What's in a Name? If It's "Tennessee Whiskey," a Lot

Chapter fifteen in my book, Bourbon, Straight, is about Jack Daniel's Tennessee Whiskey. The chapter title is, "The Elephant in the Room."

Why? Because the best-selling bourbon in the world isn't a bourbon, which tends to set off a cascade of confusion and misinformation. Jim Beam is correct when it claims to be the world's best selling bourbon, even though Jack Daniel's sells more, because Daniel's does not claim to be bourbon, preferring instead the classification 'Tennessee whiskey.'

And yet Jack Daniel's adheres to all the rules for bourbon-making, the rules binding Jim Beam and the rest of the bourbons, every single one of them. Why then isn't it labeled as bourbon?

Because it doesn't want to be.

About 70 years ago, the federal regulators said that was okay, but they did it in the form of a letter. Since they did not write it into the rules, there is no universal legally-binding definition of Tennessee whiskey. Today, the principal federal regulator is the Tax and Trade Bureau of the Treasury Department (TTB). All it requires is that claims of geographic origin must be true, so Tennessee whiskey must be made in Tennessee and, of course, it must be whiskey. That's all TTB cares about.

The Office of the U. S. Trade Representative recently tried to fill the gap. In treaties where the U.S. seeks protection for the terms 'bourbon' and 'Tennessee whiskey,' it has defined Tennessee whiskey as "straight bourbon whiskey made in Tennessee."

Does that  prevent someone from making corn whiskey in Tennessee, and calling it 'Tennessee whiskey'? Corn whiskey doesn't have to be aged. It's what many people call 'legal moonshine.' If it's whiskey made in Tennessee, TTB is satisfied. It's inconsistent with the treaty definition, but what can the Trade Representative do? Their job is to make sure other countries don't abuse the term. They have no power in Tennessee.

The Tennessee legislature, most likely at the prodding of a certain big contributor to the Tennessee economy, has decided to step in and protect the integrity of its state spirit. A new law expected to take effect in June will define Tennessee whiskey as, essentially, bourbon that has been filtered through maple charcoal before aging.

This is a good idea. It's good because it gives the term 'Tennessee whiskey' a meaning it would not otherwise have, a meaning consistent with the public's understanding of the term, and there isn't any Tennessee whiskey product that would not benefit from some charcoal filtering.

Phil Prichard, a Tennessee micro-distiller who has been making an unfiltered Tennessee whiskey, was given an exemption.

The law simply requires that the spirit be "filtered through maple charcoal prior to aging." It doesn't require the whole process JD uses. It doesn't say how much charcoal or for how long, so it shouldn't be prohibitive for small producers. They don't have to do it if they don't want to, they just can't call their product 'Tennessee whiskey' unless they do.

A more onerous requirement is the one about aging. Consistent with the TTB definition of bourbon, the Tennessee law requires that Tennessee whiskey must be "aged in new, charred oak barrels in Tennessee." Here again, it doesn't say for how long, and such aging can only help, but new barrels cost money.

The new law has teeth because the penalty for violation is a one-year suspension of the distiller's state distilling permit.

So the feds will prevent 'Tennessee whiskey' from being made outside of Tennessee, and Tennessee law will take care of producers within its jurisdiction.

Without this law, Tennessee whiskey simply means whiskey made in Tennessee. It does not, as it should, define a unique regional whiskey style. Micros in the state have been exploiting this loophole. The new law also prevents a Tennessee producer from buying bulk whiskey made outside of Tennessee, bottling it in Tennessee, and claiming that as 'Tennessee whiskey' merely because it was bottled in the state.

The new law covers the terms 'Tennessee Whiskey' and 'Tennessee Sour Mash Whiskey,' whether 'whiskey' is spelled with or without the 'e.' Will the law apply if the producer makes a corn whiskey and wants to call it 'Tennessee Corn Whiskey'? That remains to be seen.

