Friday, May 31, 2013

Squeezing the Barrel, and the Public Purse

Yesterday was goodie day at the Kentucky Economic Development Finance Authority (KEDFA), where several well-known small-government conservative Republican distillery owners and wanna-bees lined up with their hands out. Toyota was the greatest beneficiary of taxpayer largesse ($145 million), but several bourbon companies also got a taste.

Among them was Maker’s Mark, which got $100,000 in incentives to support its $8.2 million plan to “extract additional gallons” from its barrels by introducing “a state-of-the-art rinse process” in a new facility at the distillery, according to the Courier-Journal.

Angel’s Envy, through one of its many cross-owned affiliate companies, won approval for as much as $800,000 in incentives for up to 10 years, and also $72,000 in state sales tax rebates, according to Business First.

Previously approved incentives for Michter’s and Wild Turkey were extended.

From Maker's Mark we get squeezing but from Angel's Envy, all we get is teasing.

According to its KEDFA filing, Angel's Envy estimates that within its first three years of operation, it will make a total investment of $10 million in building materials and capital equipment. The project is expected to create 40 new jobs with an average hourly wage of $25 and a total estimated payroll of $1.5 million. The proposed distillery will include a column still, bottling line, grain-handling equipment, and barrel storage, according to the Lexington Herald Leader.

The Herald Leader spoke to Chris Poynter, spokesman for Louisville Mayor Greg Fischer, who would not name a specific site but said that the city and the state have been talking to Angel's Envy about a project that would be part distillery and part visitors center for the Main/Market corridor in what is historically Louisville's Whiskey Row area, now under redevelopment.

Angel’s Envy has been teasing the distillery project for about three years, with company representatives typically saying they expect to make an announcement "soon" or in "30 to 60 days." They did it again a week ago and, as of today, have missed yet another of their own deadlines. A Louisville architecture firm has proclaimed itself the winner in a competition to design the new facility, but the company remains silent about its intentions.

Last week, a published rumor identified the site as the old Vermont American factory on Main Street opposite Louisville Slugger Field.

The Hendersons are well-liked and everyone is pulling for them, but fans need to curb their enthusiasm. Remember Willett/KBD? They resumed distilling about a year ago, but only after 20 years of promising it would happen "soon." No one wants Angel’s Envy to become the next "Distillery That Cried ‘Wolf.’"

In related news, Poynter also told the Herald Leader that there are more whiskey attractions on the way for Louisville. "We have most of the major distilleries looking at some sort of presence in downtown,” he said.

Maker's Mark has not given details about its 'new process,' beyond the KEDFA filing, but parent company Beam Inc. has been squeezing Jim Beam barrels for a few years now to produce its Devil's Cut bourbon.

Distillers have always rinsed barrels to get a little more whiskey out. Jack Daniel's was the first to take it further. Several years ago, they built a facility where they take freshly dumped barrels, fill them about 1/3 full with water, then store them for about two weeks before dumping them again. Beam took it a little further by heating the water and using a device like a paint mixer to shake the barrels. This probably accomplishes the same thing storing does for Daniel's, without the huge warehouse Daniel's had to build just for its 'super rinse' operation.

Obviously, the amount of additional alcohol extracted more than justifies the expense.

When asked if the Beam process makes the barrels less desirable for the scotch makers who get them next, Fred Noe replied, "I don't really give a fuck what scotch makers think."


Steffen said...

Ah well. Don't forget Beamglobal sits on Laphroiag and Ardmore, including the Teacher's brand :-)


Unknown said...

Excellent reporting and observations.

I couldn't agree more with the need to manage expectations. For our project, it has been a delicate dance of negotiations between state and local government, and being restrained about what we release as to keep everyone informed, but not jeopardize negotiation positions.

It is a huge challenge, but thankfully, there appears to be daylight at the end of the tunnel.

Anonymous said...

Maker's Mark plans leave me concerned regarding finished bourbon.

First time I toured the distillery the Tasting Room served four samples.....

White Dog, Mature Maker's Mark, Over Aged Maker's Mark, and Maker's Mark 46.

Over Aged Maker's picked up too much wood.

Jim Beam Devil's Cut picks up darker color and additional wood.

Published plans to cut proof backfired.

Published plans to extract additional alcohol could also backfire.

Time to leave the bourbon alone.

Allocate 750ML's to distributors and retailers while keeping the bourbon at premium quality.

Maker's Mark could wind up like Coca-Cola.......

Change from premium sugar cane soft drink to lower quality sugar fructose soft drink.

Loose quality and reputation.

Chuck Cowdery said...

Maybe Maker's Mark won't use the recovered alcohol in Maker's Mark. Maybe they'll give it to Beam. That won't help Maker's supply issues but if Beam uses it, the extra supply still drops to the bottom line. Maybe they'll use it with Old Crow, which could use a little more wood.

Anonymous said...


"Old Crow More Wood" = Catchy Name !

Doctor Tarr said...

I suspect that the "over aged" Maker's only tastes of too much wood because they select it that way to justify not selling an older expression. I bet they could find some twelve year old barrels that would taste exceptional.

Anonymous said...

The Freddie Noe acorn apparently did not fall far from the Booker Noe tree. Telling it as he sees it just like his daddy did. Keep it up Freddie! From all your friends at the old Kentucky Wine & Spirits and Tom Johnson.

Anonymous said...

@Steffen: So???

@Anon: Catchy, but the new product--known internally as "Douche Cut"--will retail as "Hipster's Cut".


Seth said...

"Maker's Mark could wind up like Coca-Cola......."

The #1 soft drink in the world with no real competition?

I love Fred Noe's quote, but I do wonder what impact this will have on Scotch. It seems like that industry is slowly starting to appreciate wood management.

DavindeK said...

Ever wonder if anonymous comments sometimes come from producers trying to cast their competition in bad light?

Anonymous said...

I was at a bar last night and a bunch of hipster college kids ordered Old Crow shots - luckily I was able to mentally block them out and enjoy my Sazerac :-)

Anonymous said...

I must object to your use of inappropriate language. There is no reason to use the S_____ word here!

Archaeology Carl said...

Looks like Makers may be attempting an expansion. Finally.