Saturday, June 29, 2013

The New Bourbon Country Reader Is On Its Way

Well, it's at the printer now, but should be in the mail in a couple of days. I'm calling it June, rather than July, because it's already a month late (should have been out in May) and that will push me to get the next one out in August.

I've always promised that The Bourbon Country Reader comes out every-other month 'or thereabouts.' Whiskey writing, like whiskey itself, can't be rushed. We refuse to chop it up and put it into a pressure cooker. The Reader contains no advertising and no reprinted press releases or other filler. No pretty pictures either, just original information about American whiskey that you won't find anywhere else.

The Bourbon Country Reader lets me go into more depth on subjects I may touch on here on the blog. The lead story this time is a good example of that. It is headlined, "Who Makes All That Non-Distiller Producer (NDP) Whiskey?" It's a story that asks something from you, the reader, too. Nobody wants to talk about this subject, especially on the record, but when you consider the whole body of available evidence, you can reach some interesting conclusions. You just have to think about it.

I suggest you do so over a good bourbon or rye.

If you care about what you're drinking and believe 'who made this' is just about the most fundamental question you can ask, you'll want to read this article.

In this issue, we also compare and contrast the two American Whiskey giants, Brown-Forman and Beam.

If you're keeping score, the last issue of The Bourbon Country Reader came out at the end of March. As I wrote then, there is so much going on in American whiskey these days, it's hard to make deadlines. 

The simple pitch is this. If you're into bourbon, you really should subscribe to The Bourbon Country Reader. It is produced and delivered the old-fashioned way; ink on paper, in an envelope, delivered personally to your home or office by a uniformed representative of the United States government.

The Bourbon Country Reader is always independent and idiosyncratic and has no distillery affiliation. It makes a great gift. Subscriptions to The Bourbon Country Reader are $20/year for U.S. addresses and $25 (a new lower price!) for everybody else. It is published six times a year. Well, maybe not, but your subscription always includes six issues.

Click here or on any of the copious hyperlinks above 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 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.

Friday, June 28, 2013

MGP of Indiana May Be Sold...Again

Steve Watkins, in the Cincinnati Business Courier, reports that "a battle is brewing involving the whiskey distillery in Lawrenceburg." He's referring to MGP of Indiana, the former Seagram's distillery that distills and ages the whiskey for Templeton rye, Old Scout bourbon and rye, Redemption bourbon and rye, Bulleit rye, George Dickel rye, and other bourbon and rye brands too numerous to mention.

The facility is actually two distilleries. The larger one makes neutral spirits and gin, the smaller one makes whiskey.

Seems that last week the parent company, MGP Ingredients, based in Atchison, Kansas, announced that its 2013 Annual Meeting has been postponed indefinitely because of a proxy fight initiated by a voting trust that controls 75 percent of the company's voting shares.

The dissident shareholders have filed a proxy statement with a competing slate of directors. They want a new CEO too. In late May, the MGP board appointed a committee of six independent directors to "review strategic alternatives," including sale of the Lawrenceburg distillery the company acquired in October of 2011.

The dissidents are led by members of the Cray family, who own a lot of MGP stock through various family-run entities. They are all descendants of Cloud L. Cray, who founded MGP in 1941. In their proxy statement, they expressed "growing concern with the lack of profitable growth, deterioration in the corporate culture, efforts to sell certain parts of the Company’s business, efforts to amend the bylaws that would limit accountability to shareholders and increase the power of the Chief Executive Officer (“CEO”), and the level of compensation paid to the Chairman of the board of directors and the CEO of the Company."

None of this appears to be directly aimed at MGP of Indiana, except that Lawrenceburg has been positioned by the current regime as the cornerstone of its effort to get the company back on track, a course which the dissidents oppose.