Just like the TTB's rule, this law doesn't tell any distiller what they can make or sell, it just regulates what they can call it. This is good for big producers who already comply with the law, of course, but it will be good too for any micro who chooses to make Tennessee whiskey according to the new rule.

Jack Daniel's And TTB Redefine Neutral Spirits, Or Do They?

When is a neutral spirit not a neutral spirit? When it's a Jack Daniel's product, apparently.

The young saga of new Jack Daniel's Unaged Rye has already gotten curiouser and curiouser. The story begins with Friday's post about two new 'white whiskey' products from Jim Beam and Jack Daniel's.

Looking at the photograph of the Jack Daniel's package provided by the distillery, inquiring minds wanted to know how a product distilled at 140° proof (70% ABV), as they described the product, could be labeled 'neutral spirit,' considering that the regulations of the U.S. Treasury Department's Tax and Trade Bureau (TTB) clearly state that neutral spirit is a distilled spirit distilled at more than 190° proof (95% ABV). (The exact wording is reproduced below.)

Well, that apparently is not what 'neutral spirit' means if you're Jack Daniel's. Below is the explanation from Jack Daniel's PR agency. I'm flabbergasted, but there it is.

Mr. Cowdery,

Good afternoon. Thank you for your inquiry. Per the portion of the Code of Federal Regulations describing neutral spirits (vodka) and whiskey copied and provided below, vodka has to be distilled at or above 190 proof and “without distinctive character, aroma, taste, or color. Whiskeys must be distilled at less than 190 proof and “possess the taste, aroma, and characteristics generally attributed to whisky, stored in oak containers (except that corn whisky need not be stored), and bottled at not less than 80 proof.”

The net of this is that our unaged rye did not satisfy the “Class 2; Whiskey” requirement of being stored in an oak container, therefore the TTB ruled that it should be labeled as a “neutral spirit” even though it was distilled at 140 proof and obviously violates the stated vodka requirement of being “without distinctive character, aroma, taste, or color.” By this ruling, it is assumed that the TTB considers all whiskies (except corn whisky) to be neutral spirits until they enter the barrel for maturation. Jack Daniel’s packaging and legal departments argued that the Tennessee Unaged Rye should be labeled as an “unaged whiskey” which we felt more accurately described the nature of the product to the consumer, but the TTB ruled against this proposal and would only approve the label under the category “neutral spirit”.

Jack Daniel’s understands this category classification can certainly be a point of confusion. The Jack Daniel’s Tennessee Unaged Rye is a fermented mash of 70 percent rye, 18 percent corn, and 12 percent malted barley that was distilled at 140 proof and charcoal mellowed, but it was never entered into an oak barrel.

Again, thank you for your inquiry. Please let me know if you have more concerns or questions.

Title 27: Alcohol, Tobacco and Firearms PART 5—LABELING AND ADVERTISING OF DISTILLED SPIRITS

Subpart C—Standards of Identity for Distilled Spirits § 5.22 The standards of identity. Standards of identity for the several classes and types of distilled spirits set forth in this section shall be as follows (see also §5.35, class and type):

 (a) Class 1; neutral spirits or alcohol. “Neutral spirits” or “alcohol” are distilled spirits produced from any material at or above 190° proof, and, if bottled, bottled at not less than 80° proof.

(1) “Vodka” is neutral spirits so distilled, or so treated after distillation with charcoal or other materials, as to be without distinctive character, aroma, taste, or color.

(2) “Grain spirits” are neutral spirits distilled from a fermented mash of grain and stored in oak containers.

(b) Class 2; whisky. “Whisky” is an alcoholic distillate from a fermented mash of grain produced at less than 190° proof in such manner that the distillate possesses the taste, aroma, and characteristics generally attributed to whisky, stored in oak containers (except that corn whisky need not be so stored), and bottled at not less than 80° proof, and also includes mixtures of such distillates for which no specific standards of identity are prescribed.

