Friday, April 20, 2018

Can Maturation be Slowed Down for Extra-Old Whiskeys?


Deep inside Buffalo Trace's perfectly innocuous Warehouse P is
 an unexpected sight, a huge silver door. What could it be?
Let's have a look, shall we?

What's this? Whiskey barrels? In a giant refrigerator?

Yep.
What happens when you age whiskey for more than about 15-years in a conventional Kentucky warehouse? Most of it goes to heaven. When distilleries harvest their oldest barrels, many come out dry. The rest contain a mere fraction of what went into them originally.

But what is left often can be sold for hundreds, even thousands of dollars a bottle.

It is no secret that barrels for products such as Pappy Van Winkle Bourbon come from the lowest, coolest parts of the warehouse, where they age slowly. In Scotland, some whiskeys are aged for 50 or 60 years, to great acclaim. Scotland is a much cooler climate than Kentucky. What if you could change that? Such as by storing barrels in a warehouse that is held, year-round, at a constant temperature of 45℉?

It is just an experiment now, but the new refrigerated warehouse at Buffalo Trace can hold about 400 barrels. Some of the barrels in it now already have a few years on them, others are newly filled.

Forty-five degrees is pretty chilly, and keeping the temperature constant means there is no cycling, the heating and cooling process that keeps liquid moving through the wood, where it picks up sugars and other goodies. What if, at 45℉, nothing happens? "Then we'll try 50℉," says Sazerac CEO Mark Brown (pictured).

Research conducted elsewhere on the Buffalo Trace campus, at the experimental Warehouse X, has shown that the temperature in an unheated Kentucky warehouse can range from -5℉ to 105℉ over the course of the year. All of the new warehouses Buffalo Trace is building are insulated and heated. In Warehouse P, they're going the other way, holding the maturation process back as much as possible.

Imagine a 50-year-old bourbon.

Monday, April 9, 2018

Don’t Worry Too Much About Those Whiskey Tariffs


Rest easy, little darlings. Rest easy.
Unwelcome as it is, China’s tariff on American whiskey won’t cause much damage.

Exports are important to America's whiskey producers. The United States exported $1.63 billion worth of distilled spirits products last year, most of it whiskey, most of it from Kentucky and Tennessee.

Less than $9 million of that came from China.

Naturally, whiskey producers would be happier with no tariffs. They would rather hear that China has dropped its existing 10 percent tariff on imported whiskey and opened up even more. China is a vast and largely untapped market for imported luxury goods such as whiskey. The industry has been talking about it for more than a decade, but not much has happened. A brief Cognac boom was stifled by President Xi Jinping’s anti-corruption drive. China's domestic spirits industry is booming.

This budding trade war certainly won’t help American whiskey producers, but Kentucky will feel more pain from the soybean tariff.

Much more significant for whiskey producers would be retaliatory tariffs by Canada, the United Kingdom and the European Union. Canada is the biggest foreign market for American spirits at $198.2 million in 2017. Throw in our other NAFTA partner, Mexico (#9), and it’s $242.8 million. The U.K. is ranked second at $177.9 million. The five largest E.U. countries combined contribute $452.1 million a year. Those three trading blocks alone account for more than half of U.S. export income from spirits.

Pressure on sales to those places will hurt and hurt right away.

But even there, with supplies as tight as they have been these last few years, some easing of export growth might be welcome, at least in the short term. It would give producers some breathing space and allow them to build up inventories and pay a little more attention to the domestic market. It might lead to better retail availability at home and maybe even some price moderation, both of which would be welcomed by American whiskey enthusiasts, if not by producers. Isn’t that what ‘America First’ is supposed to mean, after all?

Longer term, and across the whole economy, tariffs and trade wars are mostly bad. The hit will fall hardest on American consumers but many U.S. businesses will suffer. Many Americans will lose their jobs. For producers and consumers, the United States always does best in open markets. That is an opinion, of course. You may consider me a free trader.

The desirability of open markets is even more clear with bourbon whiskey and Tennessee whiskey, because they must be made in the United States. They are products the world wants and wants now. We can’t miss our moment. Anything that makes it harder to satisfy worldwide demand for American whiskey is bad.

But if there are tariffs, we will deal with them, and try to make the best of it. When life hands you a lemon, you might as well make a whiskey sour.

