More News About that Distillery in Indiana.

About a year ago, after MGP bought the former Seagram's Distillery in Lawrenceburg, Indiana, whispering began that they were going to exit the bulk whiskey business and concentrate on contract distilling exclusively.

The distinction is that with bulk sales, the customer purchases aged whiskey that is ready to sell. With contract, you pay the distillery to distill and make whiskey on your behalf, which won't be ready to sell for several years. They're two very different business models.

"There is no foundation whatsoever to any rumors or speculation that MGP is withdrawing from the bulk whiskey market," says David Dykstra, MGP's Vice President of Alcohol Sales & Marketing. "We are investing heavily in rebuilding the whiskey stocks that were depleted under prior ownership of the facility. MGP intends to be in the bulk whiskey market for both the near term and longer term."

If anything, they're going in deeper. "MGP is developing new mash bill formulations of rye, wheat and other grains that we expect to introduce to the marketplace in the coming years, as product innovation is a key component of our efforts to help customers continue to grow their distinctive brands."

Bulk whiskey from that distillery has been responsible for such brands as Templeton Rye, Smooth Ambler Very Old Scout Bourbon and Rye, High West Rendezvous Rye, Redemption Bourbon and Rye, Wm. H. Harrison bourbon, Chattanooga whiskey, and a host of others.

No doubt those micro-producers are relieved to hear what MGP intends, but bulk whiskey pickings will be slim for the next few years, especially for well-aged whiskey because the previous owner laid down very little near the end.

Many bourbon enthusiasts have wondered if MGP plans to develop and market its own whiskey brands, or continue exclusively as a commodity producer. Lawrenceburg is the only pure commodity whiskey producer in the U.S.

"We have no plans at this time to develop or purchase any branded whiskeys or other products," says Dykstra. "However, we remain open to evaluating market opportunities if any such possibilities should warrant our interest."

And what about tours? There have been distilleries on that site since about 1860, though most of what is there now was built by Seagram's in the 1930s. "MGP plans to begin tours at some point over the next 18 months," says Dykstra. "We currently are working on details to ensure the tours provide a highly enjoyable, as well as educational, experience for those who visit our Lawrenceburg facility."

One huge change has already taken effect, the new owners answer questions.

What Is Killing LDI?

My recent posts about Diageo’s Bulleit Bourbon, new Bulleit Rye, and the Indiana distillery where Bulleit Rye is produced, got a lot of attention. There are a few things to wrap up on the various subjects those posts covered. If you want to catch up first, the posts were on March 3rd, March 9th, and March 10th.

This post will be about Lawrenceburg Distillers Indiana (LDI). The next one will be about Bulleit, including some tasting notes on the new rye.

Although no one official at LDI talked to me, plenty of other people with knowledge about the place did. The main thing they told me is that LDI is for sale, with a deal likely to be concluded in eight months to a year.

Many of the people who contacted me, including some who commented publicly on the blog, asked what specifically do I want to know? I’d like to know everything, starting with facility specifications: How many bottling lines? How many and what types of stills? How many rectification plates in the whiskey still? How much copper? How much still capacity? How much fermenter capacity? How much maturation warehouse capacity? What type of maturation warehouse construction?

That sort of thing. Standard whiskey geek stuff.

Some of it is on the website but most isn’t and I doubt the website has been updated recently.

Most of all I want to know what they’re doing today? What’s their business model? What do they offer to customers? What do they offer to a prospective buyer? The website tells us what they make -- or at any event what they have made and can make -- but it says nothing about what they have to sell now. That’s what bulk whiskey customers want to know. How much 2-year-old 40% bourbon do you have for sale? How much 3-year-old? How much 2-year-old 95% rye? How much 4-year-old? Or did Diageo get it all? How much is in the pipeline for next year and the year after that?

Prospective buyers of the whole facility don’t just want to know its physical specifications. They want to know what kind of business it can be. They want to know if they’re buying a viable business or just a factory. There is a difference.

The General Manager at LDI is Rick Brock. Although he won’t talk to me, he gave an interview to Cincy Magazine just about a year ago. At that point things were looking bright. Now they’re on the sales block. What happened? Isn’t the economy in recovery? Hasn’t alcohol been strong lately? The Distilled Spirits Council says it has. Shouldn’t a company that was doing well in the spring of 2010 be doing even better today?