Thanks,
Rob Hoskins
Jack Daniel’s Media Relations

As I replied to Mr. Hoskins, the definition of ‘neutral spirits,’ as a class designation, is distinguishable from the definition of vodka, which appears below it as a type designation within the class of neutral spirits, much as ‘rye whiskey’ appears as a type designation within the class of whiskey. The definition of ‘neutral spirits’ as a class, while it does not include the "without distinctive character, aroma, taste, or color" requirement for vodka, does clearly state that the spirit must be distilled above 190° of proof. The ruling as described would seem to undermine the definition of neutral spirits for more purposes than just the labeling of this one Jack Daniel’s product.

In case you haven't detected this yet, I consider this outrageous. 

I have made my own inquiries to TTB. Stay tuned.

Jack Daniel's And Jim Beam Pile Onto The White Whiskey Bandwagon.

Clearly, there is some high level market research out there that says so-called 'white whiskey' is a product consumers want, because the world's two biggest American whiskey brands are rolling out their versions over the next few months.

Micro-producers created the white whiskey category a few years back, ostensibly as a way to generate revenue while their whiskey aged. Mixologists praised its bold, spicy character as a great cocktail ingredient and its clear appearance appealed to people for whom vodka is the quintessential cocktail base.

An informal survey of whiskey enthusiasts showed that while most find white whiskey interesting, few actually drink it regularly. No one reported buying a second bottle.

Although white whiskey must, by law, have some minimal contact with wood to be called 'whiskey,' it can be as little as five minutes, too brief for the wood to have any effect on flavor or appearance. Unlike Europe and most of the rest of the world, the U.S. has no minimum aging requirement for whiskey. It just says the spirit must be 'stored in oak barrels' in order to be called whiskey. It doesn't say for how long.

The rap on white whiskey has been that it's simply white dog, whiskey distillate straight from the still, too hot and harsh to be truly enjoyable, especially neat or on-the-rocks, the way most whiskey enthusiasts drink. This has continued to be true despite the sometimes hyperbolic claims of the micro-producers for whom it is bread and butter.

Although both products are bottled at a mild 40% ABV, Jim Beam and Jack Daniel's are approaching the subject differently, from the micros and from each other.

Beam's product is called Jacob's Ghost, after 18th century family patriarch Jacob Beam. It is standard Jim Beam bourbon, aged one year, then heavily filtered to remove the color and harsher flavors. The result is a product that is still pretty raw, but much milder than white dog, with significant amounts of corn body and barrel sweetness. It is scheduled to be released in January.

Beam calls its product white whiskey, Daniel's does not. Because it's not whiskey.

As the press materials say repeatedly, new Jack Daniel's Unaged Tennessee Rye is the first new grain bill used at Jack Daniel's since Prohibition. "While many rye products only contain the required 51 percent rye in their grain bill, Jack Daniel’s Unaged Rye consists of a grain combination of 70 percent rye, 18 percent corn and 12 percent malted barley."

Notice the use of the term 'rye products,' not 'rye whiskeys.'

Take a close look at the label. Jack Daniel's Tennessee Rye is not whiskey, it's neutral spirit.

In other words, it's Jack Daniel's vodka.

Daniel's doesn't talk about any of this in the press materials.

Jack Daniel's Tennessee Rye actually tastes quite a bit like Jacob's Ghost, and very unlike the typical micro-producer white whiskey or any vodka I've ever had.

From the taste, it's hard to believe it meets the legal definition of neutral spirit. It tastes like a mild whiskey white dog.

Jack Daniel's Master Distiller Jeff Arnett, in his tasting notes, talks the way you would about an unaged rye whiskey. He describes it as more fruity than spicy, and he's right about that. They also as much as say it was already in barrels when they decided it was so good they should sell it white. That sounds like a fairy tale anyway, but is incompatible with the neutral spirit classification.

You see, the terms 'neutral spirit' and 'whiskey' are mutually exclusive. A product can't be both. You also can't put neutral spirit into a barrel and someday harvest whiskey, although they imply that's what they're doing with the phrase, "it's just a taste of what's to come."

