Tuesday, June 30, 2015

RIP David Beam, Bourbon Maker

David Beam (left) and his three sons (left to right) John Ed, Bill and Troy.

I was saddened to learn of the passing yesterday of David Beam. He died peacefully at his farm. He was 74.

Daniel David Beam was the son of Carl 'Shucks' Beam and was born in the master distiller's house on the grounds of the Jim Beam Distillery at Clermont. He and his older brother, Baker, succeeded their father at the distillery, which runs on a 24-hour schedule. Baker had the day shift and David had the night. He worked there for 38 years, retiring in 1996.

A Memorial Mass will be held at 11:00 AM on Thursday at the Basilica of St. Joseph Proto-Cathedral with burial in the Bardstown Cemetery. Visitation is 3:00 PM to 8:00 PM on Wednesday, July 1, and 9:00 AM to 10:15 AM on Thursday, July 2 at Barlow Funeral Home.

David was a sweet guy. He was funny, told great stories, and knew how to make bourbon the way regular people know how to put on their shoes. I got to know him pretty well over the last 20 years or so. It was a privilege. I'll miss him.

Friday, June 26, 2015

Bud Light Is Not a Beer

This is not about whether or not Bud Light was ever beer. This is not a shot at bland, tasteless corporate lagers. Let's stipulate that AB InBev is a brewer and makes beer. For purposes of this exposition, Budweiser is a beer, Beck's is a beer, Stella Artois is a beer, Brahma is a beer. (Those are all AB InBev brands.)

Yes, it says 'beer' right there on the label, but Bud Light is not a beer. Furthermore, 'Light' is not a promise of low calorie refreshment.

If Bud Light is not a beer, then what is it?

Bud Light is a brand.

The product in the picture, that Bud Light product happens to be a beer. It contains 110 calories per 12 ounces, about what you would expect from a light beer. But Bud Light Lime-a-Rita contains 220 calories per 8 ounces. That's 27.5 calories per ounce for the Rita compared to 9.2 calories per ounce for the beer. That's three times as many calories! The new Bud Light Mixxtail products -- Firewalker, Hurricane, Long Island Iced Tea -- they're 195 calories per 8 ounces.

In December, Sheila Cruz filed a lawsuit against Anheuser-Busch. She alleges that Bud Light Lime-A-Rita products claim to be low in calories, but actually contain more calories than any other product sold by Anheuser-Busch.

The lawsuit, which alleges that Anheuser-Busch deceptively concealed, omitted and misrepresented the calories in the products, seeks class status for anyone who has purchased any of the Bud Light Rita products since they were introduced in 2008. There are now six Rita flavors.

Start saving your receipts.

Anheuser-Busch has filed a motion to dismiss. It argues that every label at issue “accurately discloses” the average number of calories and carbohydrates that the products contain, as required by the U.S. Treasury’s Alcohol and Tobacco Tax and Trade Bureau, or TTB.

Let's pause here to explain why this story is in this column, where we talk about bourbon whiskey. Things like this would not happen if everyone would just drink bourbon whiskey as God intended, but that is neither here nor there, because some people do drink this stuff.

This story should matter to people who read this column for two reasons. First, the attorneys for Ms. Cruz argue that Anheuser-Busch is claiming 'safe harbor' because TTB approved their labels. This is the same claim Templeton, Tito's and other spirit brands have made in similar cases. That argument will be rejected. It already has been in a similar Florida case against Anheuser-Busch. The courts realize that TTB does not investigate or scrutinize label approval applications with sufficient diligence to warrant safe harbor protection.

However, Anheuser-Busch also argues that “The TTB has determined that the use of the term ‘light’ on a malt beverage label is not misleading or deceptive as long as the label contains a statement of average analysis disclosing the actual number of calories, carbohydrates, protein and fat the product contains. The labels at issue here complied with this TTB requirement."

In other words, it's not 'safe harbor,' but if your label complies with all of the rules, and discloses all pertinent information in the prescribed fashion, you should be okay. Remember that when you think about cheating on the state of distillation requirement, or the accurate age statement requirement.

The other reason this should matter to regular readers of this column is that this is the natural trajectory of a brand and every brand owner, whether he or she will admit it or not, dreams of this outcome. Not the lawsuit, but ownership of a brand that has reached the point where you can slap it on just about anything and people will buy it. Bud Light Triple Cheeseburger, anyone?

