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.

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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.