Friday, February 16, 2024

Latvia Is Russia's Whiskey Mule

 

Russia has its own whiskey, but they want ours.

Despite sanctions intended to deprive Russia and Russians of any Western goods they may want, many things are getting through, including scotch and bourbon. The mule satisfying Russia's whiskey jones is our NATO ally, Latvia.

According to DW, the German public broadcaster, in the first nine months of last year, Russia imported almost €244 million ($266 million) worth of whiskey products. Three-fourths of that came through Latvia, according to figures published by the Russian news agency RIA Novosti. In second place was another Baltic country, Lithuania, which sold Russia €27 million worth of whiskey.

Latvia also has become Russia's largest source of wine.

According to the Latvian government's official statistics portal, its exports to Russia were worth more than €1.1 billion last year. More than half of that was for alcohol and vinegar.

Latvia and Lithuania have small, domestic beverage alcohol industries, but most of what they ship to Russia comes from Western companies registered in the Baltics. 

What about sanctions? The head of a Russian spirits importer says it merely required a paperwork change. "While documents used to say that imports to Russia simply went through Latvia or Lithuania, now the Baltic states appear as the destination of the export, " he told the news agency. "Deliveries to Russia are then made from there."

Some observers say selling whiskey to Russia does not technically violate sanctions. Routing shipments through the Baltics, with Baltic companies handling all the of re-shipment to Russia, is mostly about Western companies concealing their Russian business to protect their reputations. 

According to the London-based Moral Rating Agency, Pernod Ricard is one of the largest suppliers of alcoholic beverages to Russia. Pernod owns Chivas Regal, Ballantine's, Royal Salute, The Glenlivet, Aberlour, Jameson, Powers, TX Whiskey, Rabbit Hole, Smooth Ambler, and Jefferson's. Pernod says it is trying to get out but, as just about everyone involved in this bemoans, it's complicated.

Latvia was admitted to NATO in 1999, along with Bulgaria, Estonia, Lithuania, Romania, Slovakia, and Slovenia, all states formerly dominated by Russia. They and other former Russian satellites, such as Poland, tend to be the most enthusiastic supporters of Ukraine, but many, such as Latvia, also have large Russian-speaking populations and many business and cultural connections to Russian entities. It's ironic, but also complicated. 


Friday, February 9, 2024

Bulleit's New American Single Malt Is Sourced Whiskey

 

Bulleit American Single Malt Whiskey is bottled at
90° proof (45% ABV). MSRP is $60 (750 ml).

Are you excited to try the new Bulleit American Single Malt? Well, here's a hot tip.

Bulleit didn't make it.

Diageo, which owns Bulleit, is the biggest distilled spirits maker in the world. They operate two large Kentucky distilleries and one in Tennessee, but they bought this whiskey from someone else.

They won't say from whom.

Here is what they will say, but only if you ask.

Fitting the American Single Malt category guidelines, Bulleit American Single Malt was distilled by 1 distillery in Kentucky. 

Due to contractual obligations with our supply partners, we cannot share specific details, but as has always been the case, we work very closely with our distilling partners to ensure that Bulleit is made to our exacting standards and specifications.

For further detail, we factor in working in partnerships with local distilleries to meet the growing demand for our whiskey that cannot be serviced by production at our distilleries in Shelbyville, KY or Lebanon, KY. Our distillers work closely with our distilling partners to ensure that Bulleit whiskey is made to our exacting standards and specifications.  

When we were first exploring Bulleit American Single Malt, the Lebanon, KY distillery was not operational and our Shelbyville, KY distillery was just getting started producing our signature Bulleit Bourbon at full capacity so we looked to an outside contractor to distill this product to our exacting specifications.  

We look forward to distilling and aging Bulleit American Single Malt at one of our world class facilities in the near future.

So where was Bulleit American Single Malt distilled and aged? Likely suspects include Beam Suntory, Sazerac, Heaven Hill, and Bardstown Bourbon Company. Another possibility is Newport's New Riff, which has been making malt whiskey since 2014 and released its own single malt last year. It seems unlikely any of Kentucky's smaller distilleries is the source, as they wouldn't be able to produce enough for Diageo's needs. 

Malt whiskey is not something American distilleries normally make, so the list of suspects is limited.

