Friday, December 7, 2018

My Dad's Pearl Harbor Story

Dad and his boys (and new Buick convertible), 1957. (Photo by Mom.)
On this day in 1941, J. K. 'Ken' Cowdery (my father) was in the Army stationed at Schofield Barracks in Hawaii. This is his account of that morning. He wrote it in 1991, for the 50th anniversary, for our local newspaper the Mansfield News Journal (Mansfield, Ohio). It was later published in the AARP magazine. Dad died in September, 2010, age 90.

This is just one of his stories from that fateful day. I heard them all about 100 times but it never got old. He had an amazing memory. How he got to Hawaii is quite a story too, as is what happened next, but I'll leave it at this for now.

Sunday, December 7, 1941, dawned bright and clear at Schofield Barracks, Territory of Hawaii. At least I assume that it did because it was bright and clear when I got up at about 7:45.

To get breakfast I had to be in the chow line out behind the barracks before 8:00. I made it.

Someone noticed a column of smoke coming from the vicinity of Wheeler Field, the fighter field, south of our location. There were comments and conjecture that the fly boys must be having some kind of exercise and that one of them had cracked up.

At about the same time we noticed a line of planes coming over Kole Kole Pass, which was about three miles northwest of us and in full view because there was nothing in the way. Our barracks was the furthest northwest barracks on the post. As the first plane in the line passed overhead I could not only see the red circle markings on the plane but could see the pilot's face, he came in so low that he cleared the two story barracks by about 5 or 6 feet.

At that point he also started his guns. We never did figure out why he didn't start strafing a few seconds sooner and try to get some of the 30 or 40 guys in the chow line. I have no idea what the second plane in the line did, by the time he got there I was long gone.

We all made for cover, I went into the building via the back door to the kitchen. The kitchen was about 20 feet wide by about 30 feet long. Just inside the back door, to the right, was the walk-in cooler. I hit the floor at the far end of the cooler, putting the cooler between me and the line of fire.

There must have been several planes in the line as the firing kept up for quite a long time--at least it seemed like a long time. After the firing stopped everything was completely silent, there was not a sound. I wondered if I was the only one still alive.

There was a line of preparation tables down the center of the room, with equipment and utensil storage drawers below, and ranges along the far wall at the other end of the room. Looking around I could not see another human being, everyone was obviously hugging the floor. Then I saw a hand rise up, pick up a spatula, turn over two eggs frying on the range, then replace the spatula and again disappear.

Regardless of the circumstances, duty comes first.

I might add at this point that this was the 90th Field Artillery Battalion of the 25th Infantry Division, a Regular Army outfit.

When it seemed that the attack was over and people started stirring again I grabbed a plate, claimed the eggs, and sat down to eat my breakfast.

Wednesday, December 5, 2018

Today Is Repeal Day. It's Time to Finish the Job

The 21st Amendment to the Constitution became effective 85 years ago today, ending National Prohibition. It also set in place the outline of the system of alcohol regulation that is still with us today. In what may be the longest hangover in history, many vestiges of Prohibition remain in America's alcohol regulation system and they haven't aged well.

Conveniently, the R Street Institute has published a booklet detailing some of the more absurd laws that remain on the books. Most were passed in the immediate aftermath of Repeal and have not been much examined since. 'America's Dumbest Drinks Laws' was released today, in honor of Repeal Day. You can download the PDF here.

The R Street Institute is a nonproft, nonpartisan, public-policy research organization (“think tank”). Their mission is to engage in policy research and outreach to promote free markets and limited, effective government.

As the booklet notes in its introduction, "although the 21st amendment repealed Prohibition, it still allowed state and local governments broad control over hooch."

My favorite dumb liquor law has always been Indiana's ban on cold beer (#3). Specifically, although Indiana law allows beer to be sold in drug stores, supermarkets and convenience stores, only liquor stores may sell beer cold. Efforts have been made to change this law but the liquor store lobby has managed to block it. 

The pain of this prohibition was lessened somewhat earlier this year when Indiana allowed liquor stores to operate on Sunday. At least it is now possible to buy cold beer seven days a week.

One dumb law I did not know about is the federal prohibition against distilleries on Native American lands, which has been in force since 1834. As authors Jarrett Dieterle and Daniel DiLoreto note, "While many of the laws on this list deserve our ire, this one stands alone for its general odiousness in treating people differently based on nothing more than their heritage and race."

As states rush to end the prohibition on marijuana, this might also be a good time to finish the work of December 5, 1933 and bring some common sense to the regulation of alcohol.

Tuesday, November 13, 2018

Diageo's Loss Is Sazerac's Gain

Diageo CEO Ivan Menezes
Many years ago, when I was working at a marketing services company, one of our executives issued an edict that our company would, in the future, not accept any clients that billed less than $100,000 a year. It was one of his many pronouncements that seemed, to me, to make little sense. Although I was young, I knew enough about business to know the size of an account doesn’t determine how much money you can make from it. I was pretty sure that a small but profitable piece of business was preferable to a large but unprofitable one.

This memory came to me yesterday when Diageo announced that it had ‘disposed’ of 19 brands by selling them to Sazerac. The portfolio includes several Seagrams-branded Canadian whiskies, some rums, some vodkas, and a bunch of liqueurs. Some are names you may know, such as Seagram’s VO, Goldschlager, Scoresby, Booth’s, and Myers’s. All are ‘cats and dogs,’ an industry term for small, low-margin brands with little growth potential.

In the official statement, Ivan Menezes, Chief Executive of Diageo, said: "The disposal of these brands enables us to have even greater focus on the faster growing premium and above brands in the US spirits portfolio."

In other words, the world’s largest drinks company can’t walk and chew gum at the same time. It can’t advance its most profitable segments while also making a healthy profit from the rest.

Is that fair? Sazerac paid about $550 million for the lot. That was not an act of charity. Sazerac believes it will make money where Diageo could not. Sazerac has a massive portfolio of brands, probably the largest in the distilled spirits industry.

Different companies and the managers who run them have different strategies. That doesn’t make one right or the other wrong. Unlike Diageo, Sazerac is privately-owned, so they don’t have to justify in public everything they do. Investors seemed to like Diageo’s move.

Brown-Forman has long had a firm ‘no cats and dogs’ policy. Not long ago it sold Southern Comfort, a household name, because it wasn’t performing up to expectations. Beam Suntory and Pernod also unload brands they consider unpromising. Heaven Hill has always had a lot of cats and dogs, and still does, but it has not been acquiring more of them.

Sazerac is not alone, but it dominates the segment. Most of its competitors are regional; Sazerac is everywhere.

It is a tough business because margins are so tight, but especially when you are as big as Sazerac it tends to be less volatile than high-flying brand marketing, which is more like the movie business in needing blockbuster hits to offset inevitable big budget disasters.

Sazerac doesn't shoot for the moon, although it hits it from time to time anyway, e.g., Fireball.

This week’s news is one more strange coda to the Seagram’s story. Once the world’s largest distilled spirits purveyor, Seagram’s ceased to exist as a company 20 years ago. As a brand name it lives on at several different places. Diageo still has Seagram’s Crown Royal (Canadian whisky) and Seagram’s Seven Crown (American blended whiskey). Pernod has Seagram’s Gin. Sazerac now has Seagram’s VO, Seagram's 83, and Seagram's Five Star (all Canadian whisky). Coca-Cola owns the Seagram’s mixers (ginger ale, tonic water, etc.).

Meanwhile, thousands of new brands are created every year, many by new, tiny companies. Thank you, distilled spirits industry, for keeping it interesting.

Thursday, September 20, 2018

Where Was the Frankfort Distillery?

The Frankfort Distillery, when it was in Frankfort.
It's a trick question.