The distillery has 19th century roots but was acquired by Seagram's near the end of Prohibition and completely rebuilt thereafter. About ten years ago, when Seagram's was acquired and dismantled by the tag team of Diageo and Pernod-Ricard, Lawrenceburg went to Pernod. A few years later, Pernod announced it would sell the plant if it could or close it if no buyer was found. Angostura bought it. When the worldwide economy went into crisis in 2008, Angostura's parent company, CL Financial, collapsed and had to be rescued by the government of Trinidad and Tobago, where it is based. In the restructuring that followed, ownership of Lawrenceburg, as well as the mothballed Charles Medley Distillery in Owensboro, Kentucky, was transferred away from Angostura to another arm of CL, which found a buyer for Lawrenceburg in MGP. The sale price was $15 million.

MGP mostly makes neutral spirits, starch, protein, and other products from corn and other grains. It hoped to move into a higher value commodity business with the Lawrenceburg acquisition, a strategy the dissidents apparently oppose.

Since Lawrenceburg is the only major distillery that exclusively makes whiskey for non-distiller producers (NDPs), it is highly valued by that segment of the whiskey industry. It recently expanded its portfolio of whiskey recipes from five to eleven and has ramped up production.

Thursday, June 27, 2013

Woodford Reserve Announces $35 Million Distillery Expansion

Kentucky's taxpayers are kicking in $3 million of the announced $35 million expansion at the Woodford Reserve Distillery near Versailles. One great thing about these state-financed incentives is that they get the company on the public record about exactly what they plan to do, making it easier to report that information to the bourbonially-curious.

This expansion will increase distilling and warehouse capacity at the historic distillery, established in 1780. The plan was announced today by Governor Steve Beshear. Details remain to be confirmed but Woodford has in the past talked about adding a second set of three Forsyths stills and the necessary fermenters, cookers, and other ancillaries to support them, which would essentially double capacity. Today's announcement also mentioned a new barrel aging warehouse and bottling line expansion.

In the currency of state government, the 15 full-time jobs it will add is the key metric, bringing Woodford's staff count from 30 to 45.

As you might imagine, whiskey making is big business in Kentucky. The Kentucky Distillers' Association estimates that more than 8,600 jobs in Kentucky are connected to distillery-related enterprises, generating approximately $413 million in payroll.

Monday, June 24, 2013

In Praise of Consistency

Emerson famously wrote, "a foolish consistency is the hobgoblin of little minds." He was talking about liberating yourself from conformity or, said more prosaically, advising you to "think for yourself."

The quote is often repeated without the word "foolish," which changes its meaning completely. Consistency is not always bad. It is often very good, in whiskey-making for example.

Many people today are talking about Reid Mitenbuler's Slate article "Craft Whiskey Isn't Necessarily Better." It's a familiar litany of the young movement's sins, with a caution to consumers. Just because that bottle of whiskey you've never seen before has a cool name and bottle, and a local address, doesn't necessarily mean it's worth your $40. Not only might it not taste good, it might not even be what it appears to be.

One of the people talking about Mitenbuler's piece today is Scott Spolverino, who blogs as 'In With Bacchus.'

Here he explains why, to the chagrin of his friends, he likes Budweiser. "I like Bud matter where you go in the country, in the continent, hell, in the order a Bud and you get a Bud. You don't get something that tastes sorta like Bud. You get a Bud. It may not be the best out there but it is consistent. And being consistent is much, much, MUCH harder than anyone gives it credit for. To be able to reach for a bottle of Booker's or Old Granddad or Redbreast and have it taste exactly the same is not only impressive from a distillers point of view...but it's comforting from a consumer's point of view. Sometimes I want to try something new, different, exciting and I'm willing to pay for it. But I don't want to try something new, different, and exciting EVERY time. The craft distilling movement has major troubles with consistency." (Emphasis mine.)

The major whiskey producers go to great lengths to ensure consistency. They take samples from every stage of production, up to and including the product as it is released. They do this every day and keep those samples for years. The sample archives are an amazing sight, row upon row of identical bottles with plain white labels on the front. Want to know what Jim Beam white label tasted like on March 6, 1973? There's a bottle for that.

Every master distiller at every major distillery has a story wherein his predecessor gives him a simple piece of advice: "Don't change a damn thing."

They do change things, of course. Parts wear out, production needs to increase, costs need to be controlled, governmental regulations (environmental and the like) need to be conformed to, new technology needs to be applied, but unlike with most businesses the quest isn't to constantly improve the product. It is to make the necessary changes without altering the product itself in any material way.