At this point 'Bud Light' is not a descriptive statement. The 'Light' part doesn't mean low in calories. Bud Light no longer means 'a lower calorie version of Budweiser,' as it did at one time. No, Bud Light has transcended its original meaning. Bud Light has become a brand.

How many products now bear the Jim Beam or Jack Daniel's brand name? Lots of different whiskey expressions as well as flavored whiskeys, pre-mixed cocktails, food, clothing. Too many to count with no end in sight.

Legally, all of these 'false advertising' cases will fail unless they hinge on actual deception. A subjective misinterpretation of vague 'claims' won't get very far. Templeton Rye, for example, may still have to answer for its past transgressions but, what do you know, it has a new label. It now says 'distilled in Indiana' and qualifies the 'Prohibition-Era Recipe' claim, among other things.

Will it be enough? That's up to the courts to decide. But if you're a fledgling spirits producer, you don't want to be next.

NOTE 6/30/15: I have since learned that the court dismissed this case on June 3rd and granted safe harbor protection. The distinction between this ruling and what I was talking about above is that, in fact, the Bud Light Lime-a-Rita labels comply with all TTB rules. I predict safe harbor will not be granted to Templeton because, even though their labels were approved, they did not comply with all TTB rules. The decision is here.

Monday, June 15, 2015

Make No Little Plans, Kentucky, Even If That Goes Against Every Instinct You Have

I don't know Stephen Thomson but David Mann's article about him in Louisville Business First today has me steamed. In it Thomson, a former Brown-Forman executive and current investor in Kentucky Artisan Distillery in Crestwood, Kentucky (a posh Louisville suburb) wonders "whether there's a big enough market of tourists to support this many attractions."

He's talking about Louisville's current and planned bourbon-themed attractions such as the Evan Williams Experience.

And that's the sum of his argument. He wonders. He frets. He probably purses his lips and furrows his brow. He offers no statistics, no projections, he just wonders. "Most local people will go to these attractions once and rarely go back," he speculates. "It's like a one-time experience, then you go to the next one."

"A visitor to Louisville who is in town for a convention or other purpose likely will go to one or two distilleries — not all of them, and the one or two they visit probably will be the most promoted ones."

He goes on in that vein for a few more paragraphs. "Some will fail," the genius prognosticator predicts. Yes, businesses fail, so don't ever try to start one. Is this the kind of advice 'industry consultant' Thomson gives to his clients?

The truth, or at least my version of it, is exactly the opposite of what Thomson believes. As I said in 2009, when I was inducted into the Kentucky Bourbon Hall of Fame, I believe the potential for American whiskey is unlimited.

"Don’t think in terms of twenty percent increases or forty percent increases. Think about growing two times, three times, five times, ten times bigger. There is no reason you can’t do it," I said.

Since then, the industry has been growing at about a 40 percent annual rate, yet Thomson wants to slam on the brakes.

What's his problem?

I think I know the answer.

I lived in Kentucky for nine years, from 1978 to 1987, and have spent a lot of time there since. I love Kentucky. It's a unique place with many wonderful qualities but one particularly bad one. I call it 'small timer syndrome.' It rears its ugly head in the efforts of the Kentucky Distillers Association to crush anyone who dares to promote bourbon without their permission. It is why the University of Kentucky refused to play the University of Louisville in major sports for 60 years. There are many other examples. Small timers are zero-summers. They believe you can have too much of a good thing. In fact, they believe that every new good thing diminishes the existing ones. Better not to aim too high. You might be disappointed.

At the end of Mann's article, Janet Kelly offers this retort: "Isn't that rather like Napa (Valley) saying we have too many wineries?" Kelly is the executive director of the University of Louisville's Urban Studies Institute, which actually uses data to reach its conclusions about bourbon's huge economic impact on Kentucky.

Instead of Thomson's pessimism, I prefer what Mark Twain wrote: "Too much of anything is bad, but too much good whiskey is barely enough."