I imagine people will be talking about it as "Jack Daniel's moonshine," but it's actually Jack Daniel's vodka, and that's just bizarre.

Both products are far more drinkable than a typical micro-producer 'white whiskey.' The Daniel's rye is spicier and drier than the Beam product. Still, you have to have at least some affection for white dog to drink either, because that's still how they taste.

Everything Arnett says about the product is consistent with how it tastes, but not with how it's labeled. That's the mystery.

Bourbon+Tennessee+Southern+Chicago.

I just came across a handout I did for a Southern Foodways Alliance event in Chicago in 2008. I thought you might find it interesting.

What is Bourbon?

Bourbon is whiskey made using corn (maize) as the primary grain. It is further characterized by aging in new charred oak barrels.

What is Tennessee whiskey?

Tennessee whiskey is the same as bourbon except it is filtered through thick vats of charcoal before aging, and it is made in Tennessee.

What is Southern about it?

In the original colonies, distilled spirits were made from molasses (rum), apples (applejack/apple brandy) and cereals (whiskey), but the primary grain used for whiskey was rye.

Only after settlement of the interior began in earnest, after the Revolution, did Americans begin to make whiskey primarily from corn, especially in what became Kentucky and Tennessee. The practice of making whiskey from corn spread throughout the region. After Prohibition, it contracted back into its original Kentucky-Tennessee heartland.

Whiskey-making was part of the South’s “hogs and hominy” agriculture, as most distillers kept hogs and fed them spent grain from the stills.

What does Chicago have to do with it?

Westward expansion after the Civil War was driven by the railroads. In Chicago, steers shipped East to the hungry city were replaced for the return trip by barrels of whiskey for the thirsty cowboys.

Whiskey was a commodity, bought in bulk from rural distilleries by Chicago merchants who “rectified” it before sending it west. “Rectification” might include blending, filtering, coloring, and flavoring.

After Prohibition, the descendants of those merchants financed the rebuilding of the Southern distilleries. Two examples are Oscar Getz, who owned Barton Brands; and Harry Blum, who owned Jim Beam. Both companies are still headquartered in the Chicago area.

Jack and Coke RTD Debuts in UK.

Although imbalanced tax and regulatory regimes make them unattractive in the USA, ready-to-drink (RTD) cocktails are very popular in the rest of the world.

In Australia, for example, one of the top international markets for American whiskey, more of it is consumed in RTDs than any other way. Jim Beam, Wild Turkey and others have popular RTDs that combine whiskey and cola.

Now Jack Daniel's, the world's most popular American whiskey, is joining the fray with Jack Daniel's & Cola in a 330 ml can, just released in the United Kingdom.

Susie Modhawadia, Jack Daniel's brand manager, said, "With consumer research demonstrating that over 40% of Jack Daniel's is consumed with cola, this new product is the perfect mix."

In the United States, where spirits products are taxed more heavily that beer and wine, and distribution is more limited, RTDs that contain the actual spirit product portrayed on the label have been a non-starter. Instead, many leading spirits brands have developed flavored malt beverages as line extensions, such as Black Jack Cola, which leverages the Jack Daniel's name and image but contains no actual Jack Daniel's whiskey.

Both types of products have been demonized by anti-alcohol crusaders who dub them "alcopops" and falsely accuse producers of targeting them at children.

The suggested retail price of Jack Daniels and Cola is GBP1.99 (US$3.30).

A Jimmy Bedford Memory.

Jimmy Bedford, retired Jack Daniel's master distiller, died Friday at his Lynchburg, Tennessee, home. I wrote about it yesterday.

Since then, I've been thinking about Jimmy and reading what others have written. Here are some of my more personal memories.