People often are surprised to learn that most major whiskey producers make very few different products. They may have many different labels, but only a couple of different distillates. Buffalo Trace, for instance, which makes dozens of different labels, uses just four whiskey recipes. Same with Heaven Hill. Jim Beam makes three. And so on.

The reason for this is because in each case, that company believes they are making the best whiskey it is possible for them to make. Wild Turkey makes one bourbon and one rye. The only reason some make more is because they acquired a company that was making the best whiskey it knew how to make and they kept it going. This is even more common in Scotland than here.

Today's new, small distilleries don't necessarily have to do everything the way the majors do. There would be no fun in that. But if they ignore the lessons the majors have learned they do so at their peril. The worst hubris to come from this young movement has been its claims that, on day one, they were beating the majors at their own game. They weren't. And they still have a long way to go.

Saturday, June 22, 2013

Visit Louisville -- Next Year

With the summer travel season in full swing, many will head for America's whiskey country. If you're coming south from just about anywhere in the Midwest, you'll likely enter through Louisville, Kentucky's largest city, long known as the Gateway to the South.

Should you stop, or keep going?

Unfortunately, when it comes to whiskey tourism, Louisville right now is all coming attractions.
  • The Evan Williams Experience is still under construction
  • Michter's is stalled because their building is unstable. 
  • The most likely site of the Angel's Envy distillery is known but not confirmed. 
  • The Bulleit Experience at Stitzel-Weller has been ready for two years, but is still closed to the public. (They do industry stuff there.) 
  • Another major welcome center is widely rumored but not yet announced. 
Louisville is still a great place to stay, eat, and drink, and it has many other attractions and amenities the rest of the state lacks (except Lexington), but most of its whiskey attractions are still pending.

Maybe next year.

Monday, June 17, 2013

The Power of a Salacious Name and Well-Timed Heist

The internet is a content pig and, like the animal itself, not particular about what it eats. Its taste for news runs more to the now-defunct News of the World than CNN. To be blunt, most of what passes for news on the internet is garbage.

This past weekend, especially if you favor talk about whiskey, you heard about Chicken Cock Whiskey, probably for the first time. This is not Fighting Cock Bourbon, a fine Kentucky Straight Bourbon Whiskey made by Heaven Hill. Chicken Cock is a brand new flavored whiskey product from serial distilled spirits entrepreneur Matti Antilla (Cabana Cachaca), whose business (Abb Partners, LLC) appears to be based in Florida although Chicken Cock has a Charleston, South Carolina address, perhaps because the University of South Carolina's sports mascot is the gamecock.

Chicken Cock comes in an aluminum bottle, in three flavors: Cinnamon, Southern Spiced, and Root Beer.

For readers who prefer whiskey-flavored whiskey, you might want to know that 'flavored whiskey' was a moribund classification until recently. Because whiskey is hot right now every trendy, new youth-oriented spirits product wants to be called 'whiskey.' According to the regs, 'flavored whiskey' is whiskey to which natural flavors have been added. Invariably, the whiskey part just barely meets the minimum requirements for use of that term.

Flavored whiskey can be bottled as low as 30% ABV (60° proof) but Chicken Cock is 43% ABV (86° proof).

On Friday, it was reported that on June 10, a truck carrying 10,000 bottles of Chicken Cock on their way to a Texas distributor was stolen from a truck stop in Florence. No reports of this robbery appeared in the media until after Antilla dropped his press release, publicizing the theft and offering a $10,000 reward for the return of his whiskey.

Most outlets just re-printed the press release or paraphrased it, questioning nothing. No one, for instance, seems to have looked at a map. Charleston to Florence is a funny way to get to Texas.

Some of our friends did good work. Davin de Kergommeaux explored the brand's legitimate history, which Antilla has been clever enough to appropriate. He researched the term 'chicken cock,' a regional synonym for 'rooster,' and also found a Canadian connection. Fred Minnick talked to Antilla and determined that, although Antilla's press release says the truck was coming from his Charleston "distillery," Chicken Cock is a non-distiller producer. Minnick also called the Florence County sheriff, but they haven't returned his calls.