If you guessed Frankfort, Kentucky, you are only half right. After Prohibition, the Frankfort Distillery relocated to Shively (a suburb of Louisville), but it kept the Frankfort name.

Confusing? Welcome to the world of American whiskey history. The story of the Frankfort Distillery is a perfect metaphor for the complications that arise when you try to understand the origins of America's whiskey industry.

For the whole story, check out the new, September issue (Volume 19, Number 1) of The Bourbon Country Reader, available now.

In this issue, we also look into the distilling history of Kentucky's Henry County, northeast of Louisville, where Angel's Envy has plans to build warehouses and, eventually, a second distillery.

And we review two beautiful books and one beautiful whiskey. (We're all about the beauty.)

The illustration, by the way, is of the pre-Prohibition Frankfort Distillery at Forks of Elkhorn, about three miles east of Frankfort. That site today looks completely different. It hosts a bottling and distribution facility for Beam Suntory.

Current Reader subscribers should receive their copies of the new issue in the next few days. New subscribers can get on the bandwagon by clicking here.

Founded in 1994, The Bourbon Country Reader is the oldest publication devoted entirely to American whiskey. It is a charming mix of news, history, analysis, and product reviews. Do you worry that advertising spending influences coverage in other publications? No chance of that here since The Bourbon Country Reader is 100 percent reader-supported. It accepts no advertising.

To experience The Bourbon Country Reader for yourself, you need to subscribe. Honoring tradition, The Bourbon Country Reader still comes to you exclusively on paper, in an envelope, via the USPS.

A subscription to The Bourbon Country Reader is still just $20 per year for addresses in the USA, $25 for everyone else. The Bourbon Country Reader is published six times a year, more-or-less, but your subscription always includes six issues (no matter how long it takes).

Click here 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 want to catch up on what you've missed, bound back issue volumes are available for $20 each, or three for $50. Each volume contains six issues. That's here too. Volume 18 is now available.

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.

NOTE: Turns out, the picture above is not the pre-pro Frankfort Distillery. It is the Kenner Taylor Distillery built after Prohibition at the same site. The photo below is of the real pre-pro Frankfort.

Tuesday, September 18, 2018

Denny Potter Leaving Heaven Hill for Maker's Mark

Denny Potter needs a new vest.
Maker's Mark has announced that Denny Potter is departing Heaven Hill to join the Beam Suntory subsidiary as Master Distiller and General Manager. Potter has been Master Distiller at Heaven Hill since joining the company in 2013. He became Vice President of Operations last year.

Before Heaven Hill, Potter worked at Maker's Mark for ten years.

"(We are) happy for Denny," says Heaven Hill spokesperson Josh Hafer. "We will have a transition period before he heads over to Maker’s Mark. But our distilling, warehouse and whiskey innovation teams are exceptional and all remain in place. Many of them with decades of experience. Moving forward, we will look for someone who can maintain the traditions of our previous Master Distillers including a commitment to heritage, quality, authenticity and transparency," said Hafer.

Potter replaces Greg Davis, who has been Master Distiller at Maker's Mark since 2010. Davis has been promoted to Director of Distillation at the Jim Beam Distillery in Clermont, where he will be responsible for that plant as well as the Booker Noe Distillery at Boston, Kentucky.

Also moving to Clermont is Victoria MacRae-Samuels, currently Vice President of Operations and Plant Manager at Maker’s Mark. She is relocating to the Global Innovation Center in Clermont as Senior Director, Global Quality for Beam Suntory.

Jane Bowie has been promoted from Distillery Maturation Specialist at Maker's Mark to Director of the Private Select and Diplomat Program.

Friday, August 24, 2018

"That Next Drink May Kill You" And Other Stories

You had a drink and now you're dead.
Unless you've been living under a rock, you've seen the headlines: "No amount of alcohol is good for your overall health, global study says," "Alcohol was responsible for nearly 3 million deaths in 2016, study says," "Health risks of alcohol outweigh benefits, study says."

The study was published in The Lancet. You've heard of The Lancet, right? Lots of medical stories start out there.

Read down a bit and you discover that the study was funded by the Bill and Melinda Gates Foundation. The mission of the Gates foundation is to "help all people lead healthy, productive lives." There's nothing wrong with that.

When I see stories like this, especially when alcohol is involved, I like to skip the lurid conclusions and jump to things like who paid for the study and, most of all, what was their methodology?

The study used data from the 2016 Global Burden of Disease report, which captured information on premature death and disability from over 300 diseases by sex and age in 195 countries or territories between 1990 and 2016. This study's researchers used that report to analyze the impact of alcohol on 23 health conditions and alcohol-related risks on people between the ages of 15 and approximately 95 for the year 2016.

This is where it starts to get hinky. The study's very design suggests its objective was to see how many ways they could find to blame alcohol for premature death and disability.

To arrive at their conclusions, the study's authors use something called the Disability-Adjusted Life Year (DALY), a measure of overall disease burden expressed as the number of years lost due to ill-health, disability or early death. It was developed in the 1990s as a way to compare the overall health and life expectancy of different countries. Whether or not that metric is suitable for generating the headline conclusions of this study is debatable. This is how good science often goes awry.

In the DALY, each disability has a different weight, with 1 meaning 'dead' and 0 meaning 'completely healthy.' Urinary incontinence carries a disability weight of 0.139. Migraines? 0.441. Ebola? That’s merely 0.133. The weights are somewhat arbitrary, which may be fine when used as intended, but here they are being applied for a very different purpose.

The study's headline-grabbing claim is that the deaths of 2.8 million people around the world every year can be attributed to alcohol. Is that a lot? The population of the world is 7.5 billion people.

Now let's drill down on that 2.8-million number. We find it includes people who die in car crashes, through unintentional injuries, and violence wherever there is some evidence alcohol was involved. Were those people really killed by alcohol? Or was alcohol merely the weapon of choice in some cases, and an innocent bystander in others?

As universal as alcohol use is, it should surprise no one that many people who die for many reasons have consumed alcohol along the way. People who never leave the house probably won't die in a car crash. Is that a persuasive argument for never leaving the house?

So what? It's just another study. The headlines will be gone tomorrow. Then we'll get another story about coffee or chocolate or, heaven help us, kale.

The problem is, this study's authors also make recommendations, like advocating higher alcohol taxes and other government policies to suppress or, dare I say it? prohibit alcohol sale and consumption.

The busybodies who want to improve us without our consent will always be with us.

There don't seem to be any neutral observers on this subject. I don't claim to be one. Experts in the employ of the alcohol industry suggested some of the pushback above. The more nonsensical analysis is entirely my own.

If you want to dive into this issue even more deeply, check out this commentary from Christopher Snowdon. He explains why it is probably inevitable that policymakers and advocates will finally settle on the "no safe level of drinking" conclusion. Hint: it's political.

When it is hard to get a straight answer from experts, ask yourself "what makes sense?" Most of human experience tells us that most people who use intoxicants (alcohol and others) consider their lives enhanced by that use, not diminished. Are we wrong? I think not, and this study failed to change my mind.

Tuesday, August 14, 2018

Riverside, the Chicago Portage, and Quincy Street Distillery

Chicago is laid out on a grid, as are most of its suburbs. But look at a map of the western burbs and Riverside stands out, a grid without corners. Instead of straight lines, Riverside’s streets are gently curved, like the Des Plaines River that borders the town on the south and west, and gives it its name.

Riverside was an early example of a planned community, designed in 1869 by Calvert Vaux and Frederick Law Olmsted, who most famously designed New York’s Central Park. It was intended as a suburb, connected by commuter rail to Chicago's downtown. Today most of the town is a National Historic District.

