Friday, October 28, 2011

Van Winkle Watch.

The purpose here is not to tell you about the Van Winkle whiskeys. It is to tell people who already know about Van Winkle whiskeys that the fall 2011 release will be in stores before 2011 expires -- barely. Probably just after Thanksgiving. Get friendly with your whiskey monger now.

That's official, from the Van Winkles.

You should know (and this isn't from-them official) that the chronic scarcity of Van Winkle whiskey is a deliberate business strategy, not that there's anything wrong with that. By keeping supply well below demand, the company reduces its selling cost and market risk to just about zero. Nobody pressures you on price when you're on allocation, so profits are protected and predictable. They actually do increase the supply, so their profits do grow, just not by much. It's a very unconventional and conservative business model, probably suitable only for small, family-run businesses.

To reflect a bit afield, the current state of things should have us all thinking about the point at which 'reasonable profits' slips over into 'unconscionable greed.' A company like Van Winkle shows that 'get as much as you can as fast as you can' is not the only way to be successful.

Friday, October 21, 2011

MGP Acquires LDI Distillery.

LDI, the mysterious former Seagram’s distillery that makes Redemption Rye, Templeton Rye, Bulleit Rye, and several other popular whiskeys, has finally been sold. When the deal closes, its new owner will be MGP Ingredients, Inc. The press release issued today by MGP can be found here.

‘LDI’ is an abbreviation for Lawrenceburg Distillers Indiana, which is located in Lawrenceburg, Indiana, just west of Cincinnati.

Followers of this space have read about LDI before, such as here and here. A sale has been anticipated for most of this year.

Although MGP has not announced its specific plans for the facility, MGP is a public company so greater transparency is likely going forward. MGP, which stands for ‘Midwest Grain Products,’ is a long-time and well-regarded supplier of grain neutral spirits (GNS) to the beverage alcohol industry. That suggests that they will continue and probably increase LDI’s production and sale of bulk whiskey, which will be welcome news to the many non-distiller producers who rely on LDI for their products.

Based in Atchison, Kansas, MGP has a major GNS distillery in Pekin, Illinois, near Peoria. 

MGP is buying the distillery and related assets but not the nearby bottling plant, which is being sold separately. According to MGP, that deal is imminent and the distillery sale is conditional on its completion.

Not mentioned in the press release is another associated asset, LDI’s grain division in Rushville, Indiana.

Wednesday, October 19, 2011

Knob Creek Rye, Coming Not So Soon.

I heard from a reader that, at a recent bourbon tasting sponsored by Beam Inc., a company rep mentioned that they are coming out with a straight rye under the Knob Creek banner. Currently, the Knob Creek line consists of two bourbons; the standard expression and a single barrel.

I have confirmed that the rumor is true, but the release is not imminent. Look for it sometime in 2012. It will be a straight rye whiskey, but no other details are available.

Monday, October 17, 2011

Buffalo Trace On Track To Raise $200,000 For Charity.

Nearly $50,000 has been raised for charity to date through Buffalo Trace Distillery Millennium Barrel auctions. With more than two months and 100 non-profit fundraising events to go, the Distillery hopes to reach its goal of raising $200,000 for charity by the December 31st deadline.

The Millennium Barrel was the last of the twentieth century, filled at Buffalo Trace Distillery on Dec. 31, 1999 and placed in Warehouse V, the world’s smallest bonded aging warehouse, which holds one barrel.

In June of 2011, the company removed the barrel from the warehouse and bottled the whiskey, which yielded 174 bottles. Each Millennium Barrel bottle was packaged in a numbered hardwood showcase box that includes a piece of the historic barrel’s charred oak staves.

Buffalo Trace Distillery then offered all 174 bottles free to non-profit organizations wishing to raise funds for their charity. The only caveat was that the bottles had to be auctioned off by Dec. 31, 2011. Interested parties can check on upcoming charity fundraisers for their chance to obtain this piece of history here.

"Some of these non-profits have found really creative ways to raise money for their organizations," said Kris Comstock, Buffalo Trace Bourbon brand manager.