Stories like this often disappear. What catches the content-hungry eye is the vaguely salacious name, the sensational crime, and the plea to the public for help. The resolution, when it comes, probably will only be reported if Antilla publicizes it. That is what the news business has become.

Realistically, the loss to Antilla is about $60,000, less whatever he can recover from insurance; or $10,000 if he gets the shipment back and pays the reward, but he got a million dollars worth of publicity. That, boys and girls, is how it's done.

Thursday, June 13, 2013

Some 'Right Now' Solutions to the NDP Whiskey Problem

Who made me?
When brands are created using bulk whiskey from a major distiller but the producer tries to convince you they're a craft distiller, that hurts real craft distillers. It also hurts consumers, who pay for something they aren't getting. 

Here are some easy steps craft distillers can take to protect consumers and themselves and separate the makers from the fakers.

First, create a very simple statement, one a Potemkin distillery can't make. If craft distillers can informally agree on a standard wording, all the better. Then put it on everything, certainly on your product labels, web site, Facebook page, etc.

Here's what Balcones uses: "100% of Balcones whisky is mashed, fermented and distilled at our distillery. We never resell whisky from other distilleries or source aged whisky barrels for blending under the Balcones label. This is authentic craft whisky. It has not been chill-filtered, colored or otherwise unnecessarily tampered with to ensure that its full aroma and flavor are preserved. As a result, you may notice a slight haze or sediment in the bottle - signs of the rich oils and esters that we have not removed so that your whisky can be enjoyed at its best."

The last two sentences are probably superfluous, but the rest is right on target.

Second, start putting 'distilled by' on your label. Stick your DSP number in there too. Although it's usually not required, it's something the feds regulate so if someone falsifies a 'distilled by' statement, they could lose their license.

Third, whatever you do, keep it simple and keep it standardized. Do it exactly the same way every time. Then publicize it. Send every whiskey blogger the press release. Encourage your distiller friends to do it too. Everyone can tell consumers that all you have to do when you see a new 'craft' product is look for that statement. If you can't find it you should be very, very suspicious.

Who knows, that might be all it takes.

Tuesday, June 11, 2013

The Knob Creek Bourbon Brand Is Nearly 80 Years Old. Who Knew?

This label, from 1935, was discovered by a poster on It's a real gem.

The Jim Beam-made Knob Creek we all know was part of the Jim Beam Small Batch Bourbons Collection, which debuted in 1992. No one then or since has ever mentioned that the brand was part of the company's DNA from long before that.

The label tells us that Knob Creek was a straight bourbon whiskey, bottled at 93° proof (46.5% ABV). It was distilled by the Penn-Maryland Corporation of Cincinnati, Ohio, a division of National Distillers.

Beam merged with National in 1987 and started to work on the Small Batch Collection (SBC) shortly thereafter. It is common for marketers, looking for new product ideas, to mine their corporate archives. This discovery suggests that someone at Beam took a stroll down National's Memory Lane and found Knob Creek languishing there.

It's very clear where the other three SBC names originated. Booker's was named after Jim Beam's grandson, the legendary master distiller Booker Noe. Baker's was named after the grandson of Jim Beam's brother, Park, the legendary master distiller Baker Beam. Basil Hayden's was named after one of the founders of the Kentucky whiskey industry, whose grandson created the Old Grand-Dad brand in his honor. Booker and Baker are, quite literally, from the Beam family. We knew Basil/Grand-Dad was from National and now we know Knob was too.

It was a very different world in 1987. Beam bought National primarily to obtain DeKuyper and, specifically, DeKuyper Peachtree Schnapps. Beam didn't really want the National bourbons, but neither did anyone else. Of the group, Old Grand-Dad was the most desirable because it still commanded a premium price, so at least it was profitable.

The explanation for the Knob Creek name has always been that there is a real Knob Creek, in the vicinity of Beam's Kentucky distilleries, that is tied to Kentucky's Abraham Lincoln heritage. The second and last Lincoln family farm in Kentucky was what Abe later called "the Knob Creek place." According to local tradition, Lincoln's father was a seasonal hand at a nearby distillery in what is now Athertonville, also along Knob Creek.