Quincy Street Distillery, 39 East Quincy St., Riverside, Illinois 
One of the very few straight streets in Riverside is Quincy, where you will find Quincy Street Distillery, a small artisan distiller near an art glass studio and the local arts center. Quincy Street gives tours and does tastings, by appointment, four days a week.

Quincy Street makes a large variety of whiskeys, gins, and other spirits.

A visit to a small distillery can be pretty quick, so it’s nice if there are other interesting things to do in the same area. Riverside provides that, in the historic town itself and its neighbor to the south, Lyons, where there is a site very important to Chicago history.

A statue commemorating 17th century explorers Pere Jacques Marquette and Louis Joliet.
Chicago is where it is because of its eponymous river, which originally emptied into Lake Michigan. Early European explorers learned from the natives that a short portage from the Chicago River’s south end could put one into the Mississippi River system, effectively connecting the Great Lakes and Mississippi systems. Eventually that portage trail became a canal, then a much bigger canal. Part of the original trail is still visible in its natural state at the Chicago Portage National Historic Site.

And if that isn't enough for you, Brookfield Zoo is also nearby.

Wednesday, July 25, 2018

MGP Reduces Minimum Order for Custom Mash Bills

An aging warehouse at the MGP distillery in Lawrenceburg, Indiana (formerly owned by Seagrams).
MGP announced today that it has reduced its minimum order for spirits made from proprietary mash bills to 250 barrels from the previous 1,000-barrel requirement, said MGP Vice President of Alcohol Sales and Marketing David Dykstra.

In addition to lowering the minimum order, MGP will allow customers to 'pool' orders with other producers to fulfill the 250-barrel requirement.

MGP also offers a customized barrel entry proof, and the option to use either new or used barrels. Aging in an MGP rack house is also available.

“We’re full-service and fully committed to partnerships that benefit our customers of all sizes,” Dykstra said.

This change would seem to indicate that the contract distilling marketplace is becoming more competitive and MGP is no longer the only game in town.

Thursday, July 5, 2018

Some Perspective on the Barton Warehouse Collapse

Two weeks ago, we told you about the partial collapse of Warehouse 30 at the Barton 1792 Distillery in Bardstown, Kentucky. Yesterday, not surprisingly, the rest of it came down. The photographs and videos are certainly dramatic, approximately 18,000 barrels of whiskey, each one holding 53 gallons and weighing 500 pounds, in a massive pile, with pieces of the roof and other debris scattered about.

No one was injured in either collapse.

The story is all over social media and many people are blowing it way out of proportion. Obviously, it is a bad accident, but it doesn't imperil Sazerac, the distillery's owner, nor will it have a significant impact on the industry as a whole. It is a drop in the bucket. There are currently 6,657,063 barrels of whiskey aging in Kentucky. The barrels affected in this incident represent about 1/3 of 1% of that total, and that's just in Kentucky. There are a few million more aging in Tennessee, Indiana, and other states.

Although they are rare, events like this do happen. As a precaution, every warehouse contains a mix of different products at different ages, mitigating the impact of accidents on inventory planning.

Sazerac, America's third largest whiskey producer, won't miss a beat.

The warehouse was about 80 years old. It was a wooden structure, covered with a thin steel skin. While the exact cause has not been determined, it isn't hard to figure out the factors that may have been involved: an old, wooden building; a very wet spring, and a tremendous amount of weight. These things happen from time to time. The most unusual fact about this incident is that there wasn't a fire. There usually is a fire.

As it is, the biggest concern is keeping whiskey from smashed or leaking barrels from getting into the creeks that surround the site, which all empty into the Beech Fork River. If you watch one of the longer videos, you can see there is a massive earthmoving operation going on at the base of the hill, creating a barrier to keep the alcohol out of the stream.

After the initial collapse, the Kentucky Environmental Protection Agency reported that approximately 500 fish were killed. When alcohol gets into a waterway, algae feed on it and deplete the water of oxygen. The fish die of asphyxiation.

After a warehouse at Wild Turkey collapsed and burned in May of 2000, officials of the Kentucky Department of Fish and Wildlife Resources announced that a 28-mile-long 'dead zone' was floating down the Kentucky River with the current, killing everything in its path. It was the worst fish kill in Kentucky history. About 227,000 fish died, including paddlefish, catfish, shiner minnows, spoonbills, carp, gar and saugers. Wild Turkey was assessed and paid a large fine.

As you can see from the pictures, many of the barrels appear to be intact. They are made from white oak, which is pretty stout stuff. There are no estimates yet as to how many can be salvaged, and the effort will take a long time. Barrels will literally have to be removed one by one, probably using some kind of crane to avoid disturbing the pile.

There probably were distilleries on the Barton 1792 site before 1876, but that was the year Tom Moore and Ben Mattingly established the Mattingly & Moore Distillery there, with financial help from John Willett, Mattingly's father-in-law. Moore's mother was a Willett too, so it was all in the family. In 1879. Moore established the Tom Moore Distillery right next door and that is the plant that eventually became Barton. (The year 1792, which is the name of the distillery's flagship product, is the year Kentucky became a U.S. state. It otherwise has no significance to the history of the distillery.)

Barton is pretty ideally situated on the edge of Bardstown. The distillery itself is in the valley, at the spring. Most of the warehouses are on a high plateau above it, to maximize air circulation. Although a small part of one original building was incorporated into the distillery, most of it was built in the 1940s. Sazerac bought it in January of 2009. Sazerac also owns the Buffalo Trace Distillery in Frankfort, and a maturation and bottling operation in Owensboro at the site of the Glenmore Distillery.

Although this accident is surely unfortunate, and the clean-up will be costly and time consuming, everything and everyone is going to be just fine.

Sunday, July 1, 2018

In Bourbon Country, Fall Begins Today

No, the leaves haven't changed and the thermometer tells a different story, but July 1 is the first day of the fall distilling season in America's whiskey distilleries.

Division of the year into two distilling seasons was codified in the Bottled in Bond Act of 1897 and later incorporated into the Federal Standards of Identity for Distilled Spirits as Subpart B, Sec. 5.11 'Meaning of terms.'

The significance of this rule is shown in the photograph. For a distilled spirit to be labeled 'bonded' or 'bottled-in-bond' it must, among other things, have been entirely distilled within a single distilling season, either spring (1/1 - 6/30) or fall (7/1 - 12/31) of a given year. Although the law no longer requires disclosure of the distilling season on the label, it still obliges producers to adhere to that limitation.

Designating the two seasons as 'spring' and 'fall,' rather than in some other way, has even deeper roots. Traditionally, distilling was a seasonal enterprise, mostly taking place in the fall, after the harvest was in, when grain was most plentiful and cheapest, and when farmers were available to work as distillery hands. Distilling would then continue into the winter months, with a short break around Christmas and New Year, until the grain ran out or the weather got too hot, whichever came first.

As the research being done at George Washington's distillery at Mount Vernon has shown, distilling in those days involved a lot of very hard, physical labor. It was also hot work, from boiling water to cook the mash, which had to be stirred by hand, to the hot copper stills themselves, distilleries were hot and smoky. Better to do that sort of thing in the fall and winter than in the heat of summer. Also in those days, without the technology to control fermentation with chilled water, the yeast had a tendency to work too fast in hot weather, leading to lower yields.

Today, although technology makes it possible to distill all year, and the current high demand for American whiskey makes it an economic necessity, distilleries still typically take a summer break—usually in August—to give workers a vacation and to clean, maintain, and upgrade the equipment.

If you plan to tour a distillery this summer, check first to make sure they will be operating during your visit.

So while it is too early to break out the candy corn, you may want to raise a glass to the new distilling season that starts today.