Sunday, June 14, 2015

Learn Craft Distilling in the Heart of Bourbon Country

As craft distilling has gained steam, so have the educational opportunities. One good choice is Moonshine University in Louisville. Right downtown, you get hands-on instruction in distilling while enjoying everything else Louisville has to offer. Not just for distillers, Moonshine University also has courses for whiskey enthusiasts who want an educational immersion experience.

Moonshine University is part of the Distilled Spirits Epicenter, located at 801 S. 8th St. in downtown Louisville. It also hosts Grease Monkey Distillery and Challenge Bottling. "Through hands-on distilling instruction, classes and bottling services, the Epicenter brings Kentucky’s unique distilling legacy to life," is what they say about themselves.

The Distilled Spirits Epicenter is the exclusive education provider to the Kentucky Distillers Association and a sister company to Flavorman, an international custom beverage development and ingredient supply company. If you have a new product idea, Flavorman’s Beverage Architects and the Epicenter’s team of distilling consultants can take it through every phase of beverage development and production. “After taking our five-day distiller courses, our graduates are asking for continued learning in the field to specialize and grow as spirits makers,” said owner David Dafoe. “As one of the nation’s only educational distilleries, Distilled Spirits Epicenter uses our time-tested knowledge and wealth of industry resources to add workshops to help these up-and-coming brands succeed.”

Here are some of the classes offered by Moonshine University. Call 502-301-8126 for more information.

Enthusiast Workshops ($395 to $795)

June 29 -- Bourbon Making Workshop
July 6 -- Bourbon Certification Workshop for Stave & Thief Society
Aug. 17-18 -- Interacting with History: Hands on Distilling and the History of Bourbon
Aug. 21 -- Bourbon Making Workshop
Nov. 2 -- Bourbon Certification Workshop for Stave & Thief Society
Dec. 4 -- Bourbon Making Workshop

Distiller Workshops ($1,795 to $4,995)

June 15-16 -- Rum Workshop
July 27-28 -- Experimental Whiskey Workshop
Aug. 3-4 -- Advanced Sensory Training: The Organoleptic Analysis of Distilled Spirits
Aug. 31-Sep. 1 -- Gin Workshop
Sept. 14-15 -- Route to Market Workshop
Nov. 4-6 -- Distilling Operations 201
Nov. 9-10 -- Absinthe Workshop

Distiller Courses ($5,495 to $5,950)

July 13-17 -- 5-Day Distiller Course
Oct. 5-9 -- 5-Day Rum Course
Oct. 19-23 -- 5-Day Distiller Course

Wednesday, June 10, 2015

Barton to Release 1792 Sweet Wheat Bourbon

In January of 2009, Sazerac acquired from Constellation Brands the Barton 1792 Distillery in Bardstown as well as a large portfolio of brands, including a super premium bourbon, 1792.

As Sazerac (which also owns Buffalo Trace) dug in, they discovered that Barton had been making wheated bourbon for no apparent reason, i.e., they had no wheated bourbon products nor was there any indication that they had been making it for a customer. At the time, Sazerac said they weren't sure what they were going to do with it. Now we know.

Wheated bourbon is a style of bourbon that uses wheat in the mashbill instead of rye. It is not to be confused with wheat whiskey, in which wheat is more than 51 percent of the mashbill. In a wheated bourbon, wheat is typically 12 to 15 percent of the mashbill, the bulk of which is still corn. The best known examples are Maker's Mark, W. L. Weller, and Old Fitzgerald.

The flagship expression of 1792 was launched in 2003. It is a rye-recipe bourbon with a higher-than-normal barley malt content, although the exact percentage has never been disclosed. It also features a yeast strain not used for any other brands. The product was created by Barton Master Distiller Bill Friel not long before he retired. Barton was late to the super premium bourbon game but 1792 was well received. (Named, by the way, for the year Kentucky became a state.)

Now the Barton 1792 Distillery is set to release its first 1792 line extension, called 1792 Sweet Wheat. It was distilled in 2007 so, like the flagship, it is eight years old.

“Using wheat instead of rye gives the taste profile a softer and more delicate flavor,” said Ken Pierce, director of distillation and quality assurance. “The soft flavor is balanced by rich oak tannins extracted by the bourbon while aging in the charred oak barrels.”

Wheated bourbons tend to taste sweeter than rye-recipe bourbons. They aren't, but they seem sweeter because rye adds dryness. With no rye to balance it, all of the sweetness from the wood shines through.