Thursday, April 5, 2018

After 30 Years, the Photographs of Ray Flerlage Are Right Where They Belong


Me and Ray in 2000. Photograph by Marc Pokempner for the Chicago Reader.
My personal history with the photographer Ray Flerlage began 30 years ago at the Chicago History Museum (CHM). I was doing photo research for Donna Lawrence Productions and thought CHM would have a big collection of blues photos. They didn't. "You want Ray Flerlage for that," the archivist told me.

I called Flerlage. At first he wasn't cooperative. I learned later that he was depressed. I persisted and it turned out the attention and interest in his photographs was exactly what he needed. His renewed enthusiasm about his own work led, in 2000, to publication of his book of photographs and remembrances, Chicago Blues as Seen from the Inside. Lisa Day, a renowned film editor ('Stop Making Sense,' 'Hail, Hail Rock 'n' Roll'), discovered Ray's work while editing Martin Scorsese's Eric Clapton film, 'Nothing But the Blues.' Day was the driving force in getting Ray's book published.

My smaller contribution was with my own 1995 book, Blues Legends, which also featured Ray's photographs extensively.

With publication of his book, Ray learned that he had inspired an entire generation of young photographers, including Marc Pokempner, who took the one above. Ray had mobility issues and didn't like to receive guests at his South Side home, so I generally took him wherever he needed to go, such as book signings. For interviews he liked Valois, a modest Hyde Park restaurant also favored by President Obama.

Ray died in 2002. His wife, Luise, died one month later. Her nephew was responsible for the estate. I made some suggestions about the collection (the Smithsonian was interested), but eventually lost contact with him. Recently, I was delighted to learn that, in 2016, CHM acquired the entire collection of 45,000 images, shot from the late 50s through the early 70s, as well as Ray's papers. Sometimes things work out exactly as they should.

This coming Saturday, the museum’s first full-scale Chicago blues exhibit, 'Amplified,' will open and it is built around Ray's photographs. Joy Bivins is the curator. (The Chicago Tribune has a preview here.)

Tuesday, April 3, 2018

MGP: 100% of Our Electricity Will Come from Wind



The production of whiskey and other distilled spirits has a significant impact on the environment. Distilleries use a lot of water and energy, and generate a considerable amount of waste. Environmental sustainability is a constant challenge for producers.

MGP is a leading U.S. supplier of premium distilled spirits and specialty wheat proteins and starches, best known by readers of this space for its whiskey distillery in Lawrenceburg, Indiana. MGP has embarked on a major renewable energy initiative, to source 100% of its electricity needs from renewable wind power, which is abundant in MGP's home state of Kansas.

“We are proud and excited to enter into this agreement, which represents a significant step in our efforts to realize both the direct and overarching benefits of renewable energy technologies,” says MGP President and CEO Gus Griffin. “Among these is our ability to take on a more prominent and proactive role in further supporting environmental sustainability through greater use of clean energy. This initiative is consistent with the long-term view we take for our business, and reflects our enduring commitment to our communities and social responsibility.”

The three-year agreement is with Westar Wind, a Green-e certified program offered by Westar Energy. As a result, total electric usage at MGP’s facilities in Atchison, Kansas, and Lawrenceburg, Indiana, will be offset by green energy provided by Westar’s wind resources in Kansas.

Under the agreement, which can be renewed at the end of three years, MGP will purchase renewable energy credits from Westar. Wind energy equal in value to the credits will then be sourced from wind farms in Kansas and added to the overall energy grid system. This arrangement makes MGP the largest Westar customer to commit to 100 percent renewable electric energy.

“Westar applauds MGP for its commitment to the environment and social responsibility,” Jeff Beasley, vice president, customer care, said. “It’s great to provide Kansas’ wind energy to help our customers reach their sustainability goals, even reaching beyond Kansas.”

As a Green-e certified program, Westar Wind is committed to delivering reliable, affordable, safe and clean energy to consumers. Green e Energy is the nation’s leading certification program for renewable energy. For nearly two decades, Green e Energy has provided oversight for voluntary renewable energy transactions in North America.

Thursday, March 22, 2018

Coming Soon, Whiskey at Walmart in Texas



The 21st Amendment to the Constitution, which repealed Prohibition, gave the states unusual authority to regulate alcohol as they see fit. Although in most ways U.S. law operates to create an 'open market' within the United States, it is different with alcohol. On top of complying with federal law, producers have to navigate through a confusing web of 50 state regulatory schemes. Chain retailers who sell alcohol (or want to) face similar challenges.

Because updating alcohol legislation is always fraught, most of these schemes have changed little since they were first put in place 85 years ago.

Peculiarities abound. In Indiana, only liquor stores can sell cold beer. In Utah, bartenders have to conceal their drink preparations from underage eyes. Some states still prohibit alcohol sales on Sunday.