The first time I met Jimmy Bedford I didn't really meet him. It was a few years ago at WhiskeyFest Chicago. I went to the seminar Jimmy was conducting. The audience at those things is several hundred people and they've all been drinking. Jimmy was a perfectly good presenter but he reminded me of Baker, Parker, and Craig Beam. They are all, in those situations, a bit more taciturn than the occasion warrants.

Later that evening, after WhiskeyFest was over, a friend and I went to the Hyatt's BIG Bar for a nightcap. I didn't notice him at first, but so had Jimmy. He was sitting, by himself, a few stools east of us.

I didn't speak to him because I didn't know him at the time. We went about our business and left him to his. After a few minutes, several people came over and spoke to him. He was friendly and they were obviously fans from WhiskeyFest. (They were carrying their goody bags.) After they left, he finished his drink and left as well.

After WhiskeyFest concludes for the evening, there are always lots of after-party opportunities, especially for master distillers who are, after all, the rock stars of the whiskey world. My impression was that all Jimmy wanted to do was have a quiet drink in a crowded bar before going upstairs to sleep.

Subsequently, I got to spend time with Jimmy in Lynchburg. I had dinner with he and his wife at their home, and when I subsequently saw him at events we at least exchanged greetings. My impression of him never changed. He liked to make whiskey and knew he was good at it. He grew up around it, it was the only decent job in the county, and he never thought about doing anything else.

The Jack Daniel's image works in part because so many people down there are really like that. He did the promotional stuff because when you have a job and the boss asks you to do something, you do it, you do it as well as you can, and you don't make a big fuss about it. Those really were his values. That's who he really was.

I'm not saying he didn't enjoy all of the travel and attention, but he probably would have been just as happy dividing his time between his distillery and his farm, in the town where he grew up.

I haven't heard anything about Jimmy's death other than what was in the news obituary distributed by Associated Press, which was essentially the Brown Forman press release. We may never know more. I don't know if he had any history of heart disease, or anything else about his health. I know he was slim and looked very fit.

It's not important to know, necessarily. It's just a shame.

Jimmy Bedford, 1940-2009

He was a quiet man, a reluctant celebrity, who nevertheless became the face of the world's best-selling American whiskey during a worldwide American whiskey renaissance. 

Jimmy Bedford, former master distiller at Jack Daniel's, died yesterday of an apparent heart attack at the age of 69. He was found outside a barn at his farm in Lynchburg, Tennessee.

Bedford went to work at the Jack Daniel's Distillery in 1968, where he held a number of different jobs before becoming master distiller in 1988. At that time, the job of master distiller at an American whiskey distillery was changing, from that of a full-time manager to part manager, part ambassador. A native of Lynchburg, Bedford had traveled little before taking on the ambassador role, which took him all over the world. Only seven men have held the position of master distiller at the 143-year-old distillery, beginning with founder Jack Daniel. 

Though stiff and formal addressing large groups, Bedford could be warm and open in small gatherings, such as when entertaining journalists at his home. He and his wife had one child, a daughter, pictures of whom decorate every room of their house. 

The only public stain on Bedford's long career was the way it ended last year. He was asked to retire after being named in a $3.5 million sexual harassment lawsuit brought by a Texas woman. The suit was settled out of court. His official obituary was prepared and released by his former employer, Brown-Forman, which owns Jack Daniel's.

Who Makes America's Whiskey?

Go to the American whiskey section of any large liquor store and you will see dozens of different brands on the shelves, so many people are surprised to learn that all of the whiskey made in America (excluding the handful of very small micro-distilleries) comes from eight companies, operating 13 distilleries.

They are:

1. Beam Global -- three active whiskey distilleries, all in Kentucky.

2. Brown-Forman -- three active whiskey distilleries, two in Kentucky, one in Tennessee.

3. Sazerac -- two active whiskey distilleries in Kentucky (Buffalo Trace and Tom Moore), honorable mention for a redistiller in Virginia (A. Smith Bowman).