1792 Sweet Wheat is bottled at 91.2° proof (45.6% ABV). Bottles are expected to hit stores this summer at a suggested retail price of $32.99. The distillery plans to release several additional expressions of 1792 over the next few years. “We have some remarkable whiskeys aging in Bardstown,” said marketing director Kris Comstock. “We’re excited to unveil them over the next several years.”

The Barton 1792 Distillery is part of Barton Brands of Kentucky, with facilities in Bardstown, Ky., Carson, Calif., and Baltimore, Md. Barton Brands is owned by the Sazerac Company, an American family-owned company based in New Orleans, LA. Barton 1792 Distillery was established in 1879 by Tom Moore and continues today as the oldest fully-operating distillery in the 'Bourbon Capital of the World,' as Bardstown likes to call itself.

The Barton 1792 Distillery is located on 196 acres and includes 28 warehouses, 22 other buildings, the Morton Spring and the Tom Moore Spring. It has a gift shop and offers tours.

Tuesday, June 9, 2015

In Which I Stick Up for Diageo (a Little)

Diageo, the largest company in the distilled spirits business, has become the latest victim of a false advertising suit, based largely on a Bloomberg article and video in which I appear.

In the Bloomberg video, the reporter goes to the Anderson County Sheriff's office in Lawrenceburg, Kentucky, to ask for directions to the Bulleit Distilling Company. The receptionist, gamely going along with the stunt, informs him that there is no such company with an address in Lawrenceburg. This seemingly contradicts the label reproduced above.

The label is not false.

Beyond a doubt, all or most of the whiskey in the bottle to which that label was affixed was distilled at a distillery in Lawrenceburg that was temporarily operating as the Bulleit Distilling Co., but which normally goes by the name Four Roses. It was a contract distilling job. The spirit was owned by Diageo, which owns Bulleit, the moment it was made. After distillation, it was taken in tankers to the cistern room at Diageo's Stitzel-Weller Distillery in Shively, south of Louisville, where it was barreled and then put away in one of the Stitzel-Weller warehouses. After aging, it was bottled by Diageo at their Plainfield, Illinois facility and distributed from there.

Except for the distilling claim, every other claim in the paragraph above should probably have the words 'most likely' in front of it, because excessively secretive Diageo won't confirm the other facts, but they are widely known and believed to be true. Diageo did, for many years, assert that every drop of Bulleit Bourbon is made at Four Roses. They no longer do.

If you Google 'shingle' you'll mostly find information about a nasty skin condition. But shingles, meaning a sign that names and marks the location of a business, have a long and venerable history in the whiskey trade.

Back in the earliest days of commercial distilling, distilleries didn't make brands. They made whiskey which they sold to rectifiers who created the brands under which the whiskey was marketed. Sometimes, to assure a supply, these companies would contract with the distillery to make a certain amount. In those more literal times, it was standard practice for the distillery to hang up a shingle indicating who the customer was at any given moment. While they were running whiskey for the Old Handlebar Distilling Company, the shingle said 'Old Handlebar Distilling Company.'

Many distilleries had boxes full of these shingles, which they dutifully changed according to what they were producing for whom. Depending on who had capacity or the best price, many different distilleries might do duty as Old Handlebar. This tradition died out with Prohibition. Today, most distilleries make multiple brands. Some only make brands they own, but others also do contract production. All of the non-distiller producer (NDP) products out there have to come from somewhere.

An assumed business name or DBA (for 'doing business as') might be called a legal fiction, but it is legal. While the Kentucky River Distillery is making whiskey under a contract with the Old Handlebar Distilling Company it is doing business as the Old Handlebar Distilling Company.

So the idea that Four Roses was acting as the Bulleit Distilling Company when it was fulfilling its production contract with Diageo is neither unique nor shady. It is a long established practice in many businesses.

But that doesn't entirely let Diageo off the hook. Two things.

Although both Diageo and Kirin (Four Roses) were always very secretive about the details of their contract, it became apparent about ten years ago that Four Roses wasn't producing enough whiskey for Diageo to account for all of the Bulleit Bourbon Diageo was selling. It also became known that Brown-Forman, Barton, and Jim Beam were all producing large quantities of spirit for Diageo, all of which was being aged at Stitzel-Weller.