Diageo's statement mentions Shelbyville and Lebanon, but what about Cascade Hollow (AKA George Dickel) in Tennessee? Nicole Austin, distiller there since 2018, made malt whiskey in Brooklyn for King's County and at the Tullamore Distillery in Ireland. Capacity may have been an issue, as Cascade is now producing rye whiskey in addition to Tennessee whiskey, but if they really were "first exploring Bulleit American Single Malt" several years ago, as they claim, kicking that assignment to Austin seems like a natural. 

Diageo likes to sing the "made to our exacting standards and specifications" song, but it seems more likely they sought out and found whiskey that was ready to go when they decided to enter the American Single Malt space. Once again, Diageo is playing catch-up with a me-too product in a space, American malt whiskey, that all the bigs are suddenly barreling into, lest they let crafts get a leg up. Diageo is, of course, also the world's #1 scotch producer, a fact they are not touting.

Since when does America make malt whiskey? Are we at war with Scotland now?

Once again we are left with this guessing game. Bulleit Bourbon itself has been sourced whiskey since its inception, distilled initially by Four Roses, and later by others, always with oodles of obfuscation. Only recently has Shelbyville's Bulleit made its way into bottles. Lebanon is still a few years out. Bulleit Rye has been sourced from Indiana's Ross & Squibb Distillery (AKA MGP) since day one. Diageo may be the world's largest distilled spirits producer, and the world's largest whiskey producer, but when it comes to American whiskey, they are mostly a non-distiller producer (NDP). A follower, not a leader.

The last paragraph in their statement says they intend to make the single malt themselves "in the near future." That wording suggests they are not distilling malt whiskey at any of their American distilleries right now, which means Bulleit Single Malt will remain NDP for at least the next five or six years. 

As I wrote here almost exactly ten years ago, "There is no shame in being a non-distiller producer and if the actual producer won't let you reveal their identity, that's understandable too. The shame is in not being honest about it."

So, if you're interested in American Single Malts, maybe find a craft distillery near you that is actually making one, from scratch, in a still, like a real distillery.


Wednesday, February 7, 2024

My Louisville Beginnings, Part Two

 

The building across 3rd Street from Ollie's is now the Republic Academic Center, part of Spalding University.
I never intended this to be a two-parter, but the original post got me feeling nostalgic about that time and place, now 46 years ago. That got me thinking, wondering, and Googling.

Ollie's Trolley used to be a chain. Launched in Louisville in 1973, it grew to 300 locations but never truly became successful. Most of the shops closed in the 80s. There are three left, one in Cincinnati, one in Washington, D.C., and this one in Louisville. It's a unique burger, heavily spiced. The same spice mix goes on the fries. That's pretty much the menu. Many Louisville friends eat there from time to time, so it comes up regularly in conversation. I feel a special connection because of my history at that intersection and because it's a very tasty burger.

Ollie's Trolley was the brainchild of John Y. Brown Junior. Brown was a politician, Kentucky's governor during the first part of my Kentucky tenure. He was a businessman before he was a politician, best known for buying Kentucky Fried Chicken from Colonel Sanders and building it into an international fast-food powerhouse. He also owned the ABA Kentucky Colonels professional basketball team. He died in 2022, 88 years old. 

From 1979 to 1998, he was married to Phyllis George Brown. In 1975, she became co-host of "The NFL Today" on CBS, becoming one of the first women to hold an on-air position in national TV sports. When she was Kentucky's First Lady, I worked with her on projects for a local museum she supported and also met the governor. I liked them both. She died in 2020, age 70. 

The Cosmopolitan Building is now known as The Republic Academic Center, part of Spalding University. It marks the southeastern corner of their growing, urban campus. The renovated building contains offices, labs, and classrooms and houses Spalding's School of Nursing and School of Social Work. Spalding is a private, not-for-profit, liberal arts university. It offers undergraduate and graduate degrees in various fields such as business, health sciences, natural sciences, social sciences, humanities, and education. Spalding was established in 1814 by the Sisters of Charity of Nazareth.