4. Pernod Ricard -- one active whiskey distillery in Kentucky. (Wild Turkey)

5. Kirin -- one active whiskey distillery in Kentucky. (Four Roses)

6. Diageo -- one active whiskey distillery in Tennessee. (George Dickel)

7. Heaven Hill -- one active whiskey distillery in Kentucky.

8. Angostura -- one active whiskey distillery in Indiana, one currently being restored in Kentucky.

Tennessee Whiskey Versus Bourbon Whiskey

Jack is bourbon in all but name.

The differences between Tennessee Whiskey and Bourbon Whiskey are similar to the differences between "whiskey" and "whisky," in that there is much less to both of those dichotomies than most people think.

People will sometimes get all high-and-mighty about how Jack Daniel's isn't a bourbon, and it isn't, but as a practical matter the difference is merely technical. For all intents and purposes, Jack Daniel's and George Dickel are bourbon in all but name. If they taste different, it is because each maker crafts a slightly different flavor. Those differences in flavor have nothing to do with them being a different type.

The primary effect of the charcoal filtering process used in Tennessee is to jump-start aging. Many bourbon makers say it removes too much flavor, but that is inside baseball. It is fair to debate that point, but it is a very small difference. Tennessee Whiskey is within the profile of Straight Bourbon Whiskey. As far as the whiskey in the bottle goes, there is no practical difference.

The fact that both Jack and George have very little rye in their mash bills probably has more to do with their similarity than the Lincoln County Process does, and the fact that modern Dickel was created in imitation of Jack has more to do with their similarity than does their type designation.

Like whiskey/whisky, this is one of those essentially trivial issues that ignorant people pontificate about and newbies agonize about unnecessarily. Whiskey/whisky is two different spellings of the same word. You're welcome to pick one and stick with it. Likewise, "bourbon whiskey" versus "Tennessee whiskey" is a distinction without a difference for all practical purposes.

Also like the spelling issue, the Tennessee/Bourbon thing creates myths, some quite persistent, about what the real differences are. Many people think whiskey and whisky are two different words, not just different spellings of the same word. Likewise, you hear all sorts of rumors, usually about Daniel's and almost always false, based on the fact that Tennessee whiskey isn't bourbon. It also leads to people assuming that bourbon must be made in Kentucky, also false.

I am one of those people who believes that Jack and George could be labeled "straight bourbon" if they wanted to be. Reasonable people can disagree about this, but that is how I interpret the regulations. You're welcome to have an opinion, but an acquaintance with the facts might be helpful in formulating it. Just a suggestion.

As you will discover, "straight bourbon whiskey" has a lot of requirements under the law. Jack and George meet every single one of them. "Tennessee whiskey" has no requirements, except the very limited ones to merely use the term "whiskey." So, in that sense, the regs are irrelevant.

A lot of people make assumptions about why Dickel and Daniel's aren't labeled as bourbon and all of those assumptions are wrong. They aren't labeled as bourbon because they choose not to be. There are other terms about which the same thing is true, such as Kentucky whiskey, Alabama whiskey, and Small Batch whiskey. The regs are silent as to all but the term "whiskey."

UPDATE: In 2013, Tennessee passed a law that defines Tennessee whiskey.

Dickel No. 8 Distribution Revealed.

Few posts on this blog have attracted as much interest and comment as this one from December, 2007.

It was all about the disappearance of George Dickel No. 8 (the black label) from stores across the country, but especially in the South. Diageo, the brand's owner, admitted there was a shortage due to a four-year shutdown at the distillery.

Supplies were supposed to resume in 2008 and did in a few markets, but many fans of the product are still looking for it in vain.

No. 8 has long been the brand's best seller. The more expensive No. 12 and Barrel Select have not been affected by the shortage. Since the shortage began, Dickel has introduced a new product, called George Dickel Cascade Hollow Recipe, that is a three-year old whiskey. It originally had a black label suspiciously like No. 8, which was changed to red when No. 8 began to reappear.

I will keep you in suspense no longer. The official word is that they only have enough whiskey to fully support No. 8 in its eight core markets, which are Alabama, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia. This is the official answer Dickel is sending out in response to consumer inquiries.