Either way, that’s an interesting business story.

According to my sources, LDI has seven bottling lines but runs only four on a typical day, and only on one shift. Lately they have been bottling a lot of Three Olives Vodka, which is a product of Proximo Spirts, a small New Jersey-based producer and importer of various vodka, tequila and rum brands as well as, just recently, Stranahan’s Whiskey. LDI bottles several other Proximo brands and some for Castle Brands too, a similar small producer and importer whose products include Jefferson’s Reserve Bourbon and Boru Vodka.

For drinks giant Diageo they bottle Moon Mountain Vodka, Godiva Chocolate-Infused Vodka, Bulleit Straight Rye Whiskey, and Seagram’s Seven Blended Whiskey.

Absent from these mentions is Seagram’s Gin, which used to be a mainstay of LDI. At 2.8 million cases sold per year, Seagram's is America’s #1 gin.

The Seagram’s Gin and Vodka lines are owned by Pernod Ricard, which owned LDI until 2007. Before it sold LDI, Pernod moved most of its bottling to Fort Smith, Arkansas, where it also manufactures its Hiram Walker cordials line. But LDI still made the gin and shipped it by tanker to Fort Smith. Did LDI lose that contract?

Presumably, all or most of the products they bottle at LDI are made there as well. The distillery and maturation warehouses are about a mile from the bottling hall and finished goods warehouse.

Last year at this time, Brock said they had about 185 employees. They have fewer than half that many now, according to my sources, and many are temps.

Is LDI’s secrecy what’s killing it? There’s seems to be no problem with their products, which are doing well for companies such as Diageo, Proximo Spirits, Castle Brands, Tipton Spirits (Harrison Bourbon), High West Distillery, Templeton Rye Spirits, Dynamic Beverages (Redemption Bourbon and Rye), Big Bottom Whiskey, and no doubt others. Their fully-aged whiskey, in its various guises, is the darling of international whiskey enthusiasts and their young bourbons and ryes, again in various guises, are hot properties with today’s most creative and celebrated mixologists.

Shouldn't somebody be able to make a profitable business out of that? I suppose they would have to know about it first.

Potemkin Craft Distilleries.

Thanks to High West Distillery & Saloon, I have coined a new term: Potemkin Craft Distillery. It’s a play on the term ‘Potemkin Village,” which is defined as "something that appears elaborate and impressive but in actual fact lacks substance."

The original term refers to Grigori Aleksandrovich Potemkin, who allegedly had elaborate fake villages constructed for Catherine the Great's tours of the Ukraine and Crimea, in an effort to show his colonization efforts there were successful. It came into common usage during the Cold War, to refer to similar Soviet efforts to portray living conditions in the USSR as better than they actually were.

I call High West a Potemkin Craft Distillery because the company’s most highly touted products, its Rendezvous and Rocky Mountain Ryes, are whiskeys High West did not make but, rather, merely bought and bottled. In the fine print, High West explains that they “sourced the whiskey from back east while we are waiting for our own whiskey to age."

I am skeptical in part because no one who has taken this approach has subsequently replaced their third-party product with a house-made one.

In High West’s case, the High West Distillery & Saloon in Park City, Utah, just opened in December of 2009, but High West has had a still and a distilling license for four years. They could have a four-year-old whiskey of their own creation on the market right now, but they don’t.

The splash page of High West’s web site talks about "award winning small batch mountain crafted spirits." Another page talks about how "High West Distillery & Saloon started with one man’s passion to make a great Rocky Mountain Whiskey." It doesn't mention that his dream is, so far, unrealized.

Finally, on the product page, after the words, "High West Distillery crafts products for people who want great taste and appreciate quality ingredients, small batches, and the distiller's personal touch," comes the admission that the whiskeys were made somewhere else by someone else. It is hard not to conclude that High West’s intention is to fuzz the distinction.

Why do I keep harping on this? Because I have repeatedly had the experience of someone raving to me about this terrific whiskey made by this little distillery in Utah. When I explain that the whiskey was most likely made in Indiana, not Utah, they express disbelief and disappointment. Until High West calls its business "High West Distillery, Saloon & Rectifier," I will continue to call them a Potemkin Craft Distillery.

