that idea, except where is the craft in buying your way past two-thirds of the process? It’s exactly like buying frozen bread dough, baking it in your oven, and calling yourself an artisan bakery.

Every industrial-scale, grain-based distiller in America, from the makers of Kentucky bourbon, to vodka-makers, to the folks who make fuel ethanol for cars, starts the process with whole grain, but not Bill’s guys. How come?

Micro distillers who make brandy and rum don’t mind fermenting, but it’s harder with grain. Fruit juice and molasses are fermentable just as they are, but grain starch is not. It must be converted. For that you need enzymes. In Scotland, the law requires distillers to use endogenous enzyme systems only. That’s a fancy way of saying you have to use malt, which is barley that has been malted, i.e., sprouted, to produce the necessary enzymes.

Some large American whiskey distillers use supplemental enzymes, which are permitted here but not universally used. No one has abandoned endogenous enzyme systems altogether except micro distillers, not because it’s better—-it isn’t-—but because it’s easier.

Another issue is equipment. Most micro distillers make a big deal about how they use pot stills, not column stills. What they actually use are hybrid stills. They are batch process, like pot stills, but instead of an alembic (the simple, one-piece still top that’s shaped like a tear drop), their pots are topped by...columns, exactly like the ones that give column stills their name.

Part of the problem is that these hybrid stills aren’t designed to make whiskey the way Americans make whiskey. They are European and designed to make brandy and other fruit spirits. They will distill a grain wash okay, into whiskey or even vodka if that’s what you want, but they can’t handle an American distiller’s beer, which contains husks and other undissolved grain solids. Even a wash made from corn and rye, instead of just malt, will give these stills fits.

Then there’s aging. Except for vodka and other clear spirits, most distilled spirits are aged in oak barrels, typically for years, occasionally for decades. Most micro-distillers can’t wait that long, so they sell unaged or very lightly aged products. There’s nothing wrong with that. There always have been unaged and young spirits sold, but aging is another part of the craft and most micro distillers give it short shrift. Virtually all bourbon whiskey is aged for more than four years. I know of only one micro distillery whiskey aged that long and it costs $300 a bottle.

It gets worse. Some micro distillers don’t make anything. They buy bulk spirits and bottle them. They have a distillery, or plan to; it’s making something, or will soon. The bulk goods are just a bridge until their own product is ready for sale, they say, but several have been saying that for years and not exactly publicizing how the only product they sell is one they didn’t make and probably can never duplicate.

The moral of this story is caveat emptor, let the buyer beware, especially if you think you are buying an artisanal product and that matters to you. Do some research, ask questions, be skeptical. Most producers won’t lie to you outright, but you have to ask the right questions and listen to the answers very carefully.

Do these practices make these distillers, or their products, bad? Not necessarily, but that’s not the question. The question is, are these practices craft? Are they artisanal? Are they traditional? That’s where many of these new micro distilleries have issues.