When will No. 8 distribution widen? No one knows. Not having enough product to meet demand is a high class problem for any manufacturer. That whiskey has to age for several years makes production planning a nightmare. Presumably, Dickel has more whiskey in the pipeline each year, but if demand continues to outstrip supply it could be a long time before George Dickel No. 8 Brand Tennessee Whiskey reappears at a store near you.

Do You Have Whiskirexia Nervosa?

Whiskirexia nervosa is a whiskey buying disorder characterized by a distorted whiskey inventory image and an obsessive fear of running out of whiskey. Individuals with whiskirexia nervosa tend to already own more whiskey than they can ever drink, even as they continue to buy more.

Sufferers can typically be told repeatedly that they have plenty of whiskey, really more than enough, by persons who they ordinarily would trust, and they may even in moments of coherence acknowledge that fact intellectually, but they can't stop buying.

What can you do if you think you may have this condition? A support group appears to be forming here, although I'm not exactly sure what they support. (I suspect they're all really enablers.)

George Dickel, Say What?

Lest no one think my gripes about bullshit in the marketing of spirits products are limited to micro-distilleries, here's a shot at Diageo, the world's biggest booze company.

I was working on some follow up to my December post about the George Dickel No. 8 shortage for my newsletter, The Bourbon Country Reader, which got me looking at several sources, including the history section of the Dickel web site.

Diageo seems to be engaging in some revisionist history on Dickel's behalf. They now have George and his wife, Augusta, visiting Tullahoma in 1867, where he dreams about "creating the finest, smoothest sippin’ whisky," and then "In 1870, Dickel’s dream came true, and a company which bore his name was opened at Cascade Hollow, Tennessee."

Both, based on everything else I can find out about Dickel's history, appear to be complete fabrications.

One purpose seems to be to obliterate both the independent history of the Cascade Distillery (which was, by all accounts, established in 1877 and never actually owned by Dickel) and diminish the role of the Shwab family (which the Dickel web site misspells as Schwab, like the stock broker), much like Four Roses has built up John Paul Jones at the expense of Rufus Rose.

What Is Really Going On With George Dickel No. 8?

Whiskey is weird.

How many other products can you name that take four or more years to manufacture? We always talk about this, how the whiskey aging cycle challenges distillery production planners. The story of George Dickel No. 8 Brand Tennessee Whisky demonstrates what can go wrong.

In the early 1990s, United Distillers was a company with big plans. The spirits division of Guinness & Co., it had been built by acquisitions over the previous decade. It was an international company with major brands in the scotch whiskey and American whiskey categories, as well as gin, rum, and others.

Among its assets was George Dickel Tennessee Whiskey.

One of the company’s big plans was to take selected American whiskey brands and give them a big marketing push in Europe and Asia, where American whiskey was starting to grow as a category, unlike the U.S. market, where it was doing nothing. One of the brands selected was George Dickel.

As a Tennessee whiskey, Dickel is a unique product. Unlike United’s many bourbons (at the time), the George Dickel recipe is shared by no other brands. Because of the whiskey aging cycle, any long-term sales growth strategy has to be accompanied by steady production growth, so that when the marketing plan succeeds, you have enough product to sell. United started to make more Dickel, a lot more.

The effort to sell more Dickel overseas wasn’t a failure exactly, but it didn’t meet expectations either. Part of the problem was that the newly huge company was unwieldy and often lacked focus. Dickel was too far back in the portfolio to get the attention it needed. Because the whiskey made at Dickel could only really be used for the Dickel brand, the stocks built up, and because nobody was paying close enough attention, they just kept producing.

In 1997, Guinness merged with Grand Metropolitan to form Diageo. To accomplish the combination, the company assumed a lot of debt. It soon had to start selling assets to generate cash and also cut costs wherever it could. It decided what its core business would be and, by 1999, it had decided that American whiskey was not part of that picture. Early that year, it sold off all of its American whiskey assets except two brands, I. W. Harper and George Dickel. It also stopped production at the Dickel distillery.