Now more than 100 years old, the building was built as the D. H. Ewing & Sons Creamery. In 1930, it merged with the Grayson Von Allman Dairy Company to form Ewing Von Allman Dairy. By 1941, it was producing 90,000 cases of canned milk a year. The front section was always offices and the whole building was converted to offices in 1953 when the dairy moved out. That's when it became known as the Cosmopolitan Building. FS&M started in the 50s, so they may have been an original tenant. Before my time they had several clients in the dairy products industry. 

When I was ensconced there, FS&M Advertising (my employer) occupied the third floor. The second floor was the offices of a convenience store chain that was one of our major clients. I forget who was on the first floor. That may have been the convenience store chain too. Many convenience stores began as retail outlets for dairies, so perhaps it was all connected.

In 1982, the building was listed in the National Register of Historic Places. The architect is unknown. 

In 2010, it was sold at auction. Its value was estimated as $745,000. Spalding acquired it in 2012.

Photograph from the building's 1982 National Register application. My Pontiac may be in the parking lot.


Monday, February 5, 2024

Remembering David Beam and the Michter's Stills

 

Daniel David Beam, 1941-2015

I just happened upon this happy picture. It's from 2014, I think. That smile belongs to David Beam, the last Beam distiller at Jim Beam. (The last one with the last name of Beam, that is.) The picture was taken at Tom's Foolery near Cleveland, with two fermenters from the Michter's Barrel-a-Day Distillery. 

There is a lot to unpack in this simple picture.

David was the son of Carl 'Shucks' Beam, grandson of Park Beam. Park was Jim Beam's younger brother. When the Beams resumed distilling after Prohibition, Jim and his son, Jere, ran the business while Park and his sons, Earl and Shucks, made the whiskey.

David was born in the master distiller's house on the grounds of the Jim Beam Distillery at Clermont in 1941. He and his older brother, Baker, succeeded their father at the distillery, which ran on a 24-hour schedule. Baker had the day shift and David had nights. He worked there for 38 years, retiring in 1996.

Around the time he retired, David learned that the Michter's Distillery in Pennsylvania was being liquidated. He knew they had two nice Vendome pot stills, at 500 gallons and 350 gallons each, and associated fermenters and other equipment. It was a complete distillery capable of producing one barrel (53 gallons) of whiskey per day. 

David decided he wanted it, though he wasn't sure why, so he went to the auction, bid on it, and won. Then he got his three sons and some buddies, borrowed a couple trucks, and trekked to Pennsylvania to bring it all back to Kentucky. He set it up in a shed at the My Old Kentucky Home Motel in Bardstown, which he co-owned and managed with his wife, Belle. He had an apartment there too, where he lived when he wasn't at his farm outside of town.

Although he and his sons talked about it, David never put the equipment to use. In 2011, he sold it to Tom and Lianne Herbruck and helped them set it up and operate it at their craft distillery in Chagrin Falls, Ohio. They made bourbon and applejack. This picture was taken during one of David's visits there. David's grandson, who the Herbrucks hired as an apprentice, was there too.

In 2015, the Herbrucks sold the Michter's equipment to the new Michter's (i.e., Chatham Imports), for installation at their Fort Nelson facility in downtown Louisville, where it has been ever since. The Herbrucks got another old still. They still make whiskey and applejack in Chagrin Falls. On June 29th of that year, David Beam died peacefully at his farm outside of Bardstown. He was 74.


Friday, February 2, 2024

My Louisville Beginnings

 

My first office in Louisville was on the top floor, left side. Right across the street was my favorite lunch place. Both are still there.

My recent post about Five Brothers Bourbon and the early history of the Heaven Hill Company brought to mind my own early history with the company and the Shapira family.

Early in 1978, with snow still on the ground from one of the worst winters in memory, I moved from Columbus to Louisville to take a new job. Although the job was supposed to take me on to New Orleans, that part fell through, but I liked Louisville and the company, Fessel, Siegfriedt & Moeller Advertising (FS&M). Ed Fessel was retired by then, but Fred Siegfriedt and Rudy Moeller became my mentors in business and life.

Like most Louisville ad agencies, FS&M had a bourbon client. In our case it was Heaven Hill. I didn't work directly on their business, but in a small agency you're exposed to everything. I don't recall ever meeting any of the founding five brothers, but Max Shapira, Ed's son, was in our offices usually several times a week.