There's also a famous shooting range on and named after Knob Creek. It's the site of CMT's "Guntucky." (With Fort Knox nearby, shooting ranges around there are a little different.)

National Distillers was formed in 1924 from what was left of the Whiskey Trust. Throughout Prohibition National bought closed distilleries, along with their brands and whiskey stocks, for pennies on the dollar. National had a medicinal whiskey business and made industrial alcohol, but they were also betting that Prohibition would be repealed. When it was, National held about half of the aged whiskey in the U.S., and owned about 140 different brands.

The Penn-Maryland Corporation was a joint venture between National and another remnant of the Trust, the U.S. Industrial Alcohol Company, based in Peoria, Illinois. The original plan had been for Penn-Maryland to produce blended whiskey while National specialized in straights, though obviously there was some cross-over. By 1936, National had taken over U.S. Industrial Alcohol and dissolved Penn-Maryland.

The 1987 merger of Jim Beam and National was really an acquisition by Beam. 'Merger' sounded better because National was the larger company. With tobacco money behind it, Beam was in much better financial shape.

Although Beam got the Knob Creek name from National, the recipe was all Beam. At the time of its introduction it was simply 9-year-old Jim Beam. It still begins as Jim Beam but now the distillate intended for Knob is taken off the still at a lower proof and they manage the Knob barrels differently, knowing they're going to age for at least nine years.

This discovery may explain the persistent rumor over the years that while Booker's and Baker's are Beam juice, Knob and Basil Hayden are Old Grand-Dad juice. Old Grand-Dad is made from a different recipe entirely, with a different yeast and a rye-heavy mash bill. Basil Hayden uses that juice, but Knob Creek does not and never did. The rumor was probably started by someone who knew Knob had been a minor National brand back in the day.

Finally, Cincinnati, where Penn-Maryland was based. If the 1935 Knob Creek was distilled in Cincinnati it was probably at the Carthage Distillery. Carthage is a community on the north side of Cincinnati, where a distillery was first established in 1893. National was originally formed with eight distilleries and Carthage was one of them. National eventually used it to make DeKuyper cordials from a neutral spirit base distilled elsewhere and Beam continued to operate it for that purpose until 2011, when it moved those operations to Kentucky.

For Marcel Proust, it was a cookie that launched a revery. For me, it's old whiskey labels.

Saturday, June 8, 2013

Bourbon Lifer Marvels at Whiskey's Renaissance

Max Shapira, president of Heaven Hill Distilleries in Bardstown, Kentucky, may be the only bourbon business CEO who was born into it. His father and four uncles owned Heaven Hill almost from the start and their descendants are its sole owners today.

So Shapira, more than just about anyone else, has experienced the business at both its top (now) and bottom (the '70s and '80s). He's a good person to comment on how stunning the current boom is to anyone who remembers the bust.

Speaking to the Lexington Herald Leader (Lexington, KY) last month, Shapira recalled that it wasn't long ago that bourbon had been virtually written off, but times have changed. "Almost an unbelievable renaissance in the bourbon category," Shapira said. "Now we're the darling distilled spirit not just of the state or the U.S., but of the world. People are enamoured of this industry."

The occasion was the formal addition of downtown Louisville's 'Evan Williams Experience' to the Kentucky Bourbon Trail. Visitor centers in downtown Louisville are the newest way the industry is reaching out to consumers, since many visitors to Kentucky's largest city would like to have a bourbon experience but don't have time to visit one of the distilleries.

Evan Williams Bourbon is Heaven Hill's flagship product and, as they like to say, the #2 bourbon in the world. They can say that, of course, because although they trail both Jim Beam and Jack Daniel's, Jack doesn't choose to call itself 'bourbon.'

Still, achieving that stature is a remarkable accomplishment for a relatively small, family-owned company. Heaven Hill stuck with bourbon and rye through the hardest times. They never even had a long shut-down like most other distilleries did. That's why they so richly deserve to reap the benefits of bourbon's turnaround now.

