Thursday, December 22, 2016

Sazerac Buys the Distillery Formerly Known as Popcorn Sutton

Not this guy again.
This morning, Sazerac announced its acquisition of "a distillery located in Newport, Tenn." Key staff intend to remain including Master Distiller John Lunn and Master Blender Allisa Henley. (Both Lunn and Henley previously worked at Diageo's George Dickel Distillery.) The purchase does not include any brands.

The Sazerac press release further states that, "the purchase will allow Sazerac to start producing Tennessee whiskey, using the Lincoln County process" and "Sazerac will begin investment into the Distillery to modify the pot stills for the Lincoln County process."

It is unclear what this means since the so-called "Lincoln Country Process" refers to charcoal filtration of the new make spirit after distillation and before barreling. It has nothing to do with the distillation process itself. (Sazerac clarified that it is still determining the distillery's precise capabilities and some additional investment probably will be necessary.)

What is clear from the press release is that Sazerac's primary purpose is to use the facility to make and sell a true Tennessee Whiskey. They plan to begin distilling this new product in a few months. That means, of course, that the unnamed product won't be available for sale until about 2022.

That is where the information provided by Sazerac ends and the questions begin.

Although unnamed in the press release, the "distillery located in Newport, Tenn" can only be Popcorn Sutton Distilling. It has been called Avery's Trail Distilling lately, a name that began to appear in September.

Here is the backstory as we reported it in March. Popcorn Sutton was a colorful and well-known moonshiner, a convicted felon. His widow and one of his buddies started a legit alcohol business in Sutton's name shortly after his death in 2009. It was a very slapdash and small scale operation. About three years ago it was acquired by Mark and Megan Kvamme. He is a successful venture capitalist, close to Ohio Governor John Kasich. She became Popcorn Sutton Distilling's CEO.

The Kvammes built a new distillery in Newport. It is 50,000 square feet. The solid copper pot stills are true alembics (no rectification section), built by Vendome. The two beer stills are 2,500 gallons each. The spirit still is 1,500 gallons. That's big, about the same size as the stills at Woodford Reserve. They were using only about 20 percent of their capacity, according to Lunn.

The Newport location, close to Gatlinburg and other Smoky Mountains attractions, was conceived as a tourist destination.

It is possible Sazerac and the Newport team will continue to make the Popcorn Sutton and Avery's Trail products under contract, assuming those products continue, but it appears Sazerac would like to distance itself from any public association with Sutton.

Sazerac has sent out several press releases today about acquisitions. They have purchased a Cognac distillery and brand, and will be the U.S. distributor for several Danish spirits brands. This on top of last week's high profile New Orleans real estate buy. Sazerac has been successful on many fronts lately, but one assumes this is how they are reinvesting the immense Fireball profits. Sazerac is quickly becoming a very big deal in the international distilled spirits business. They are not afraid to take chances.

It remains to be seen if Tennessee Whiskey is really even a category apart from Jack Daniel's, which represents 99 percent of all Tennessee Whiskey sold, the remaining one percent being George Dickel. Sazerac is betting the words 'Tennessee Whiskey' have some magic on their own. “We see a lot of potential in the distilling capabilities of this operation,” said Mark Brown, president and chief executive officer, Sazerac. “We are excited to have the talents of John Lunn and Allisa Henley on board and we look forward to utilizing their expertise to start laying down true Tennessee whiskey.”


Brian (AKA The Dean) said...

I'm quite thrilled with this news. As I've previously stated, the move to Popcorn Sutton by Lunn and Henley never made much sense to me. Now I get what they were probably planning.

I've been a longtime fan of Dickel, and even JD---back in the old days, when Black was 90 proof. IMO there is plenty of room for another Lincoln Process Tennessee Whiskey in the market. Especially one as good as I expect from these distillers, and Sazerac. Hope I'm still around to taste it, when it's released.

Unknown said...

very interesting. as you've observed Diageo with Walker and BF with Jack are vying for possible markets in China and India. Now, if Sazerac can make a decent TN whiskey, they might just get swept up in a rising tide (assuming it happens over there.) you don't have to take a lot of mkt share from Jack to make a lot of money.

kaiserhog said...

That photo is a masterpiece. I love it.