It wasn't much business, some small space magazine and newspaper ads for Evan Williams Bourbon, the occasional sales brochure, point-of-sale display, or label design. I recall when the art department started work on packaging for a new bourbon called Elijah Craig. 

Heaven Hill's bourbon, I soon learned, did not have the best reputation, especially in Bardstown, where it was made. It was described as 'oily.' The current distiller, a member of the Beam family, was aware of the problem and in the process of correcting it, I was told, but these things take time. Although Max's father and uncles owned and ran Heaven Hill, the whiskey had always been made by Beams.

Heaven Hill made whiskey exclusively, bourbon mostly, a little bit of rye, and of course blends. I was in the room when the first label designs for Heaven Hill Gin, Vodka, and Rum were presented. All of the bourbon companies were being forced by changing market conditions to either sell or diversify into other, non-whiskey categories. The Shapiras had no interest in selling, so they diversified.

Fred and Rudy were terrific bosses, and I learned a ton from both of them. Fred had some amazing stories about his Army service in Europe at the end of WWII. I spent the most time with Rudy, often in the car driving to meetings with clients and prospective clients. That's where I got my first Kentucky education, as he told me what crazy thing happened in this or that house as we drove through various small towns.

Max Shapira, who was then in charge of marketing, went on to run Heaven Hill, only recently transitioning to emeritus status. 

After a few years I left FS&M for another Louisville company with a distillery connection. This time it was Brown-Forman, where I worked on various brands but not Jack Daniel's which, although owned by Brown-Forman, was entirely run from Tennessee. 

I left Kentucky in 1987 but by then the Commonwealth had its hooks in me. 


Wednesday, January 31, 2024

What Becomes a Legend Most?



Heaven Hill was named after the farmer, William Heavenhill, who originally owned the land where the distillery was built. The company's founder and first distiller was a member of the famous Beam family, Joe Beam. Joe's first cousin, Jim Beam, had already cornered the market on the family name, so the new company pulled names from the history books, Evan Williams and Elijah Craig, to christen some of its first brands.

Despite those facts, Heaven Hill's beginnings are primarily the story of the five Shapira brothers, David, Ed, Gary, George, and Mose. The brothers ran a chain of small department stores founded by their father. Called the Louisville Stores, they were mostly located in Kentucky's small towns (not in Louisville). They were a lot like today's dollar stores.

One day, the brother who ran the store in Bardstown was invited to invest in a new distillery there. He agreed, believing whiskey was a good investment now that it was legal again, but he expected to be a passive investor because he didn't know the first thing about the whiskey business. He wrote the check and went back to running his store.

Prohibition ended in the midst of the Depression and money was scarce. Soon the brother and his siblings were approached with a new proposal. The other original investors were all over-extended. They intended to sell the company if they could, close it if they couldn't. Would the Shapiras care to buy the whole thing?


Though not sure they should, they did. At their mother's insistence, they pooled their money and thereafter shared everything equally, risks and profits. Slowly, the distillery and its whiskey built a following. The brothers may not have known whiskey, but they had a philosophy forged from their retail experience, of always offering customers the best value for the money. Today, Heaven Hill is one of the largest whiskey distillers in the United States, still owned and run by its founding family, and value is still their hallmark.

Even though Heaven Hill was their company, and always had been, the brothers and their descendants never put their family name on a bottle. Now they have. 

As a way of embedding the tribute in liquid, Five Brothers is Heaven Hill's traditional rye-recipe bourbon at five different ages, between five and nine years old. Yes, it's a gimmick, but it has gotten good reviews. Heaven Hill produces many brands, many of whose profiles include whiskey of different ages. Unless it's a bond or single-barrel, most whiskey products contain whiskey of different ages. Even when the label has an age statement, that just means the youngest whiskey in the bottle is that old. There is almost always older whiskey in there too.

Five Brothers Bourbon is only available in Kentucky, primarily at Heaven Hill's gift shops and a few other Kentucky retailers. Normally, I don't write about products that are this hard to find, but you don't need to buy Five Brothers to appreciate what they accomplished. Enjoy some Elijah Craig, Evan Williams, Larceny, Bernheim, Henry McKenna, Rittenhouse, or any of Heaven Hill's many other fine whiskeys. 

Ninety years ago, those five young guys took a gamble. They were new kids then. Some said they were playing where they didn't belong. There were ups and downs, but they stuck together as a family and persevered.