In addition to the excess whiskey inventory, Dickel had some environmental issues in Tennessee, having to do with wastewater disposal. They weren’t a huge deal but would require a significant investment to fix. Because of that, the company couldn’t casually crank up the distillery for a few weeks each season, just to keep some current production in the pipeline. They had to stay completely dark and take their chances.

When they stopped Dickel production, they pretty much stopped marketing it too. That will tell you what the underlying strength of a brand is. Maybe that was their plan, maybe there was no plan beyond stopping the bleeding and making the brand profitable again. With the distillery closed and the marketing budget at zero, it wasn’t too hard to make the brand profitable in the short term.

At that time, now almost nine years ago, product availability seemed like the least of their problems.

In 2002, Diageo began to pay some attention to Dickel again. The brand got a marketing budget and started to make some noise. Either the marketing worked, or it was just time, you never know exactly, but Dickel sales suddenly picked up here, there, and everywhere. They got their environmental problems fixed and resumed production in fall of 2003.

The new marketing program featured the premium Dickel expression, known as No. 12, but the less expensive No. 8 continued to be the main seller. In about the middle of 2007, Dickel No. 8 drinkers began to notice bare shelves. In some cases there was a note on the shelf explaining that No. 8 was in short supply because of the 1999-2003 distillery shutdown. Ads in a few markets explained that the shortage was being caused by the shutdown, combined with “an incredible surge in demand for George Dickel No. 8."

No company gets itself into a situation like that on purpose, but when you find yourself with that kind of problem you try to make the best of it. One tactic has been to generate publicity about the shortage itself. Nothing makes people want something like telling them they can’t have it. Another has been to release a temporary stop-gap, a new product called Cascade Hollow Recipe, aged three years. The strange thing is, the Cascade Hollow label looks almost exactly like the No. 8 label and it is being sold for the same price. It’s obvious that many shoppers, grabbing for the familiar black label, will never notice it’s a different product, a fact no doubt anticipated by the brand’s management.

Since the company could easily have made the Cascade Hollow packaging look completely different, why make it virtually indistinguishable from the No. 8? The strategy, it appears, is to have it both ways. They’re being upfront with the people who are paying attention while hoping to slip one past the people who aren’t.

Here are some simple facts the people at Diageo aren’t talking about.

No Dickel product except the new Cascade Hollow carries an age statement. It has one because it is required to, by law, because it is less than four years old. Unofficial statements by distillery personnel have pegged the top-of-the-line Dickel Barrel Select product as containing whiskey 8 to 12 years old, the No. 12 as 8 to 10 years old, and the No. 8 as 4 to 6, but those ages are all unofficial. They are trying to match a taste profile, of course, and if the whiskey starts to taste a little younger they hope no one will notice. Having no age statement gives them a lot of flexibility. With no age statement, all you know for sure is that the whiskey is at least four years old.

Regardless of what age it actually is, the oldest and most mature whiskey they have is going into the more profitable No. 12 and Barrel Select expressions. Those are reporting no shortages.

On Monday, the Associated Press (AP) ran a story in which a Diageo vice-president acknowledged the “temporary” shortage and promised that No. 8 will return early in 2008.

What seems underway, then, is an effort to turn a problem into an opportunity, always a good idea. By next year, Dickel hopes to be in greater demand than ever thanks to publicity generated by the shortage. The AP story alone was picked up by thousands of print and electronic outlets. When No. 8 returns, the company will have a new entry-level product on the shelves and its best-seller, the No. 8 Brand, will reappear, maybe at a higher and more profitable price. Then maybe they will start to change the two labels to give the two products more separation. They’ll transition price-sensitive shoppers to the Cascade Hollow product and get a little more scratch from No. 8 loyalists.

Let’s hope for their sake that all this works out better than their last master plan.