Monday, June 25, 2018

The Rest of the Sourced Whiskey Story

A few weeks ago, NBC News posted a story and video with the headline "Behind the misleading claims fueling America's bourbon boom." They did a good job with it. It was well told and accurate, despite the overheated headline.

Stories about whiskey sourcing appear from time to time and that's good too. It is an aspect of the industry most people don't understand, and there are shady operators out there who exploit that ignorance.

But there are a few parts of this story most journalists miss.

(1) Sourced whiskey is nothing new.

(2) Whiskey sourcing is not inherently sinister.

(3) It's not all coming from MGP.

First, some history. It took a long time for distilled spirits to become an industry in the United States. Distilleries, like most things, were local. You bought your whiskey or other spirit directly from the person who made it, or from a local retailer who did. It was only around the middle of the 19th century that it became an industry. The Coffey still made it possible to produce a large volume of product, and the railroads made it possible to get that product to distant markets quickly and economically.

For the most part, distilleries simply distilled and aged the product. Most were located in the country, close to their raw materials: water and grain. They sold most of their output to distributors who bottled it and created brands, and marketed them far and wide. Back then, virtually all whiskey was sourced whiskey.

After 1905, technology made bottling more practical, beginning a trend toward vertical integration.

That trend continued when the industry came back after Prohibition, but sourced whiskey never went away. Some distilleries continued to sell most of their output to distributors and most distilleries sold at least some of it that way.

There are two ways to buy sourced whiskey. The first is bulk whiskey, where you buy whiskey the distillery has made and aged at its own expense that is ready to drink. The other is contract, in which you buy new distillate and either pay the distillery to age it for you, or take it and age it yourself.

As the industry contracted when bourbon sales collapsed in the 1970s, there was a lot of excess distilling capacity. Because sourced whiskey (bulk or contract) tends to be a low margin business, most distilleries that specialized in it were early casualties. The distilleries that survived primarily made and sold their own brands, but since most of them had excess capacity they were happy to do contract distilling for anyone who asked, and they were happy to sell bulk whiskey when they had excess inventory, which most did through the 70s, 80s, and into the 90s.

What we now know as MGP in Lawrenceburg, Indiana was originally owned by Seagrams. It is a big distillery that makes both neutral spirits (i.e., vodka) and whiskey. It primarily made Seagrams Gin (which uses neutral spirit) and Seagrams blended whiskeys such as Seagrams Seven Crown (which combines straight whiskey with neutral spirit).

In 1999, the entire Seagrams company was sold for parts. Diageo got the blended whiskey brands. Pernod got the Lawrenceburg distillery and Seagrams Gin. Diageo contracted with Pernod to keep making the blends, but there was nothing to prevent them from making them somewhere else in the future. Likewise, Pernod could make its gin somewhere else. The Lawrenceburg distillery, then about 70 years old and showing its age, began to look like a surplus asset. Pernod announced its desire to sell the plant and said they would close it if they couldn't find a buyer.

Because sales of the Seagrams blends were declining, Pernod found itself with more whiskey in its aging warehouses than it needed, so in about 2005 it quietly began to sell some of it in bulk. The makers of Templeton Rye were among the first buyers and as has been well documented, they went to great (and illegal) lengths to hide the source.

Eventually, Pernod sold Lawrenceburg to Angostura, the distilled spirits division of a large insurance and financial services company in Trinidad and Tobago. Along with a lot of other things, that company crashed in the 2008 worldwide financial crisis. Without financing from their failing parent, the Lawrenceburg distillery was forced to go it alone, selling whatever they could to whoever would buy it just to keep the lights on.

MGP bought the distillery in 2011 and their timing was great. All of a sudden, the market for both bulk whiskey and contract distilling was booming. Margins improved. MGP was sitting pretty.

But through all this, MGP was never the only or even the primary seller of sourced whiskey. A few of the major distilleries had always sold it as a regular part of their business. They included Heaven Hill, Barton (then owned by Constellation), and Sazerac's Buffalo Trace. Brown-Forman didn't sell bulk but they did a lot of contract distilling at their Shively plant. Virtually every other major distillery sold bulk from time to time, whenever their forecasts predicted a surplus in a particular age range.

But as the bourbon boom got even boomier, those producers increasingly needed both their stocks and their capacity to support their own brands. Contract producers stopped accepting new contracts or permitting current customers to contract for greater volumes. Brown-Forman stopped doing contract distilling altogether. MGP became the only game in town.

Today, supplies of bulk whiskey are still very tight, but a lot of new contract distilling capacity has been created. In addition to contract distilling, MGP is investing in building up its bulk whiskey stocks and many of the new producers, such as Bardstown Bourbon Company, are doing the same. In addition, long time non-distiller producers such as Luxco and Michter's have built their own distilleries, becoming distillers. As their house-made whiskey reaches maturity, they will exit the sourced whiskey market as buyers and perhaps re-enter it as sellers, so the whole dynamic is changing.

Meanwhile, the majors continue to unload their surpluses into the market from time to time. Maker's Mark and Jack Daniel's are just about the only distilleries that never need to do this.

Although they are losing their hegemony, all this is not bad news for MGP. It means the business is becoming more competitive but MGP's CEO, Gus Griffin, is a smart guy who knows the business well. He already has begun to develop house brands to diversify away from the low margin sourced whiskey business.

Meanwhile, stories like the NBC News one are making consumers smarter and more skeptical about sourced whiskey, especially mediocre products with fancy bottles, big price tags, and dubious origin stories.

Friday, June 22, 2018

Partial Warehouse Collapse at Barton 1792

At about 11AM EDT this morning, without warning, a whiskey aging warehouse at the Barton 1792 Distillery in Bardstown partially collapsed. No one was injured but about 9,000 barrels are affected, according to Nelson County Emergency Management spokesman Milt Spalding. Although the visible barrels appear remarkably intact, they may be leaking. So far, according to officials, water in the nearby Beech Fork River has not been impacted.

The building, which is about 60 years old, was being repaired. Bardstown Fire Chief Billy Mattingly said the part still standing is very unstable and may collapse as well. The warehouse held a total of 20,000 barrels.

There is no way to say yet how many barrels were lost. Intact barrels, still full, can be salvaged. Even so, the financial cost surely will be in the millions, not just from lost whiskey but also the cost of replacing the building. New warehouses cost about $2 million each. As for the whiskey, the value of a barrel will vary according to its age but let's say a full barrel is worth about $2,000, a low estimate. A loss of 9,000 barrels adds up to $18 million.

Here is one mitigating factor. Because accidents happen, distilleries don't put all of their eggs in one basket. Every warehouse contains a mix of barrel ages, from newly-filled to fully mature.

As the images show, the warehouse was built at the edge of a hill and that is the side that collapsed. This has been an unusually wet spring throughout the region. One possible reason for the collapse is subsidence caused by oversaturated soil. Barton 1792 is owned by Sazerac. As of now, the company has not made any announcements about the accident.

Click here for some drone-shot video of the scene.

Sazerac has released the following statement:

Barton 1792 Distillery is confirming it did have an incident with one of its barrel warehouses, Warehouse #30 today, Friday, June 22nd around 11 a.m. EDT. 

One side of the barrel warehouse collapsed causing structural damage.  No one was inside the warehouse and there were no injuries. 

The Distillery team took proactive measures to access and contain the damage immediately.  The Kentucky Department for Environmental Protection has been on site and the Distillery team implemented a number of actions to minimize any environmental risk.

Barrel Warehouse #30 was built in the 1940s and held approximately 18,000 barrels.  We believe no more than half of the barrels inside are impacted; we are assessing how many of the impacted barrels can be recovered.  A mix of various distilled products at various ages were stored in that warehouse.