Today, with new bourbon brands appearing daily, often with dubious backstories and liquid of unknown provenance, you have the example of the five Shapira brothers, a classic American tale of taking a chance and doing the work to make it a success. 

David, Ed, Gary, George, and Mose thank you for your support.

Monday, January 29, 2024

Barry Berish, Who Ran Jim Beam, Dies at 91

Barry Maurice Berish, 1932-2024
Barry Berish died last week. He was 91.

Berish worked for 40 years, 1957-1997, at Jim Beam Brands, rising to the position of Chief Executive Officer in 1982. Under his leadership, Beam went from a one-brand company to the largest distilled spirits producer in the United States, 5th largest in the world. In 1987, he was instrumental in the company's acquisition of National Distillers, tripling the size of the company, and also acquired several brands from Seagram’s Co. that grew the portfolio by an additional 35 percent. 

I became involved with Beam about the time of the National acquisition and was often in their offices in the Chicago suburb of Deerfield, working on various marketing projects until about 1994. After that, although I worked with some of the Deerfield-based PR people, I was no longer involved with Beam marketing and my writing about bourbon put me more in contact with Beam folks based in Kentucky.

Berish's official obituary talks about his "warmth and charisma," but I remember him differently. I say "remember," although I had very little direct contact with him. I knew where his office was, at the end of hall, right next to that of Rich Reese, his right-hand-man and successor. I saw both of them from time to time. Reese would poke his head into our meetings now and then. I don't recall Berish ever doing even that.

Around the office, Berish was considered volatile, capricious, and best avoided. He was very much in charge. Beam folks called it the "Barry and Rich Show" because their opinions were the only ones that mattered. I heard him blow up a time or two, but always from a safe distance. I was just one of dozens of anonymous suppliers who came and went. I wasn't on his radar and from what everyone told me, that was a good thing.

So, this is not much of a personal remembrance, but Barry Berish made a mark as one of the industry titans of the late 20th century. He helped shape the business as we know it today. When he became Beam's leader, companies like Jim Beam and its chief rival, Jack Daniel's maker Brown-Forman, were struggling with the decline in whiskey sales that had begun a decade earlier. The task before both companies, and others, was to transition from whiskey companies into broad-portfolio distilled spirits companies. Beam, led by Berish, succeeded where many others did not.


Friday, January 26, 2024

The Effect of World War II on American Whiskey Production


Julian P. Van Winkle Jr. (bottom, right) and his tank crew, on their way to liberate the Philippines, October 1944 (from But Always Fine Bourbon).

As we reported in the most recent issue of The Bourbon Country Readervery little whiskey was distilled during World War II. Whiskey distilled before the fighting began became available as it matured, but because all the distilleries were making neutral spirit for munitions, synthetics, and other war needs, and not whiskey, there was panic buying, hoarding, profiteering, and other ills. Whiskey was scarce on the front lines and at home. 

As a follow-up, and thanks to the inimitable Chris Middleton, here are American whiskey production totals for 1934 to 1952, after which this data was no longer publicly reported. A "proof gallon" is one gallon of 100° (50% ABV) spirit. Reporting was for a July-June fiscal year.

1934/35........149,112,923 proof gallons
1935/36........300,658,508
1936/37........223,457,850
1937/38........102,895,872
1938/39..........93,003,917
1939/40..........98,993,303
1940/41........121,851,983
1941/42........120,257,424
1942/43..........19,529,698
1943/44......No whisky produced
1944/45...........41,562,203
1945/46.........147,464,516
1946/47.........167,994,805
1947/48.........129,597,067
1948/49.........149,595,230
1949/50.........118,760,487
1950/51.........205,702,460
1951/52.........103,543,953

Prohibition ended on December 5, 1933. There had been limited production since 1929, but the country was in the depths of the Great Depression, so it took time to get the distilleries operating again. As you can see, extraordinary amounts were produced in 35/36 and 36/37 before settling down to a normal level of about 100 million proof gallons per year, ramping up to 120 million on the eve of Pearl Harbor.

Although it was winding down, WWII did not technically end until August of 1945, so 46/47 was the first full year of normal whiskey production. The numbers probably reflect an industry operating close to capacity and still in the process of ramping up, both to make up for missed production, and to exploit the post-war economic boom.