Thursday, June 6, 2013

The Bourbon Exchange May Be On To Something

The Bourbon Exchange, a page on Facebook, launched in April. You may have read about it here or here.

It has 732 members as of today and the page is constantly busy. If you want to know what it's all about, click on the links in the previous sentence or just click this one to go there. You may notice that the link takes you to an internet site that instantly sends you to the Facebook page. That's in case Facebook ever decides to shut them down.

Even if you don't care to engage in the sorts of transactions the Bourbon Exchange exists to facilitate (is that oblique enough for you?), the page is interesting to bourbon enthusiasts for other reasons.

First, because of the legal environment in which whiskey collectors are forced to operate, the true secondary market is suppressed. There is a secondary market for alcoholic beverages and some alcoholic beverages have significant value in that secondary market, but it is impossible to give a reasonable assessment of what that value is because there is no reliable record of transactions, except from the occasional auction.

Generally, people who participate in the whiskey secondary market are working blind, at least at first. As they gain experience and get to know other collectors they can establish a body of knowledge about past sales.

They can also learn about their fellow collectors. Trust is essential in any marketplace, but especially an illegal one. The closed environment of Bourbon Exchange encourages social interaction to help build trust. Bourbon Exchange lacks many key features of a truly open marketplace, but it does allow participants to gain experience and accumulate valuable information quickly. Fairly soon, transactions among the most active participants will begin to reflect true market values. It's a start.

Facebook is ideal for this because it's so picture friendly. The main role the Facebook page plays is as a display case. Members exhibit some of their treasures and what happens next is up to them. Values aren't discussed on line, nothing to do with buying or selling is, but other members can easily message the exhibitor through Facebook. They can do the rest of their business that way or take it to email.

What these pictures can tell the rest of us is what's out there? What do people consider desirable, valuable, or otherwise worth collecting? What are people willing to part with? How does my own collection compare?

Some of the participants are excellent photographers. It's fun to see some of the rare bottles you'll probably never touch, let alone taste. Some call it 'whiskey porn.'

There can be a cumulative effect. Most of bottles shown are either very old or were limited editions, typically very limited. Various Jefferson's expressions seem to show up a lot, perhaps out of proportion to how many were sold. How should one interpret that? Buyer's remorse, perhaps? Not that it means the seller no longer likes the stuff to drink, just that in retrospect they may be in an overbought position. You can't necessarily pin down the exact meaning of what you're seeing, but clear patterns may eventually emerge.

It's all information we didn't have before.

Second, extremely rare and desirable bottles such as A. H. Hirsch Reserve (not to be confused with 'Hirsch' without the 'A. H.') need to see the light of day. With A. H. Hirsch and other very rare products that are no longer available, it's just a shame if there are people who want them, and people happy to part with them, but they can't be brought together. It's un-American.

Most people who bought A. H. Hirsch and the like, including those who bought them by the case, did so because they liked the whiskey and knew the supply was finite. It seems likely that some, perhaps many of those people would like to, as they say, adjust their holdings.

'Open to buy' is an expression in retailing. It's the amount you, the buyer, have available to spend on new merchandise and it's linked directly to the investment you already have in merchandise on the floor. The only way to replenish your 'open to buy' account is to sell some of the merchandise you already own.

Many whiskey collectors are married men whose wives exert strict control over their 'open to buy' account.

It has been many years since any iteration of A. H. Hirsch has been readily available. What's a bottle of A. H. Hirsch 16-year-old gold foil really worth? The best way to find out is to flush out as much of the bunkered stock as possible. If you have any to sell, now is the time to make your move. Don't let your overbought position in Hirsch keep you out of the marketplace for new treats.

The legality questions always loom, of course. It's hard to see how eager sellers connecting with eager buyers, all of whom are above the legal drinking age, does anyone any harm, but that doesn't change the fact that it is illegal to sell alcohol without a license.

Third, what the Bourbon Exchange can do without any legal worries is be an information exchange. It's a place where people can find out more about the bottles they have and the bottles they want. The possibility of transactions doesn't even have to be mentioned. Collectors like to show and talk about their collections. If anything else happens, it happens somewhere else entirely.