Diageo had other needs for bourbon distillate, so there is no way to prove that any of that whiskey was being used for Bulleit, but it sure seemed likely that someone other than Four Roses was producing some of what became Bulleit Bourbon.

At about the same time, a source close to Four Roses reported that lab tests performed by Kirin confirmed that Bulleit contained whiskey not produced at Four Roses. This caused Four Roses to withdraw from an event in which it had earlier agreed to participate. While this was all very plausible and a lot of people knew about it, the original source clammed up and it became impossible to get confirmation so I never reported any of this widely and only do so now with all of the caveats above.

Finally, early last year, it became known that the Four Roses contract with Diageo had ended on December 31, 2013, and Four Roses was no longer producing any whiskey for Diageo, for Bulleit or any other brand. That fact obviously doesn't affect the label above, or any Bulleit bourbon that is being sold today, since that whiskey was distilled years ago. At some point a few years hence, none of the whiskey in a Bulleit Bourbon bottle will have been distilled in Lawrenceburg, Kentucky, and the label will have to change. Right now it's true.

Today, most of the big bourbon distilleries are running at capacity. Brown-Forman, long the favorite contract distiller for other big distilleries, announced that as of January 1, 2015, it would only be distilling for itself. No more contracts.

Other distillers still do contract distilling, mostly via long-term agreements, but other than MGP in Indiana, most have no more capacity so while existing contracts will be fulfilled, NDPs are finding it hard to grow because they can't increase their orders. New Riff, a relatively new distillery in Newport, Kentucky, is picking up some of the slack. Michter's has solved the problem by building a new distillery in Shively, which they should be firing up any day now. Willet, in Bardstown, has been distilling for about two years. Diageo, too, is building a distillery in Kentucky but it is more than a year away from completion.

I don't like all the time having to guess what Diageo is really up to. Transparent they are not. In that regard they are out of step with the other majors, as well as the growing legions of small distillers, who are generally very open and eager to answer every question. Even in their statements about the Bulleit lawsuit, Diageo didn't claim the label was true, they claimed it was legal. The Big Galoot, as I sometimes call Diageo, still has a lot to learn about what American whiskey fans want and expect. If it takes a lawsuit to knock a little of the arrogance off of them, that wouldn't be a bad thing, but I'm not holding my breath.

Monday, June 8, 2015

The 'Other' Warehouse at Buffalo Trace

My fondness for Weller 12 is well-known and since it has been in such short supply lately, I was deeply moved when I spotted a whole pallet last week at Buffalo Trace. Let's hope it is on its way to a bar or liquor store near you.

In the whiskey world, we talk a lot about warehouses, and almost all of the time we mean those buildings where they keep the barrels full of aging whiskey. This is not about that kind of warehouse.

This is about the finished goods warehouse, sometimes called the distribution center (DC). That's where the products go from the bottling line. There cases are stacked on pallets, shrink-wrapped, and put away. Hopefully they won't be there for long, but will be drawn out for shipment to a distributor. This picture was taken (by Mark Gillespie) last Wednesday, so it's possible this pallet of Weller wonderfulness is already on a truck, making its way to thirsty Weller drinkers.

While Weller and I are having our moment, I am actually standing between the present and future of distilled spirits DCs. In the direction I'm facing is the current paradigm. It's a big, open space in which cases of spirits, shrink-wrapped on pallets, stand in neat-ish rows. Sazerac has warehouses like this at each of its bottling facilities, the largest of which is in Owensboro, at what used to be the Glenmore Distillery. The shrink-wrapped pallet-loads are put away with forklifts. Later, when they show up on an order, another forklift retrieves the load and takes it to a truck.

Each pallet is identified by a bar code that is scanned as it moves through the system. Every putaway space has an address. Theoretically, things can't get lost but if you show up at the right address and the product you want isn't there, you're pretty much screwed.

Behind me is the new paradigm, an automated system. The one at Buffalo Trace is brand new. The concept isn't new. I've seen them for many other industries, from auto parts to pharmaceuticals, but this is the first one I've seen at a bourbon distillery. There may be others. The DC is usually not on the tour.