There are micro-distilleries such as Finger Lakes, Dry Fly, Garrison Brothers and others who have eschewed the course of buying spirits for resale and have, instead, found a business model that allows them to only present products of their own manufacture. I tend to regard those companies more highly than I do companies that take the other approach. That's my prerogative as a consumer.

So while I commend High West for making some exceptional orphaned whiskeys available to the marketplace, I continue to find the company's Potemkin Craft Distillery pose disingenuous.

Who Made That Whiskey?

Every time some new whiskey appears that isn't being made by one of the "usual suspects" (the handful of known distillers of American whiskey) my first question is always, who made it?

Often, when I query the marketers of said product, they admit they did not make it but claim they can't tell me who did, because that producer won't let them.

I believe this claim of "source secrecy" by bulk whiskey buyers is more obfuscation than fact. When Willie Nelson, for example, wanted to disclose Heaven Hill as the source of his Whiskey River Bourbon, Heaven Hill was happy to oblige, and had him in for pictures. Likewise Luxco identifies Heaven Hill as the source for its Rebel Yell Bourbon. The Pogue family also was very forthcoming when they introduced their bourbon, which was Heaven Hill whiskey sourced through Kentucky Bourbon Distillers Ltd (KBD).

In Scotland, where there are a lot more distilleries and where distillery names and brand names, for single malts at least, are one in the same, and where bulk sales to blenders are common, the distilleries tried without success to prevent independent bottlers from identifying the sources of their whiskey. Logo designs, package designs and things like that are protected, but the courts ruled that if saying, "this whiskey was made at Glen Whatchamacallit" is a true statement, then the bottlers are allowed to make it, whether the distillers like it or not.

Of course, a sale of bulk whiskey could well be made on the condition that the source not be revealed, which would give the distiller a civil cause of action if the bottler did reveal it, and the contract could be written in such a way that the mere breach would entitle the distiller to some kind of award, without having to prove damages, but I've never seen such a contract or heard from a distiller that they insist on such a contract when they make bulk sales.

No, who I hear it from are the bottlers, who frequently have also created a mythology intended to lead consumers to believe they made the product they bottled. Then when somebody like me asks them who really did make it, they come up with this "source secrecy" thing.

In fairness to KBD, a major independent bottler of American whiskey, they have never used the "source secrecy" excuse with me. They either tell me where it came from, give me enough information to figure it out, or just tell me they're not going to tell me, all of which are fine with me. I'm definitely not pointing a finger at them about this, but I've certainly heard it from others, most recently Templeton and High West.

Tell me to go f*** myself, tell me it's none of my g** d*** business, but don't lie to me and treat me like a chump.

While I don't think Heaven Hill or Barton, who are the sources for most bulk whiskey, really care, I can imagine somebody like Jim Beam, who only sells bulk occasionally, when they find they have overproduced for their needs, demanding non-disclosure. Brown-Forman, on the other hand, can't wait to tell me who they're making whiskey for, so I can't believe they swear the customers to secrecy.

If someone refuses to tell me I still don't know, but that's not the same as falsely claiming that you are required by the distiller to keep the source secret. If they say, "I don't want to tell you," they are at least taking responsibility for the secrecy, not pretending that they'd like to tell me but their hands are tied.

As I said, don't treat me like a chump. I'd like to know the source and I don't think much of them for refusing to tell me, but I give them points for owning their silence. I think even less of them if they pretend that they can't tell me when the truth is that they choose not to.

Many people have come back at me with the argument that "who cares if it's good whiskey?" There is some validity to that. However, part of my reason for arguing for transperancy is that the most highly regarded single malts all come from known distilleries and that type of obfuscation is not well tolerated by single malt enthusiasts. I think that for American whiskey to take its rightful place among the world's great spirits, its producers need to be similarly transparent. Independent bottlers should identify themselves as such and be proud enough of their products to tell the truth about them.

We're not children and we don't need to be told that our whiskeys are made by elves in a hollow tree.

In other not-getting-answers-to-my-questions news, it is two weeks and counting since I asked Diageo my George Dickel questions.