The Warehouse incident will not affect normal operations or tourism activities; the Distillery expects to be open for tours on Saturday and it will resume normal business operations on Monday.   Barton 1792’s normal “summer shutdown,” which is when bourbon distilleries shut down for a short time period in the summer for repairs and routine maintenance, began last week. This will not affect bourbon production once the Distillery’s summer shutdown time period ends as already planned.   

It may be several days or weeks before a full assessment of the damage to Warehouse 30 at Barton 1792 is fully complete.  At this time we do not know which Barton 1792 brands or customers will be impacted.

Thursday, June 14, 2018

Elijah Craig Did Not Make the First Bourbon

One of the most persistent bourbon myths is the one about Elijah Craig. Here is a typical example, from Alexis Lichine's New Encyclopedia of Wines & Spirits: "Early in the colonial history of America, a Baptist minister, Elijah Craig, established a still in Georgetown, Kentucky and began producing whiskey from a base of corn. The still is said to have been one of the first in Kentucky and customers in neighboring towns christened his product Bourbon County Whiskey, from the county of origin."

The myth can be traced to Richard Collins, whose History of Kentucky was published in 1874. Collins does not identify Craig by name, but writes that "the first Bourbon Whiskey was made in 1789, at Georgetown, at the fulling mill at the Royal spring." This claim is included, without elaboration, on a densely-packed page of short statements under the heading 'Kentucky firsts.' 

Collins does not attempt to substantiate the claim nor has any evidence ever been produced to support it. Craig was a real person—a major character in early Kentucky history—and he was a distiller. He also operated a fulling mill at the Royal Spring in 1789, so there is little doubt that Collins intended to attribute this milestone to Craig. What is lacking is any evidence that Craig’s whiskey was unique in its day, that it alone had somehow been elevated from the raw, green, corn distillate made throughout the frontier to the bourbon whiskey we know today.

In addition to a lack of any evidence to support the Collins claim, which was made almost 100 years after the fact, there is another, more significant problem about connecting the Craig claim to bourbon’s name. Craig's distilling operation was never in Bourbon County, even with the shifting of county boundaries that took place during Kentucky's early history. Craig didn’t move, but the boundaries did as new, smaller counties were created from older and larger ones. Craig's site was first in Fayette County (1780), then Woodford (1788), then Scott (1792), but never Bourbon. 

In Craig's day, making whiskey was commonplace, universally viewed as an economic and personal necessity. It was only much later, in Collins’ time, that making and consuming whiskey became controversial. Collins himself sympathized with the prohibitionists who would eventually outlaw whiskey, but distillers and their supporters were quick to embrace his assertion that bourbon was 'invented' by a respected Baptist preacher. This does not explain why Collins attributed the invention of bourbon to Craig, but it does explain why that legend has endured.

Now, of course, it is in the interest of a certain distillery to keep the myth alive. 

Tuesday, June 12, 2018

Buffalo Trace Updates Bourbon Shortage Status

I don't generally publish press releases. I am publishing this one for two reasons. (1) It contains a lot of interesting information. (2) I wish everybody would put out something like this. Don't you?

Thirsty Drinkers Cope with Scarcity amidst Bourbon Shortage

Buffalo Trace Distillery Now Investing $1.2 Billion to make more  

FRANKFORT, FRANKLIN COUNTY, KY (June 12, 2018) In 2013, Buffalo Trace Distillery looked at its bourbon inventory, current sales, and 20 year sales projections and determined it had a problem: fans were drinking more bourbon than the company had predicted. In short, the company was facing a bourbon shortage. 

So it took the next logical steps: put bourbons most in danger of running out on allocation, warned fans there might be periodic shortages at the liquor stores, increased distillation, added more bottling lines, and hired more employees, including a dedicated position to watch and balance bourbon inventory. The company thought these steps were the appropriate reaction to the problem, rather than raising prices to slow sales or compromising taste or quality to bottle more by diluting proof, or bottling barrels before they fully matured.

Now, five years later, the bourbon boom is still booming, Bourbon sales continue to grow in the United States by five percent annually. The number of new brands has exploded as consumers seek more variety. Over 1,500 craft distilleries dot the landscape across America. The craft cocktail scene has arrived and a new bourbon bar seems to open weekly.

Those national trends are good news for Buffalo Trace Distillery who has more barrels coming of age over the next 12 months. Fans of Buffalo Trace Bourbon will enjoy finding more bottles available in 2018, but the company still suspects it will not be enough to meet demand.

There’s good news on other brands too, like Eagle Rare, W. L. Weller, E. H. Taylor Jr, and Blanton’s Single Barrel, as all of these brands will see more barrels come of age and bottles produced in 2018.

The Distillery will continue to bottle other fan favorites such as Van Winkle, George T. Stagg, Elmer T. Lee and Sazerac Rye as barrels mature, but unfortunately there will be little growth on these brands.

The company expects the majority of its whiskeys will still be on allocation, and will continue bourbon allocations across the U.S. to ensure each state receives some.

“When I started with the company in 1995, we filled 12,000 barrels a year. Today the growth seems moderate, but when you think about how far we’ve come, it’s actually phenomenal, considering when we’re on track to produce 200,000 barrels this year,” said Harlen Wheatley, master distiller.

All that growth takes capital investment, and Buffalo Trace is in the early stages of spending $1.2 billion over the next 10 years at this National Historic Landmark. Already, two new barrel warehouses are complete with new barrels being loaded inside. The third is going up rapidly, and the foundation has been started for the fourth. When complete, each of these new warehouses will hold 58,800 barrels of whiskey. The plan is to build one new warehouse every four months for the next several years. Each warehouse cost $7.5 million to build and $21.0 million to fill with barrels.

Each warehouse will be insulated, an industry first, to protect it from the cold Kentucky winters, when bourbon lies dormant inside a barrel when temperatures drop. Already, Buffalo Trace is one of the few distilleries to steam heat its existing warehouses, now another layer of environmental protection has been added with insulation. 

But all those barrels means whiskey production must be increased too, which is why Buffalo Trace is in the process of replacing its boilers (some of which have been in place since the 1950s) and is preparing its site to add a new cooling tower next summer. The cooling tower cools down the water that is used for cooling down the grain after its cooked into mash. 

Also next summer, the Distillery plans to add four new cookers, twice the size of the existing cookers. Plus, four new fermenters will be installed. These 92,000 gallons fermenting tanks will be same size as the existing fermenters - the largest in the distilling industry.

As whiskey production capacity increases, the distllery expansion will displace the main bottling operation at Buffalo Trace. So a new bottling hall is being built at a cost of $50.0 million which will improve efficiency, flexibility and overall quality. The move is expected to be complete by the end of 2018.

Buffalo Trace Distillery would like to stress that while the bourbon shortages are prevalent on all of its brands, they speak only for themselves, not for the entire bourbon industry. 

Although Buffalo Trace is moving forward aggressively with expansion plans, allocations will continue, with no foreseeable end in sight.  Buffalo Trace Distillery would like to thank its customers for their continued support and to ask them to remain patient as they endeavor to make more bourbon. Unfortunately, you can’t cheat Father Time when making good bourbon!

About Buffalo Trace Distillery

Buffalo Trace Distillery is an American family-owned company based in Frankfort, Franklin County, Kentucky. The Distillery's rich tradition dates back to 1773 and includes such legends as E.H. Taylor, Jr., George T. Stagg, Albert B. Blanton, Orville Schupp, and Elmer T. Lee.  Buffalo Trace Distillery is a fully operational Distillery producing bourbon, rye and vodka on site and is a National Historic Landmark as well as is listed on the National Register of Historic Places. The Distillery has won 21 distillery titles since 2000 from such notable publications as Whisky Magazine, Whisky Advocate Magazine and Wine Enthusiast Magazine. Its Col. E. H. Taylor, Jr. Four Grain Bourbon was named World Whiskey of the Year by “Jim Murray’s Whiskey Bible 2018.”  Buffalo Trace Distillery has also garnered more than 500 awards for its wide range of premium whiskies. To learn more about Buffalo Trace Distillery visit

Monday, June 11, 2018

International Law? There Is No Such Thing

WARNING: No bourbon content.