When we think about our favorite whiskey makers, we mostly think about the whiskeys they make, but most of them make more than just whiskey. Buffalo Trace produces just about everything. American whiskey, of course, is made on site from scratch. Other products, such as liqueurs, are mixed from their component parts and bottled there. Still others, such as foreign whiskey, vodka, rum, and tequila, are made elsewhere and simply bottled there. It's hundreds, maybe thousands, of different products. Most are produced in a range of sizes. It's a lot to keep straight.

Almost everything leaves the site in bottles, packed into cardboard shipping cases, by way of the DC.

The first thing you notice about the new section of the DC is its height, about four times higher than the highest stacks in the old part. Instead of open space it is a matrix of shelves. Think of them as rows and columns in a three dimensional spreadsheet. It's mostly dark. The system doesn't need to see.

Compared to the traditional DC, it's a much better use of space. The other thing is that everything that happens within the system is done by machines. Conveyors move each load to the right section and an automated forklift swiftly puts it away. Everything is identified by chips and bar codes. It can run 24-hours a day if necessary. The brain knows exactly where everything is all the time.

It uses less labor, of course, but with the way Sazerac is growing, nobody is losing their job. It's faster, safer, more efficient, more reliable, and more secure. All new production is going into the new warehouse. When the current space is emptied, it will be used to store things like bottles and labels. The space where those materials are stored now probably will become another expansion of the visitor's center.

It takes a minimum of 12 years to make Weller 12 but when the whiskey is ready, you want there to be as little as possible between it and you. That's what this new DC is all about.

(Photograph by Mark Gillespie.)

Monday, June 1, 2015

Got a Cool Old Bottle to Sell? Try North Carolina

The North Carolina Senate Finance Committee passed House Bill 909 last week, which will make several significant changes to North Carolina alcoholic beverage control ("ABC") laws. House Bill 909 now heads to the full Senate for a vote. If it passes the Senate, it will be presented to the Governor for signature and will become effective immediately thereafter.

Here are the two sections that caught my eye.

Section 1 - Antique Spirituous Liquor

The bill allows restaurants, bars, and other entities holding mixed beverage permits to obtain antique spirituous liquor permits and sell antique spirituous liquor to customers. Antique spirituous liquor is liquor that has not been produced or bottled in more than twenty years, is unopened, and is not owned by a distillery. The bill provides a means for retailers to purchase antique spirituous liquor from local ABC Boards, which will purchase the antique liquor from private sellers. This process will enable retailers to obtain mixed beverage tax stamps and pay taxes on antique spirituous liquor, just as they do for other types of liquor. The North Carolina ABC Commission will adopt temporary rules by 1 September 2015 to outline this process.

I have some questions about details, such as is a bottle of A. H. Hirsch gold foil, distilled in 1974, bottled in 2003, considered 41-years-old or 12-years-old? If it was removed from wood more than 20 years ago, does that count? I suspect the rule will be interpreted as 'bottled.' The wording also suggests that pre-1995 Old Grand-Dad won't be allowed, since Old Grand-Dad is still produced. Or how about Very Very Old Fitzgerald? Old Fitzgerald is still produced but it has been more than 20 years since VVOF was.

I know of no state that has this type of law in effect.

Section 4 - Distillery Sales

The bill allows distilleries producing less than 100,000 gallons per year to sell one bottle of liquor per calendar year to each visitor to the distillery. This is a change from current law, which allows only ABC stores to sell bottles of liquor. Sales of bottles of liquor at the distillery shall be at the same price as sales at ABC stores, including the same taxes. Distilleries will remit applicable taxes to the North Carolina Department of Revenue. Bottles will have labels stating "North Carolina Distillery Tour Commemorative Spirit." The bill would allow each visitor to purchase one bottle of spirituous liquor per calendar year. Distilleries will be required to maintain electronic records verifying visitor purchases.

This is similar to the way sale at the distilleries was first legalized in Kentucky and Tennessee, including the labeling requirement as a 'commemorative' product. It is looser now. The limit in Kentucky now is three liters per person per visit.

The new law surely is not everything North Carolina distillers want, but it's a start, and it's interesting to see how a control state handles this sort of thing.

To the best of my knowledge, there are no distilleries in North Carolina that produce 100,000 gallons or more per year, but why should they be excluded?