The fact that 51/52 production was half of 50/51 might reflect the Korean War, or it might just be a reporting anomaly as the Treasury changed its reporting system.

Wednesday, January 17, 2024

U. S. Craft Spirits Sales Exceeded 14 Million Cases in 2022

 


The American Craft Spirits Association (ACSA) and Park Street today presented highlights from the 2023 Craft Spirits Data Project (CSDP) at its annual economic briefing. Introduced in 2016, the Craft Spirits Data Project evaluates performance and trends in the U.S. craft spirits industry. 

Key findings and highlights include the following: 

U.S. craft spirits market volume reached 14M 9-liter cases in retail sales, growing at an annual rate of 6.1%. In value terms, the market reached $7.9 billion in sales, growing at an annual rate of 5.3%. While there was still growth in 2022, it had slowed considerably from 2021, when craft spirits volume grew by 10.4% and value by 12.2%. U.S. craft spirits market share of total U.S. spirits maintained a 4.9% share in volume and increased value share to 7.7% in 2022, up from 7.5% in 2021.

The number of active craft distillers in the U.S. grew by 2.4% over the last year to 2,753 as of August 2023. Similarly, growth slowed from the year prior, which reported an increase by 17.4%. Active craft distillers are defined as licensed U.S. distilled spirits producers that removed 750,000 proof gallons (or 394,317 9L cases) or less from bond, market themselves as craft, are not openly controlled by a large supplier, and have no proven violation of the ACSA Code of Ethics. 

Despite strong economic challenges, craft producers have consistently found value in reinvesting in their businesses. The total amount invested in the U.S. craft spirits segment increased by 6.5% year-over-year to $880 million. Employment numbers within the U.S. craft market also continued to increase post-pandemic, with 27,368 full-time domestic employees. 

Home states still represent a critical sales opportunity. Craft spirits sales remain almost evenly split between the home state (47.4%) and other states (52.6%) in 2022. 

While export growth was slower (up by 58% in 2021), exports provided an important runway for growth in 2022, up by 4.3% to 171,000 9L cases and surpassing pre-pandemic heights of 155,000 9L cases in 2019. However, the category is still recovering from the impact of tariffs and have not reached pre-tariff levels seen in 2017 at 566,000 9L cases. 

The American Craft Spirits Association is the only registered national non-profit trade association representing the U.S. craft spirits industry.  Launched in 2003 by former McKinsey consultants, Park Street is a technology-enabled services company that helps emerging and established alcoholic beverage suppliers and brand owners cost-effectively and securely scale and manage their businesses.


Wednesday, January 10, 2024

Size Matters

 

A 42-inch diameter column still at Diageo's Bullit Distillery.
The previous post was long and covered a lot. Here I want to give more attention to the "Size Matters" story in the new issue of The Bourbon Country Reader, my old-school, paper-in-the-mail newsletter.

About a decade ago, I began to keep track of all the column stills making whiskey in the United States. Why? Because the size (i.e., diameter) of a column still tells you that distillery's production capacity, not how much it will produce, or does produce, but how much it can produce. In the story "Size Matters," I go into some of what I've learned from that project. 

I've written about this subject here on the blog. This post from 2017 continues to be one of the most-viewed. 

In 2014, eight companies distilled virtually all of America’s whiskey at thirteen distilleries. Three years later, there were ten companies operating fifteen distilleries. The additions were at the low end of the scale. Today there are 16 companies operating 26 distilleries. Those companies control about 94 percent of America’s whiskey production capacity. 

Again, the new companies are coming in at the low end. The biggest producers have only gotten bigger. The new guys are nowhere close to knocking out the old guys, despite what some folks out there seem to think.

The 16 companies, more or less in order (best estimate), are Brown-Forman, Beam Suntory, Sazerac, Heaven Hill, Campari, Kirin, MGP/Luxco, Diageo, Bardstown Bourbon Company, Whiskey House of Kentucky, Pernod Ricard, Bacardi, Tennessee Distilling Group, Michter’s, Jackson Purchase, and Castle & Key.

As the inclusion of Whiskey House of Kentucky suggests, the database includes current capacity and scheduled (not speculative) near-future capacity.

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