High West Checks In

I heard from David Perkins of Utah's High West Distillery about Sunday's post. The High West web site has the full text of the Rendezvous Rye back label, where it clearly says, "In this tradition of importing whiskey from back East (while we age our own whiskey), we crafted Rendezvous from two exotic straight rye whiskies."

I apologize for implying that High West claimed it distilled the rye it's selling. They do disclose on the label that they did not make it. However, they're not discouraging publications like the Park Record from giving the impression that they did.

He also complained that I should have contacted him first. I tried to find him but failed, though perhaps I didn't try hard enough. However, just now I Googled "High West Distillery" and got a lot of references, including this blog, but not the one-page High West web site.

Perkins correctly pointed out that I forgot one of the "usual suspects." Barton Brands at its distillery in Bardstown also makes straight rye whiskey, which they sell only in northern Wisconsin under the name Fleishmann's Rye. I often forget them because the Fleishmann's is in such extremely limited distribution and not very good. Nothing wrong with the basic distillate--Barton is a good distiller--it's just very young whiskey.

Perkins says he is contractually bound not to disclose the whiskey's maker. That still leaves a lot of questions he should be able and, I assume, willing to answer about the whiskey. The big one is to clarify if he is really saying someone 18-years-ago made a batch of rye whiskey from a mash that was 80 percent rye grain, and further saying that six years ago that distiller, or another one, made a batch of rye whiskey from a mash that was 95 percent rye? If so, why would they do that, since that's not typical of American straight rye whiskey? Or of any American straight whiskey, for that matter. The only thing an American producer would normally make with that high a proportion of a single grain would be corn whiskey.

The label talks about "a higher proportion of rye" and he mentions that in his email too, but a 60 percent rye mash bill would be a higher proportion than the norm, why 80, or 95? It's so far outside the norm as to be suspicious, but I'm still not sure that's even what he is claiming when he says "95% rye" and "80% rye."

I hope he can also clarify his reference to "unmalted rye." Is he saying the mash bill was, in one case, 95% unmalted rye and 5% malted rye, and likewise in the 80/20 case? If not, then why mention "unmalted" rye? All rye in American straight rye whiskey is unmalted except for the whiskey Fritz Maytag makes, which is 100% malted rye. So I hope he will shed some light on how this very unusual whiskey (his use of "exotic" is apt) came to be made, since it is so outside the norm.

Maybe he can't tell us who made it but how did he find out about it? There's a lot he can tell us about the whiskey itself without naming the distiller.

Perkins says "'Straight Rye Whiskey' isn't necessarily a better classification" than "a blend of straight rye whiskies." I suppose we can just disagree about that. To most American whiskey drinkers, "blend" is a dirty word in any context. It's also an unfamiliar classification. On the other hand, I suppose he wanted it called a blend because he wanted to talk about the two constituent whiskeys. However, my reading of the standards for "a blend of straight rye whiskies" is that that classification is only to be used when the constituents are straight rye but non-conforming as to the standards for "straight rye whisky," which would point to them having been made in different states. He can confirm or deny that without disclosing the maker(s).

If both were made in the same state, then why are they non-conforming? If they conform, then did TTB give him the option of using either classification? That is contrary to my reading of the rules, but he went through the label approval process and I didn't, so maybe he will enlighten me.

As I wrote Sunday, I like the idea of mixing an old straight rye with a young one, ideally to capture the best of both. I applaud that. I never denied this might be a good, even exceptional whiskey.

I said all of these things and more to him in a reply to his email and will let you know if he answers back. He is also, of course, welcome to post a comment here and say it in his own words.

The final and, perhaps most important question? Has High West distilled anything? Have they laid down any rye whiskey that they made? The web site makes it clear that the answer to that question is no. They bought an old stable in Park City, which they are restoring as a "distillery and saloon."

Far be it from me to strangle a baby in its bed, and I get the idea about getting some products out to get some cash coming in and some publicity going out, but the buzz you're creating is about people wanting to try that 18-year-old rye made in Utah, when it's nothing of the kind. I still have a problem with somebody calling himself a distiller and his company a distillery putting out a product he merely bought and bottled. It's not good for him in the long run. It's a bad way to start.