When people show what they recently found at retail, you can see what's still 'out there,' in at least some quantity. That also tells you what's not. Part of the hobby is dusty hunting. Dusty hunting and, therefore, its facilitation are 100 percent legal.

Bourbon Exchange is a good place to learn because most of the participants are sufficiently knowledgeable that, Wikipedia-like, correct information is quickly validated and incorrect information is refuted. Unlike the average drinker, bourbon collectors value reliable information, so interference by egregious dopes is kept to a minimum.

Finally, Bourbon Exchange is an opportunity to form a real community around this very specialized interest, which is what social media does best. Being members-only (and the operators are particular about admitting only real identities), everybody can see who else is looking in. People can figure out who to trust. Networks can form. It's a good thing.

The Bourbon Exchange isn't even two months old, so who knows what it will look like in a year, but it should be fascinating to watch.

Tuesday, June 4, 2013

"I Must Govern the Clock, Not be Governed by It"

The legendary Israeli leader Golda Meir said that.

She was not talking about whiskey aging.

But because what she said resonates, it may help explain why someone is always selling one scheme or another to 'govern the clock' with regard to the aging of whiskey, and why people are always eager to believe them.

Cleveland Whiskey's Tom Lix is only the latest, but he's generating a lot of publicity right now. (To which I hate to contribute, so you'll have to Google him for yourself.) Many articles call him a distiller, which he is not. He is a non-distiller producer (NDP), but not a mere re-bottler.

What he does is take bulk whiskey -- six-month old bourbon -- and subject it to a Frankensteinian process he has developed that he estimates ages the spirit the equivalent of 24 hours every second.

(If 'Frankensteinian' seems too strong, consider this. He chops up the barrel and mixes it with the spirit, then subjects the whole mess to agitation, pressure, and lightning. Okay, not lightning.)

Some craft distilleries make similar claims for small barrels, five- to fifteen-gallons as compared to the standard 53.

That's not to say that small barrel aging doesn't have its place. In the hands of a skilled distiller, brief aging in a small barrel can create an original and appealing whiskey. That's a beautiful thing, but neither small barrels nor pressure cookers in Cleveland can produce the taste of a fully aged bourbon in weeks instead of years. That claim is bullshit, pure and simple; always has been, always will be.

If wood extraction was all there is to aging it might be true. There are many ways to speed up the extraction of substances from the oak. One of them, warehouse temperature cycling in winter, is practiced by several major producers. Wood extraction is part of aging but it isn't the whole story. Aging is also about oxygenation, color development, and the removal of unpleasant flavors, all of which take time.

Still, you have to admire the sheer moxie of someone who thinks he has developed something in his garage that has eluded professional whiskey makers for centuries.

In several of the articles about Lix, the writers have had people taste test Cleveland Whiskey against something like Diageo's Bulleit Bourbon or Beam's Knob Creek. That's the wrong comparison. Lix starts his process with bourbon made by a major bourbon distillery and aged for six months in a new, 53-gallon, charred oak barrel. What none of his collaborators (yes NPR and Forbes, I'm talking about you) have done is taste that good, young, properly-made bulk bourbon against the godawful mess Lix proceeds to make of it. If they did, they might recognize him for the strangler-of-babies-in-their-cradles that he actually is.

But that's not the story they want to write, nor is it a story the proud Cleveland bars that sell the stuff like crazy want to promote. So nobody tells the emperor he's buck naked, except for the occasional honest-to-god bourbon drinker who makes a brief appearance (Matt Wunderle is my hero), only to be hustled into the wings for fucking with the approved narrative.

If I sound grumpy about this, I am. I often say that sometimes I have to drink bad whiskey, but I do it so you don't have to. Well, occasionally I also have to waste my time with stories like this, so you don't have to.

Monday, June 3, 2013

How a Whiskey Shortage Works

After the recent announcement from Buffalo Trace about a general tightening of bourbon supplies -- a 'shortage,' if you will -- many people chose to comment (here and elsewhere) by pointing out that the stores they shop are still well-supplied with the brands in question.