In their criticism of the Trump administration's recent policy change, regarding separating the children of asylum-seekers from their parents upon arrival, many have cited the 1951 United Nations Convention Relating to the Status of Refugees and its 1967 protocol that says the U.S. must recognize refugees that fear persecution and are not able to get help from their home country. They say that by arresting asylum-seekers and putting their minor children into protective custody, the U.S. is in violation of that international law.

I don't approve of that policy, nor did I approve of the U.S. invasion of Iraq in 2003, but both events raise the question. What is international law? Here is something I wrote in 2004.

On September 17th, United Nations Secretary General Kofi Annan said in an interview with the British Broadcasting Corporation World Service that he believed there should have been a second U.N. resolution to determine the consequences of Iraq's failure to comply over weapons inspections.

Asked if he viewed the invasion of Iraq as illegal, he said: "Yes, if you wish. I have indicated it was not in conformity with the U.N. charter--from our point of view, from the [U.N.] charter point of view, it was illegal."

When politicians and commentators talk about international law, they usually fail to explain that what is called 'international law' is very different from the ordinary, everyday law to which you and I are subject. If we break a law and are found guilty by a court, we can go to jail, be required to pay a fine, or required to pay some sum of money to another person. Ultimately, the jurisdiction in question (whether it be a city, state, or nation) has the authority and power to enforce its rulings, by force if necessary, and they usually do so without hesitation.

If, like most people, that is what you think of when you see the word 'law,' then by comparison 'international law' is practically a euphemism.

Advocates of international law would like everyone to equate it with the common understanding of the word 'law.' That is why they use the term. But if there were truth-in-advertising in international rhetoric, the term 'international law' would have to be banned.

International law consists of a web of multilateral and bilateral agreements among and between sovereign states. The first 'international laws' were trading agreements that became standardized and to which most nations subscribed. Today, the various courts of international law operate under the auspices of the United Nations. If you understand the United Nations to be to international law what the State of Illinois is to Illinois law, you can begin to see the problem. Persons, whether natural (you and me) or unnatural (corporations), are subject to Illinois law. The state of Illinois can send armed officers to take me into custody to enforce its laws. It can order my bank to give it my money. It can even kill me.

With international law, sovereign nations are the subjects. What can the United Nations do to a member nation found guilty of violating an international law? If the United Nations imposes sanctions on a nation, it relies on its member states to abide by the sanctions regime. International law only works when it is in everyone’s interest to go along. When it is not, they don’t, and there isn’t much anyone can do about it.

Unless, that is, they have a military and the willingness to use it. Then so-called international law can provide a handy rationale for military action.

In an Illinois courtroom, at least ideally (and, in fact, in most cases), the law applies equally to everyone. This may be true of international law in theory, but in reality it is always political.

Nations voluntarily submit themselves to the various bodies charged with hearing cases and making rulings about alleged breaches of international law. They can cooperate during a trial and then say, “no thank you” to the verdict, or they can say “no thank you” to the entire process.

As a rule, nations abide by international law except when they don’t. When they don’t, the political part kicks in, first prodding and persuasion, then maybe sanctions, which might or might not be effective at punishing the violator, depending on the violator’s susceptibility to international pressure and on the willingness of other nations to bring it. Imagine if the IRS collected taxes that way.

It is often said that the United States Constitution “is not a suicide pact,” meaning that any right can be reasonably limited when permitting its full exercise would threaten the nation. Likewise, international law is not a suicide pact. Sovereign nations never will submit voluntarily to rulings that threaten their sovereignty and the United Nations has no independent ability to compel them to submit.

So, the United States invokes international law to defend its invasion of Iraq and the war’s opponents invoke it to condemn the invasion as illegal. Who is right? Neither? Both? Both sides have a case but, ultimately, so what?

That is what 'law' means when you put an 'international' in front of it. Ultimately, not much.

Monday, June 4, 2018

Kentucky Launches Mail Order Bourbon Business

Governor Matt Bevin signs the 'Bourbon Without Borders Act' at the Frazier History Museum in Louisville.
The bill Kentucky Governor Matt Bevin signed into law on Friday allows alcoholic beverage producers in Kentucky--distilleries but also small farm wineries--to ship their products out-of-state. Nicknamed the 'Bourbon Without Borders Act,' it was introduced by Chad McCoy, who represents Bardstown in the Kentucky House of Representatives.

"HB 400 is an important step in eliminating red tape and modernizing one of Kentucky's signature industries," said Gov. Bevin in a tweet. "This new law will promote economic development and increase tourism opportunities, ensuring that visitors can take a little piece of Kentucky home with them when they leave."

Some visitors, anyway. Currently, the privilege is limited to states that also allow direct shipment, of which there are seven (Arizona, Hawaii, Nebraska, Nevada, New Hampshire, North Dakota, and Rhode Island), plus Washington, D.C. The hope is that more states will join the club, leading eventually to a national direct sales marketplace.

Kentucky bourbon distillers and other producers celebrated the new law, as did UPS, which has its Worldport hub at Louisville's airport. UPS's largest air facility, Worldport processes an average of 1.6 million packages a day.

The direct shipment law takes on more significance when considered in conjunction with Kentucky's new 'Vintage Spirits Law,' which took effect on January 1. Now collectors in participating states can buy and sell legally without traveling to Kentucky, as long as they sell to and buy from a licensed Kentucky alcohol retailer. (Unlicensed individuals may not ship alcohol, but if you can get it there, everything else is legal and aboveboard.)

Full normalization of the secondary market in alcoholic beverages still has a long way to go, but it is nice to see Kentucky exhibiting this kind of leadership.

Friday, June 1, 2018

That Stuff You're Drinking? It's Not Whiskey

Whiskey has exactly one ingredient, whiskey. A mixture of different whiskeys, and nothing else, is still whiskey. A mixture of whiskey and other stuff is not whiskey. It is a cocktail.

People can drink what they want. You should drink what you like and be proud of it, which means be honest about it. Don't say you are a whiskey drinker if what you are drinking is not whiskey but merely a beverage "made with whiskey." (See label, above.)

You will also notice, on that label, that the word 'Tabasco' appears in larger type and twice as often as the word 'whisky.'

There are several things going on here, about branding and American whiskey having a moment right now. All of a sudden, everybody wants to say they're a whiskey drinker. Just about all of the big producers are getting in on it. Jack Daniel's Honey is not whiskey. Red Stag by Jim Beam is not whiskey. Fireball is not whiskey.

We could talk about the labeling rules, but what's the point? Most of these products follow the rules, more or less. This isn't about rules, this is about common sense, or maybe dignity, or patriotism, honor, faith, courage, respect, something important like that.

We may not all have the same truth, but let's all try to speak the same language.

A manhattan is a drink made with whiskey, but a manhattan is not whiskey. Only whiskey is whiskey.

Wood finishes, like Angels Envy, Maker's 46, or Woodford Reserve Double Oaked, are a different subject. Wood is an ingredient in whiskey, not the other way around. You can mess with the wood and the liquid is still whiskey. If the Dickel product was just Tennessee whiskey finished in Tabasco barrels it might not be good, but it would be whiskey.