Maybe his publicity just got ahead of him, or maybe my post did exactly what I wanted it to do.

What Is This Stuff, Really?

It may sound sometimes like I'm on a crusade against micro-distilleries. I'm really not. Quite the opposite. I have great hopes that small distilleries will revitalize the American distilled spirits industry. Problem is, most micro-distillery operations seem to be pushing out bullshit faster than any other product, which is perhaps not surprising since it is the easiest thing to make.

(Followed by their next-most-popular product, vodka.)

Now comes an outfit in Park City, Utah, called High West Distillery. Their premier product is a rye whiskey called Rendezvous Rye. It is 92 proof and selling for $40 per 750 ml bottle. The back label specifies a blend of 6-year-old 95% rye and 17-year-old 80% rye.

It also uses the category designation "a blend of straight rye whiskeys." This, by itself, raises some alarms. That classification is for a mixture of straight rye whiskeys which, for some reason, does not conform to the standards for being called straight rye whiskey. Since any mixture of straight rye whiskeys made in the same state should qualify for the better classification of "straight rye whiskey," one wonders why this mixture was non-conforming. The frustration, of course, is that the makers aren't talking because they want to preserve the illusion that they made the product, which is impossible since they've only just gotten both their license and still.

But let's look at the rest of their claim: "a blend of 6-year-old 95% rye and 17-year-old 80% rye." Although not crystal clear, the reference to a percentage would seem to refer to a mash bill. The problem is, nobody makes rye whiskey that way.

So here is a reality check and I encourage Scott Bush (Templeton) and David Perkins (High West) to address this issue. Get around these facts if you can:

Over the last 20 years, only five American distilleries have made rye whiskey. One of them, Anchor, can be set aside because they make very small quantities of a very idiosyncratic spirit that has very little to do with the tradition of American straight rye whiskey. The other four are Heaven Hill (using, at the moment, Brown-Forman's distillery), Wild Turkey, Buffalo Trace (Sazerac) and Jim Beam.

That's it. Those are the usual suspects. The Templeton Rye had to have been made by one of those four. Most likely the High West was too.

All of them make a mash bill that is about 51 percent rye, the balance being corn and barley malt.

Some of the very old ryes on the market today were made more than 20 years ago at the Medley Distillery in Owensboro and at the old Bernheim Distillery in Louisville, so there are two more suspects, but that's it. We can't be sure what their mash bills were, but they probably weren't more than about 60 percent rye.

What is left of that whiskey resides at Kentucky Bourbon Distillers LTD (KBD) in Bardstown, Kentucky, which has bottled it under a number of different labels, and sold it to others wishing to do the same. Setting aside the mash bill claims, KBD may have acquired some 6-year-old rye from, most likely, Heaven Hill and mixed in a little of its elderly whiskey (maybe, in fact, a 17-year-old) to make the High West product. That, based on the known facts, is the most likely scenario.

Personally, I hope it is that, because that would be an interesting product that might actually justify the price. I find most of KBD's very, very old bourbons and ryes too old, too woody, but take a little of that and add it to some good 6-year-old rye? That could be just the thing. I would be interested to try that product.

But back to the original issue. The bottom line is that any fully-aged rye whiskey on the market today has to come from one of the sources named above. That unavoidable fact is the reason why people like High West and Templeton aren't saying who made their whiskey. It's not only because they want you to think they made it. It's also because then it becomes easy to say, "Oh, that's Heaven Hill's rye? Well, you can pay $35 for it in a bottle that says 'Templeton,' or $40 in a bottle that says 'Rendezvous Rye,' or $12 in a bottle that says 'Rittenhouse,' which would you prefer?"

More than a decade ago, when Brown-Forman reopened what is now the Woodford Reserve Distillery, they wanted a Woodford Reserve product on the market right away, so they used whiskey made at their other Kentucky distillery. While they didn't print banner headlines about the whiskey's real source, the information was always there, and if you asked they always told you the truth.

I'm all for this micro-distiller thing, but when it seems like all of these characters are coming out of the box lying to the consumer, I'm already less than enthusiastic about their next act.

But that's just me, the grumpy old man. You kids, knock yourselves out.