Friday, March 26, 2010

American Whiskey, 2030.

On yesterday, Gary Gillman asked the community to predict the American whiskey scene in 2030. Here's mine.

More distilleries in the U.S., rather than fewer? I hope so, but it's possible to imagine Beam Global and Brown-Forman, in the roles of Miller and Bud, as a #1 and #2 miles ahead of #3.

The cats and dogs business shreds and Buffalo Trace and Heaven Hill become mostly whiskey-makers, owned by Bacardi and LVMH, respectively. Those two along with Four Roses (Kirin) and Wild Turkey (Campari) are in the second tier, size-wise, but just like today, they're making equally as good if not better whiskey than the two giants.

Diageo gets into and out of the American whiskey business at least five times, finally getting out of it altogether, selling George Dickel to Beam, I. W. Harper to Four Roses, and Bulleit to Buffalo Trace where Tommy Bulleit (age 90) is hailed as a prodigal returned.

What's left of the micro-distilleries are actually mid-size regional producers who have strong community ties and superior relationships with local customers. Those customers rely on them for exceptional service and customized products. A few have developed excellent boutique whiskeys that are good enough to be distributed internationally.

Malt whiskey is being made in so much of the world that Scotland loses some of its hold over that style of whiskey, which becomes known as the International Style, consisting of single malts and blends made in dozens of different countries. This competes with the American Style, made mostly in America (which now includes Mexico, Canada, the Caribbean including Cuba, all of Central America, and Venezuela). The International Style is still the more popular, but the gap has narrowed.

The three-tier system is dead.

The largest producers handle their own distribution directly. Mid-size producers band together to form joint ventures to handle their distribution. Local/regional producers handle their own distribution directly. The cats and dogs business (commodity brands) becomes local again.

There are still 'distributors,' but they are transportation companies that simply handle deliveries on a non-exclusive basis. Every transaction is tracked electronically.

Lots of things are local again due to high transportation costs that render the advantages of low cost labor markets less compelling. It becomes more cost effective to produce goods close to where they will be consumed, rather than where labor is cheap.

Just as the world is a bit more developed now than it was 20 years ago, the world of 2030 is a little more developed than today. Cheap labor isn't what it used to be.

And, oh yeah, I am immortal and your king.

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