As an example, Comstock referred to the New York Cares organization that raised $6,255 by offering it as a special door prize only to premier ticket holders to their fundraising event. Several other organizations across the country have upped their dollars raised through similar creative strategies, such as bundling the Millennium Barrel bourbon with other upscale prizes.

"With more than 100 non-profits events still scheduled before the end of the year, we hope to reach our goal of $200,000 for these worthwhile causes," Comstock added.

Friday, October 7, 2011

How Maker’s Mark Was Made.

Most histories of Maker’s Mark Bourbon mention an early ad campaign, typified by the one above. “It tastes expensive…and is,” was always the headline.

Bragging about how expensive your product is can be a risky tactic, but Maker’s made it work. To understand how, it helps to understand the context.

The first barrel of Maker’s was laid down in 1954. The first bottle was sold in 1959. They were a true independent then, owned and operated by the Samuels family. They were tiny, starting from scratch. They grew slowly but steadily, almost entirely in Kentucky.

Bill Samuels Junior, whose father started the company, has said it is a good thing they were family-owned and independent then because it didn’t make much sense as a business and any real business would have shut them down.

It took, after all, 25 years.

Price was always an issue with retailers, especially in rural Kentucky, who couldn’t imagine why someone would buy an unknown bourbon for $7 a bottle when there were plenty of good bourbons for $6 and less. In the cities, where people routinely paid $7 or more for a bottle of good whiskey, it was scotch they were buying, not bourbon.

Bourbon was the working man’s drink. No one could imagine a bourbon competing directly with scotch or Cognac.

Maker’s was clearly swimming against the current. Because they were so small, they didn’t have much of an advertising budget. But they did have a story, a good one, one that they believed in. They also had a good advertising agency, Louisville’s Doe-Anderson.

Ads like the one above weren’t full-page or color. They were one-quarter page or less, in black and white. The message had to be clear and pertinent. It had to ‘move the needle.’

The “It tastes expensive…and is” ad campaign, launched in 1966, was successful because it under-promised and over-delivered, in an almost back-handed way. The ads said Maker's was expensive, but it wasn't. It was a little pricier than other bourbons but less than most good scotch or other things people might be drinking. The first time you looked at it in a store you were prepared by the advertising for it to be more expensive than it was. Perfect!

With price resistance thus overcome, they could get to sampling, and Maker’s sampled well because it had a different flavor. It genuinely was not a typical bourbon. It had a milder, sweeter flavor, even compared to scotch. It made an excellent first impression, regardless of the taster’s previous drinking experience.

After 1969, whiskey sales collapsed and the rest of the industry was in a race to the bottom. Maker’s stood apart even more. No one in the business believed you could sell bourbon with a quality claim. That was true when bourbon sales were growing and became carved in stone when sales nose-dived. No one took Maker's Mark seriously. It was still a tiny, Kentucky-owned brand.

Ultimately, Maker’s Mark was 'made' by a 1980 article in the Wall Street Journal, which described how it had been discovered by traveling businessmen, who began a word-of-mouth campaign, which led to surging sales and a chronic shortage that persists to the present.

The WSJ article told how Maker’s was making all the right moves, so it’s likely they would have succeeded anyway, but the article sure helped. It can also be said to mark the beginning of the present bourbon revival. Once it was okay to think of bourbon as a quality product, anything was possible.

The independence that had been such a large part of Maker's story was gone in less than a year. People often mistakenly believe small privately-owned companies sell out because they've hit a bad financial patch. Usually it's the opposite. They sell out because they can't afford to finance the growth their success has made possible without help. In 1981, Maker’s Mark was acquired by Canada’s Hiram Walker and Sons.

Now part of the new Beam Inc., Maker’s Mark has become the first super premium bourbon to break the one-million-case sales barrier. Its success has been built on a perfect convergence of smarts and luck. Bill Samuels Jr., since 2010 the company’s hardest-working retiree, has often said that his primary guiding principle has been, “don’t screw it up.”

So far, so good.