In Texas, only individuals and privately-owned corporations can get retail licenses to sell distilled spirits. Publicly-owned corporations such as Walmart cannot. Texas is the only state that bars public corporations from selling liquor solely because of their status as public corporations.

That will change if the decision of a U.S. District Court sitting in Austin is upheld. It ruled that the public company ban and some other restrictions are unconstitutional. The decision, filed on Tuesday, won't go into effect until all appeals have been exhausted, or in 60 days, whichever comes first.

The defendants in the suit are the Texas Alcoholic Beverage Commission (TABC) and the Texas Package Stores Association (TPSA). The TPSA is the trade association of Texas package stores. It only accepts applications from package stores that are majority-owned by Texans.

As reported by ABC News, the CEO of the TPSA, Lance Lively, had this to say about the ruling: "The Texas Legislature put a system in place to ensure safe access to alcoholic beverages in Texas, and that system has worked for over 80 years. We will appeal the trial court's decision and continue to fight for family-owned liquor store owners against the world's largest corporate entities that seek to inflate their profits by upending sensible state laws that protect both consumers and small businesses."

In business, the only profits that are ever 'inflated' are the other guy's.

Consumers, of course, are expected to benefit from the competition Walmart and other national chain retailers will bring to the Texas market.

If you think this rule exists to keep liquor retailing a 'mom and pop' business, think again. Out of a total of 2,578 active package store permits issued by TABC, 574 are owned by a package store chain (meaning, a business holding six or more package store permits). There are now 21 such chains operating in the state. The largest, Spec’s, holds 158 permits. Since 1944, the chains have greatly increased their number of stores and volume of sales, even as the total number of package stores has stayed approximately the same. The four largest chains control about 60 percent of the market.

Is anybody in Texas crying because Specs and Gabriel's may have to compete with Walmart?

Walmart did not challenge the law that will require them to build separate liquor stores next to their existing stores. They already do this in other states that have the same requirement.

The decision describes a legal tug-of-war that has been going on since the early 1990s, in which the TPSA keeps trying to limit retail distilled spirits licenses to Texans only. That triggers what is known as the dormant Commerce Clause, which says that if Congress has the power to regulate commerce among the states, then the states lack the power to impede interstate commerce with their own regulations.

Because of the 21st Amendment, state liquor laws are a little bit different but they aren't that different. The court concluded that the sole purpose of the ban was to protect Texas package store owners from out-of-state competition, which is unconstitutional.

In its arguments, TPSA was really grasping at straws. They conceded that allowing in Walmart and other national chains would lower prices for consumers, then they argued that this is a bad thing because lower prices encourage more consumption leading to more liver disease, heart disease, strokes, and cancer, and numerous other social ills such as drinking and driving, child and spousal abuse, homicides, and suicides.

Yes, consumers, our high prices are actually good for you. (But we're not inflating our profits.)

Texans, unlike most people in most other states, are fiercely loyal to their in-state champions. Texans love all things Texas. I get that and I think it's beautiful, but you gave up some of your independence when you joined the United States in 1845, a decision I know some of you now regret.

Tuesday, March 20, 2018

Does Bourbon’s Shadow Threaten Its Future?


Baudoinia compniacensis covers an aging warehouse in Cognac.

It looks like a shadow and is casting a pall over the otherwise brilliant revival of American whiskey in the 21st century.

Tourists find it an amusing curiosity. Producers decline to talk about it. Distillery neighbors call it a nuisance and worse. There have been government actions and civil lawsuits.

Nobody knows what to do about it.

‘It’ is baudoinia compniacensis, more commonly called the ‘whiskey fungus.’ It looks like dirt. The black mold can be found clinging to the outer walls of whiskey warehouses in Kentucky, Tennessee, Canada, Scotland, Ireland, Japan, etc. It was first observed in France, in Cognac, more than 150 years ago.

Cognac wears it proudly as an ensign of prosperity. In other places it is less esteemed.

In the new issue of The Bourbon Country Reader (and the next one), we take a deep dive into all things baudoinia, the history of its discovery, the current state of scientific knowledge, and how it may be affecting the ability of American whiskey-makers and other spirits producers to take full advantage of the recent, ongoing spectacular growth in the popularity of spirits, especially American whiskey.

Baudoinia is a potential threat to all producers of barrel-aged spirits, from the largest to the smallest.

Although there is no evidence that baudoinia is a health threat, and a great deal of evidence that it is not, these days it takes more than facts to keep people from claiming all sorts of dangers.