But if you add port, or sherry, or honey, or honey liqueur, or 'essence of Tabasco,' the beverage is no longer whiskey. A beverage is not 'cinnamon whiskey' unless it is distilled from the fermented bark of a cinnamon tree. It is, exactly like a manhattan, a drink in which whiskey is an ingredient.

Well, not exactly like a manhattan. A manhattan is good.

Wednesday, May 16, 2018

Dad's Hat Rye Set to Break 4-Year Age Barrier

All of a sudden, it seems, there are hundreds of small distilleries in the U.S. It is a struggle to keep track of them all. For whiskey drinkers, however, it is possible to quickly shrink the number to a manageable size. Just limit your attention to distilleries selling house-made whiskey that is at least four years old.

Last spring, Whisky Advocate Magazine published a story by me headlined "Craft Whiskey Comes of Age." At the time, I estimated that only about 20 craft distillers met the 4-year standard. I'm sure the number is a little higher now.

Dad's Hat Rye, located in the Philadelphia suburb of Bristol, was on that list. Like several others, their 4-year-old was bottled-in-bond and a very small release, available only at the distillery. Since then, stocks have grown enough that owners John Cooper and Herman Mihalich feel they can make the bond an annual release, available throughout Pennsylvania and soon in other states. The 2018 release will be out at the end of this month.

Later this year, Dad's Hat will transition its Dad's Hat Pennsylvania Straight Rye Whiskey to a 4-year-old as well, probably in September depending on stocks.

As the whiskey matures, so does the craft whiskey movement itself. Dad's has hung its hat on rye, the traditional spirit of Pennsylvania, home of such legendary rye distilleries as Michter's, Large, Old Overholt, Schenley, and Broad Ford. They are one to watch.

Sunday, May 13, 2018

Whiskey Fungus Struggles in Court of Public Opinion

Fungus on the warehouses at Heaven Hill in Bardstown, Kentucky.
Baudoinia compniacensis is a harmless fungus that grows well in the presence of ethanol vapor. It is commonly called the ‘whiskey fungus’ because it is found on or near whiskey maturation warehouses.

The bourbon boom has led to more whiskey being distilled, more in warehouses, and therefore more fungus. Since the first complaints and lawsuits were filed in 2012, the industry has fared well in courts of law, less well in the court of public opinion. Today, when distilleries decide to build new warehouses, and ask for public investment in the form of tax incentives, the companies and officials want to talk about economic development, but the public wants to talk about fungus.

The new, May issue (Volume 18, Number 6) of The Bourbon Country Reader, available now, contains the second and final part of our in-depth report on B. compniacensis and the threat it poses to American whiskey's continued vitality. In part one, (Volume 18, Number 5) we looked at the history and science of the fungus, and the new awareness that first arose about five years ago. In part two, we look at the recent history of complaints to regulators, lawsuits, and the 'not in my backyard' reaction of many citizens to new distilleries and maturation facilities proposed in their communities.

But wait, there's more! Brown-Forman is relaunching one of its ancient brands, King of Kentucky. They tell some of the story, we tell the rest.

Current Reader subscribers should receive their copies of the new issue in the next few days. New subscribers can get on the bandwagon by clicking here.

Founded in 1994, The Bourbon Country Reader is the oldest publication devoted entirely to American whiskey. It is a charming mix of news, history, analysis, and product reviews. Do you worry that advertising spending influences coverage in other publications? No chance of that here since The Bourbon Country Reader is 100 percent reader-supported. It accepts no advertising.

To experience The Bourbon Country Reader for yourself, you need to subscribe. Honoring history, The Bourbon Country Reader still comes to you exclusively on paper, in an envelope, via the USPS.

A subscription to The Bourbon Country Reader is still just $20 per year for addresses in the USA, $25 for everyone else. The Bourbon Country Reader is published six times a year, more-or-less, but your subscription always includes six issues (no matter how long it takes).

Click here 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 want to catch up on what you've missed, bound back issue volumes are available for $20 each, or three for $50. Each volume contains six issues. That's here too. Volume 18 is now available.

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.

Go ahead and subscribe. (Note: newsletter contains no actual fungus.)

Friday, May 4, 2018

Who Makes America's Whiskey?

Beam-Suntory's Booker Noe Distillery - Boston, KY
In 2014's Bourbon, Strange, I wrote, "the industry is very concentrated, with just eight companies distilling all of America’s whiskey at thirteen distilleries."

When the question was revisited in 2016, it was ten companies and 15 distilleries.

In both cases, the list was limited to distilleries that produce at least 500,000 proof gallons of whiskey per year, about 10,000 barrels. Yes, there are hundreds of smaller distilleries that make whiskey, so it can't be 100 percent, but it is at least 99.

In 2016, the newcomers were Michter's and New Riff. Since then Bardstown Bourbon Company, Lux Row, O. Z. Tyler, Bulleit, Angel's Envy, Willett, Rabbit Hole, and Castle & Key have joined the club. Coming soon are Old Forester and Wilderness Trail. All are in Kentucky.

That makes 18 companies and 25 distilleries.

Those numbers are misleading. All of the new plants are at the small end of the range. Most of them have the ability to produce about one million proof gallons per year. Meanwhile, producers at the top have been expanding on a grand scale.

In fact, the concentration at the top is staggering. Four companies produce 70 percent of the whiskey made in the USA. Brown-Forman, led by Jack Daniel's Tennessee Whiskey, is biggest. Beam-Suntory is second, Sazerac is third, and Heaven Hill is fourth. Nothing about that appears likely to change unless through merger or acquisition.

Sazerac, for example, is in the midst of a 10-year, $1.2 billion expansion project at Buffalo Trace, that will culminate in the addition of a second 84-inch diameter beer still at the Frankfort distillery.

Although several of the new distilleries are already expanding, the number of new projects on that scale seems to have slowed. Although the number of distilleries in the more-than-500,000-proof-gallon range has doubled, the industry remains very concentrated.

The more things change, the more they stay the same.

Thursday, May 3, 2018

Diageo Doubles Its Shelby County Footprint

Diageo's Bulleit Distillery - Shelbyville, KY
Louisville Business First reported yesterday that Diageo has doubled its real estate holdings in Kentucky's Shelby County. The company has acquired, for $2.8M, 352 acres of additional land on Vigo Road adjacent to the present Bulleit Distillery property.

The same article reports that Michter's has purchased land near Springfield. It has been reported elsewhere that Maker's Mark is shopping for land near Lebanon. Not very long ago, MGP bought a large plot in northern Kentucky, not far from its Indiana distillery. Most of the major producers have acquired more land in the last few years.

Of the above, only Maker's has immediate plans to build warehouses, but that is what all of them will do eventually.

The Bulleit Distillery has only been open for a year and just half of the twelve 55,000-barrel warehouses planned for that site have been built. The distillery fills about 720 barrels a day.

Originally, Diageo wasn't planning a visitors center at Bulleit, but one is now under construction. That's another $10M. When it opens, will Diageo continue to operate the Bulleit Frontier Whiskey Experience at the Stitzel-Weller Distillery, south of Louisville? Probably. It is already on the official Kentucky Bourbon Trail.

Diageo is a huge company, with more than 200 brands in more than 180 countries. Its biggest brands include Johnnie Walker, Smirnoff, Captain Morgan, Bailey's, Tanqueray and Guinness. Relative to its dominance in most other segments, Diageo is a pipsqueak in American whiskey, especially in terms of actual distilling. Its big bourbon, Bulleit (which also has a rye), is entirely sourced. The new distillery in Shelby County is years away from putting anything in bottles. Diageo does make George Dickel Tennessee Whisky at the recently-renamed Cascade Hollow Distilling Company in Tullahoma. It also owns distilleries in Canada, where it makes Crown Royal and other Canadian whiskies.