While this at first blush simply seems funny -- how blinkered is your world view that you don't think something is happening unless it's happening to you? -- it suggests that many people don't understand how a whiskey shortage works.

First, it's important to remember the three-tier system. By law, producers sell to distributors and distributors sell to retailers. In many states, merchandise can't flow in the other direction. Even chain retailers can't move stock from store to store to equalize availability. This can lead to one store in a market being out of a certain product, while others in the same market have plenty.

To a whiskey producer such as Buffalo Trace, there is a shortage whenever they receive orders they can't fill. Sometimes this is a very short term problem. For example, there are no more finished goods in the finished goods warehouse ('finished' means bottled, cased, and ready to ship) and there is a gap in time before that particular product is scheduled for another bottling run, but there is sufficient whiskey available, so that a normal bottling can be done at the next opportunity. That's not really a shortage, although it can result in a few very limited out-of-stock situations at retail.

Another situation might be that the producer's finished goods warehouse is bare and there's nothing suitable that's available to bottle -- so there's a shortage as far as the producer is concerned -- but the distributors have sufficient stock that the shortage never reaches retail. A point is reached where everything is on the shelf somewhere -- the producer and distributor stocks are depleted -- but they are able to be replenished before bare shelves appear at retail.

For the consumer, a real shortage occurs when the finished goods warehouse is bare and there is no suitable whiskey available to bottle until the next batch reaches maturity. For several months, distributors and retailers are unable to replenish their stocks of that particular item, leading to multiple retail out-of-stock situations market-wide. That's the kind of shortage consumers notice, because they may have to visit several stores to find the item in question.

When this happens to a particular product with regularity, because demand has out-stripped supply for several cycles, more consumers are likely to perceive a shortage. Instead of having to visit several stores to find what they want, they can't find it no matter how many stores they visit.

An even more severe situation can occur when there is a gap in the pipeline for some reason. A good example of this is George Dickel. Because the distillery was closed for several years during the 1990s, the pipeline for George Dickel No. 8 simply ran out and there was none to be had anywhere for more than a year. A shortage that severe is very rare.

What's happening now is that general demand has been outstripping supply year after year, even though producers have been increasing supply at the production end of the pipeline. When this happens, producers make such adjustments as they can to ensure that their most profitable products remain available. (Throughout the Dickel 8 shortage, Dickel 12 and Dickel Single Barrel remained generally available.) In this situation, the pipeline may dry up for a particular product, meaning some but never all retailers will experience out-of-stocks, but they're temporary because there's product in the pipeline that simply isn't mature yet.

So if you buy a bottle of brand XYZ approximately every three months, there may be an active shortage but you'll never notice it, because your buying cycle missed the two-month window when out-of-stocks were occurring.

Just because you personally haven't perceived a shortage, that doesn't mean it's not real.

Some producers in the past have hyped shortages. Beam did this a few years ago with Knob Creek. The shortage was real but retail out-of-stocks weren't widespread enough for long enough for most consumers to perceive the shortage personally. Many, therefore, called it a hoax, and that has led them to assume that all announced shortages are also hoaxes, leading to the "we've got plenty here in Little Rock" phenomenon.

Another situation is the deliberate shortage, e.g., Van Winkle. For Van Winkle, Buffalo Trace and the Van Winkle family deliberately keep supply behind demand. At the moment it may be further behind demand than they'd like, but Van Winkle will never be in surplus if the producer can help it. Van Winkle also has legitimate supply issues because the products are so highly aged, meaning they can't make much of a change in supply if they want to, but that doesn't alter the fact that they don't want to.

Consumers, of course, can contribute to a shortage. While some people poo-poo the shortage, others go out and stock up. Some do both.

What bourbon and rye drinkers are likely to experience going forward is occasional, temporary shortages of certain products. If stocking up is advisable at all, you probably won't need more than one or two extra bottles to ride through a brief out-of-stock. Panic buying is certainly not necessary. The best advice is probably to use an out-of-stock when one does occur as an opportunity to try something new.