Current Reader subscribers should receive their copies of the new issue in the next few days. New subscribers can get on the bandwagon by clicking here.

Founded in 1994, The Bourbon Country Reader is the oldest publication devoted entirely to American whiskey. It is a charming mix of news, history, analysis, and product reviews. Do you worry that advertising spending influences coverage in other publications? No chance of that here since The Bourbon Country Reader is 100 percent reader-supported. It accepts no advertising.

To experience The Bourbon Country Reader for yourself, you need to subscribe. Honoring history, The Bourbon Country Reader still comes to you exclusively on paper, in an envelope, via the USPS.

A subscription to The Bourbon Country Reader is still just $20 per year for addresses in the USA, $25 for everyone else. The Bourbon Country Reader is published six times a year, more-or-less, but your subscription always includes six issues no matter how long it takes.

Click here to subscribe with PayPal or any major credit card, or for more information. Click here for a free sample issue (in PDF format). Click here to open or download the free PDF document, "The Bourbon Country Reader Issue Contents in Chronological Order." (It's like an index.)

If you want to catch up on what you've missed, bound back issue volumes are available for $20 each, or three for $50. Each volume contains six issues. That's here too.

If you prefer to pay by check, make it payable to Made and Bottled in Kentucky, and mail it to Made and Bottled in Kentucky, 3712 N. Broadway, PMB 298, Chicago, IL 60613-4198. Checks drawn on U.S. banks only, please.

Go ahead and subscribe. It's fungus!

Thursday, March 15, 2018

What Is Sazerac Doing in Tennessee?


A rendering of Sazerac's proposed Tennessee whiskey distillery in Murfreesboro.
Last fall, Sazerac announced its interest in a 55-acre parcel of land in Murfreesboro, Tennessee, on which to build a new Tennessee whiskey distillery. Nothing was said at the time about how this might affect Sazerac's existing distillery in Newport, Tennessee, where distillers John Lunn and Allisa Henley have been making Tennessee whiskey since last June. On March 1, USA Today reported that even as Sazerac's plan works its way toward approval by the city council, local residents are up in arms about traffic, industrial zoning so close to residential, and the dreaded 'whiskey fungus.'

But that isn't what caught my eye in the article. Baudoinia compniacensis will always be with us. What struck me was this: "Sazerac will relocate its Tennessee operations from Newport in East Tennessee." The article doesn't identify a source for that claim, and Sazerac says its plans for Newport are not finalized, so they won't comment.

'Newport' is the distillery formerly known as Popcorn Sutton. At the very end of 2016, Sazerac bought the distillery but not the Sutton brand, nor any of the spirit made there up to that point. Popcorn Sutton was a notorious moonshiner who died in 2009. Shortly after his death, his widow and one of his buddies launched a legal distilling venture in Sutton's name. In 2013, it was acquired by Mark and Megan Kvamme. He is a successful venture capitalist, close to Ohio Governor John Kasich. She became Popcorn Sutton Distilling's new CEO. The Kvammes still own the brand, which appears to be quiescent.

The Kvammes poured a lot of money into building a new distillery in Newport, near Sutton's home, and also not far from Gatlinburg and other Smoky Mountains attractions. The place is big, 50,000 square feet. The three solid copper pot stills are true alembics (no rectification section), built by Vendome. The two beer stills are 2,500 gallons each. The spirit still is 1,500 gallons. The operation also includes a 5,000-gallon mash cooker, three 10,000-gallon fermenters, and a small bottling line.

The Kvammes scored their biggest coup in 2015 when they hired John Lunn and Allisa Henley away from Diageo's George Dickel Distillery to run the place. When Sazerac bought it, they kept Lunn, Henley and their crew in place. After a few months of planning and experimentation, Lunn and Henley began production of a Tennessee whiskey of their own creation.

Then came the Murfreesboro announcement. Nothing was said about Newport, but USA Today in its recent reporting says Henley will run the Murfreesboro operation.

What Sazerac seems to be doing is logical. Newport only made sense when the distillery was all about the legend of Popcorn Sutton. That remote location might be good for tourism, but without Sutton there is no obvious tourism hook. Sazerac doesn't want to make 'moonshine.' They want to make regular, bourbon-like Tennessee whiskey to compete with Jack Daniel's and George Dickel. Murfreesboro is close to Nashville and the home of Middle Tennessee State University. It is reputed to be a great place to live and will be an easy stop for tourists on the way to visit Jack and George.

Stay tuned.