Shelbyville is about 30 miles east of Louisville, on the way to Frankfort, Versailles, Lawrenceburg, and Lexington. It already has the Jeptha Creed Distillery. Creed is new and small, but visible from the highway and clearly anxious to welcome visitors. When in Shelbyville, be sure to dine at the Claudia Sanders Dinner House. Claudia was the wife of Colonel Harland Sanders, who started Kentucky Fried Chicken. It doesn't get more Kentucky than that.

Tuesday, May 1, 2018

Rabbit Hole, Louisville's latest downtown distillery, opens today

Photo by Fred Minnick
Rabbit Hole Distilling is a new $18 million bourbon distillery located in downtown Louisville. They had their grand opening today.

Rabbit Hole has had whiskey on the market for the last year or two, but it was contract distilled by another distillery. At full production, their new distillery will be able to make about one million proof gallons of spirit per year. That's big, about the same size as neighbors Angel's Envy (open now) and Old Forester (opening soon).

The other, smaller distilleries in downtown Louisville are at the Evan Williams Experience, the Jim Beam Urban Stillhouse, the Distilled Spirits Epicenter, and Michter's (opening soon). Kentucky Peerless Distilling is just slightly west of downtown. Copper and Kings, a very spiffy brandy distillery, is just east.

Louisville is, of course, the capital of Bourbon Country. Evan Williams had one of the first distilleries there in the 18th century, in what would now be considered downtown, but historically distilleries have not been in the city. That is true everywhere, not just Kentucky. The distributors and rectifiers would be located downtown, close to the river in Louisville's case, because the Ohio River was the principal way whiskey got to distant markets. Louisville always had a few distilleries in town, but most were on the outskirts, close to the farms that grew the grain.

There were other reasons for distilleries to stay away from population centers. Water needs were one, they need a lot of it and it needs to be clean. Before Prohibition, many distilleries kept livestock, typically cows or pigs, because spent mash is a nutritious feed. Whiskey maturation warehouses take a lot of real estate and in the city they need extra security. Because distilleries make high proof alcohol, fire is always a risk.

Today, the equation has changed. No distilleries have feedlots and most use municipal water sources. Fire safety is much advanced. All of the new downtown distilleries have only token maturation stocks on-site, if any.

But the biggest change is tourism. People like to visit distilleries. A great visitor experience can create a customer for life.

While a rural distillery such as Maker's Mark has its own unique charms, urban distilleries are easily accessible. Now someone in town for a day or two on business; or attending a sporting event, concert or convention, can easily get in a distillery visit or two. Louisville's distilleries are a unique attraction that reinforce Louisville's standing as Bourbon's capital city. Add in non-bourbon attractions such as Churchill Downs, the Louisville Slugger Museum, and the Muhammad Ali Center, plus myriad lodging and dining choices, and Louisville is hard to beat. Visiting Louisville is also remarkably affordable compared to other major cities.

Although one million proof gallons is a lot of whiskey, these new distilleries are small compared to plants such as Heaven Hill, which is close to downtown Louisville, or Brown-Forman, which is about three miles south. The three massive distilleries operated by Beam Suntory in Kentucky are all in rural areas, as are the rest, more or less.

It is still somewhat odd to build what is essentially a factory in the middle of an urban center, but in this case it all seems to make sense. Congratulations to the folks at Rabbit Hole for joining in this marvelous experiment.

Monday, April 30, 2018

Trolling Vodka World

I had a little harmless fun today on Facebook by posting the following statement: "'Craft Vodka' is an oxymoron."

The crowd went wild.

Simple trolls are best because they allow people to respond with their pet prejudices and most practiced arguments, with little regard for the subject of the original post. With a simple troll, many commenters just free associate. It can be entertaining and sometimes illuminating.

The best part about this one is that everybody missed the point.

'Craft Vodka' is an oxymoron, not because of the word 'craft' but because of the word 'vodka,' which is nothing more than a fanciful name for ethanol or, rather, ethanol diluted with water. Ethanol is a type of alcohol, the type we drink. The typical 80° proof vodka is 40 percent ethanol, 60 percent water.

There is ethanol in whiskey, of course, but whiskey (or tequila, etc.) isn't pure ethanol, which is what vodka is supposed to be.

This is not to say all vodkas are identical, anymore than any two glasses of water from different sources are identical. Humans can detect extremely subtle flavors and especially aromas, so the idea that some vodkas taste better than others is not fantasy, although what craft there is to it has more to do with filtration techniques and materials than anything else.

With something like beverages, a skilled craftsperson can make a product that is better than what can be mass-produced. The pertinent question is how much better and at what cost? There is, however, one drink that a factory can almost always make better than a craftsperson and that's vodka, because the making of ethanol is a highly developed industrial process. If the goal is ethanol that is as nearly pure as can be made, you want a machine to make it.

If you drink and like vodka, you can easily understand why this is true. People talk about good vodka in terms of the flavors that aren't there, not the flavors that are. The best vodkas, according to most drinkers, are the ones that taste most like water and 'don't taste like alcohol.'

There is one form of vodka that is, or at least can be, genuinely craft and that is flavored vodka. There the craft isn't in making the ethanol, it is in flavoring it. Gin, for example, is an example of a flavored ethanol product. I made gin once, at one of the big producers. I climbed up to the top of a huge tank of ethanol and poured in about a quart of 'gin essence' purchased from a flavorings house. Voila, I made gin, thousands of cases of it. There wasn't any craft in it, of course. The craft in gin-making, and vodka-flavoring, is in how one selects and processes the flavoring ingredients and how one infuses them into the spirit. That is a real craft requiring creativity, skill and experience.

Vodka is a great way to put alcohol into a drink that gets its flavor and character from its non-alcohol ingredients, but it is not so much a drink itself. It is an alcohol delivery system.

Vodka is also a great vehicle for embodying a particular self-image in a consumer product. That explains why there are so many different vodkas at such a vast range of prices. Get some ethanol, do perhaps some filtering to remove any lingering unpleasant flavors or aromas, then package and market it based on the simple premise of giving people what they want. Maybe you call it 'moonshine.' Maybe you make it in France, from grapes. Maybe you put it in an elegant bottle, give it an exotic-sounding name, and charge a ridiculous amount of money for it, some of which you pay to a suitable celebrity to endorse it. Since vodka is cheap to make, the money can be spent on marketing.

Very few people distill vodka themselves. Most buy it from one of the huge producers who simply make ethanol, some of which is used for drinks, some for medicine, some for fuel, etc. Even the big liquor companies like Diageo and Beam-Suntory don't distill the ethanol they use for their vodka, gin, and liqueur products. They buy it like they buy sugar or any other commodity. The companies that make it all seem to have names that consist of three initials: like MGP, ADM, and GPC.

Most vodka is made from corn (maize), which is why it can be labeled 'gluten free.' Other cereal grains can be and sometimes are used, whatever is cheapest at any given moment. A synonym for ethanol, common in the beverage world, is 'neutral spirit.' U.S. law requires products that contain neutral spirit to identify the source of the spirit, so ethanol made from corn is 'grain neutral spirit' (or 'neutral grain spirit'), ethanol made from sugar cane is 'cane neutral spirit' and so on.

Although ethanol can be refined to 100 percent purity, destroying every trace of the ingredients from which it was made, ethanol likes water too much to stay that dry for long. It quickly absorbs moisture from the atmosphere and stabilizes at about 96 percent. The regulations call it "at or above 190[deg] proof." Then, of course, water is added by the producer to dilute it to, typically, 40 percent.

The last time I wrote this much about vodka was last fall when I wrote about Tito's. As of today, that post has gotten 553,884 page views, my personal best.