Saturday, October 20, 2012

Is White Whiskey Just About Over?

Savvy investors know that when the general pubic hears about a hot stock, that usually means it's done. Some of that is insider hubris, of course, but trends go through phases and mass popularity blunts leading edge by definition.

In one of the early reviews of Jack Daniel's new unaged rye, Kevin Gray of Cocktail Enthusiast writes that the product "helps to legitimize the unaged whiskey category." Does it? Or does it mark the beginning of the end?

Let's leave aside for a moment the absurd decision of the Tax and Trade Bureau (TTB) to classify Jack Daniel's Tennessee Rye as a neutral spirit. We all know what it is, even if the increasingly irrelevant TTB does not.

Kevin Gray is clearly a fan of micro-producer white whiskeys, especially since he thinks the new Daniel's rye delivers "easy-drinking mellowness." Everything is relative.

Whether from micros or majors, most white whiskey is simply white dog, spirit straight from the still that's hot and harsh and badly in need of long years in wood.

Gray's analysis of the marketplace is intriguing. "For Jack to be playing in this space at all means something. It shows that the [white whiskey] category isn’t just for fringe players who cannot afford to let their whiskeys sit in barrels for upwards of four years. But a category worth the interest of the industry’s biggest brands."

As he notes, Buffalo Trace, Heaven Hill, and even Maker's Mark have toyed with unaged products, but this Daniel's rye and the impending Jacob's Ghost from Jim Beam take it to a different level due to the immense power of those two brands.

Gray hopes "this doesn’t hurt the micro distillers. Companies like Death’s Door, Finger Lakes and Woodinville each make a fine unaged whiskey. But with Jack Daniel’s and others on the playing field, it could raise interest and visibility of the category as a whole, thereby helping the small guys gain a better foothold."

Or not.

One white whiskey producer confided surprise at the Daniel's and Beam moves, because he is beginning to think the whole white whiskey thing is just about played out. Whether or not it is would seem to depend on how consumers respond to the Daniel's and Beam products.

Meanwhile, micro-producers might want to think about installing filtration systems. Though still extremely harsh by fully aged whiskey standards, the new Jack Daniel's Rye is certainly milder than a typical white dog due to the charcoal mellowing all Daniel's new make receives. Often described as a jump start to aging, charcoal mellowing tempers, transforms, or removes many of the harsh congeners responsible for white dog's challenging taste. Beam's Jacob's Ghost is actually one-year-old bourbon that has been extensively filtered to remove its color and harsher flavors.

Unless you prefer a spirit that takes off the top of your head, both are an improvement over the typical micro-producer white whiskey.

Does any of this bode well for micro-producers, as Gray hopes? Or is it the death knell for their white whiskeys?

It could be both. White whiskeys may need to change. Luckily, the ability to reinvent oneself quickly should be a micro-producer advantage. Instead of trying to make their products more palatable with short aging in little barrels, micro-producers might try filtration. It's a completely natural, legitimate, and historically authentic way to process whiskey, and it doesn't take years to work.

8 comments:

Lazer said...

This is a winner for Jack and Jim, here's how:

They have the ability to get their white stuff sold all across america, anywhere the micros are, and, they have the name brand and the marketing to get people to try their's instead of the micros. Phase one complete.

Phase two: once people try it they will either say, as I did, this white stuff is horrible, I'm never going to try this again, pass me some brown, which puts the micros out of business, or two some weirdos will say, yum Jack and Jim make the best white whiskey too.

Either way, they will either lead in this category, or put it out of its misery.

Justin Victor said...

Nice article as alway Chuck. Great follow up comment Lazer. I can't argue.

I too think the writing is on the wall. The signs out in the internet ether are telling me that the "whiskey boom" has peaked and will now spend some period of time tapering off. I don't feel that whiskey will slide all the way to match popularity levels of the 80's but the days of Super Ultra and rediculously overpriced bourbons have seen their day in the sun. People I talk to are tired of the hype about bottles they never see let alone bottles they WANT to afford. Settling down with the old stand by's and affordable annual releases like those of Four Roses and Parker's Herritage collection seem to be winning out in my circles.

You Micros charging high prices for young and uninpired whiskies take note. Unless you can put out a product the big boys are not making, you may soon be out of customers.

DrinkSpirits said...

Chuck, for the record the sentiment that was posted in the Cocktail Enthusiast review was lifted directly from our review on DrinkSpirits. The editor of that piece has even admitted as such.

http://www.drinkspirits.com/whiskey/jack-daniels-unaged-rye-whiskey-review/

Please don't support a blog that is lifting other people's content.

Harry said...

I'm still baffled by the high prices unaged spirits command. It's true with unaged cognac and armagnac, too. How is it that bourbon (or any spirit) that sits taking up rickhouse space for years can wind up costing $25 a bottle, while similar spirits (admittedly not always the same exact mashbill) bottled straight away or after drastically shorter aging periods will run $40-$50 a bottle? To me, the answer is simple: novelty and phony prestige. Am I wrong? Is there any reason it costs more for unaged or short-aged booze?

Chuck Cowdery said...

Pricing is based, not on cost, but on how much the producer thinks the consumer will pay. However, products issued in small quantities have higher packaging, distribution, and marketing costs.

Dave said...

Isolation of the carbon filtration step is interesting; products that do this will allow us to determine how important that is maybe by comparing the spirits to any white dog out there.

Cocktail Enthusiast said...

DrinkSpirits, don't be ridiculous. We didn't lift anything from you. We agreed with you on certain points (which you made first), hence the link back to your site. There's a big difference between agreeing/linking to a source and lifting content.

Chuck, we appreciate your analysis. It will definitely be interesting to see the impact this has on the market.

Lenny Eckstein said...

As a small distillery owner and producer of a white whiskey, I'd implore those of you with negative opinions current white whiskey or young whiskey offerings to maintain an open mind*. Sure, there are more than a few white whiskies on the market that flat out suck. They suck served neat, in cocktails and they might even continue sucking after sitting in oak for years. That's unfortunate, but there is some really nice stuff out there too. I created a white whiskey (and have enjoyed a few others) that happens to taste really nice on it's own and works amazingly well in a properly built cocktail.

I did not bring to market a white whiskey simply because casks required a longer maturation period than my business could tollerate — it would have been far easier and more cost effective to market a gin, vodka or white rum. However, I find a properly produced white whiskey incredibly interesting and worth while offering, despite the difficulty current confusion in the market about this micro-segment.

I haven't had the offerings from JD or Beam yet but I'm looking forward to seeing what these big guys decided to offer up, how they are marketed (since they have the budgets to do so), and how they are received by the public. In the mean time, I'll keep pushing my craft though colorado liquor stores and mixed in cocktails that have converted more of the "I don't drink whiskey" crowd than you could believe.

Justin, well said: "Unless you can put out a product the big boys are not making, you may soon be out of customers." Chuck, I'm sending you a bottle of my Whitewater Whiskey for you to sample and help shape your feelings—one way or the other—on white whiskies. Always enjoy reading your angles.