KDA 'Fantasy Camp' Starts Wednesday

The Kentucky Distillers' Association (KDA) likes to describe its Kentucky Bourbon Affair, which begins next Wednesday, as "a fantasy camp for bourbon lovers." Fantasy camps are a thing. The term usually describes an expensive meeting of has-beens and wanna-bes which due to its high cost is a true fantasy for most, reality for only a privileged few.

The true theme of the Kentucky Bourbon Affair, therefore, is insiders versus outsiders, and the only way to be an insider is to pay KDA, either in cash or fealty.

That is how KDA plays the game. It's not enough that insiders win, outsiders must also lose.

An article in the Louisville Courier-Journal this past Tuesday put that strategy on display like never before. In it, KDA President Eric Gregory is quoted as follows: "What makes our Kentucky Bourbon Affair unlike any other whiskey event in the world is the fact that Kentucky distillers are hosting this, not an event firm or some other group," Gregory said.

"Event firm" is a dig at FSA Management Group, which along with Bourbon Review Magazine, had the nerve to produce the Bourbon Classic for two years running without KDA's permission.

It's no secret that the name at the top of KDA's blacklist is Sazerac, which operates the two big Kentucky distilleries (out of ten) that don't belong to the KDA. That's understandable, since member dues used to be the sole revenue source for the KDA, before it became an event firm. The estimated take from the 3-day Affair will be about $400,000, which will be used to promote the member distilleries even harder.

The KDA doesn't have an exclusive franchise to promote bourbon and bourbon tourism, and most of those other individuals and groups have no gripe with Sazerac, its Buffalo Trace distillery in Frankfort, or its Barton 1792 distillery in Bardstown, but anyone who fails to treat Sazerac and its properties like pariahs risks the KDA's wrath, which usually comes on little cat feet in the dark of night.

This crazy bourbon boom, which nobody saw coming and nobody can claim credit for, should make everyone happy. It looks like there should be plenty of opportunity to go around, but when the stakes go up, the powerful get greedy. "We're the goose that lays them," think the big distillers. "Why shouldn't we keep all the golden eggs?"

The thing is, that's our gold, not yours. Bourbon buyers and bourbon drinkers and bourbon tourists created that wealth, not you and your politician buddies. Remember, not 20 years ago you were drowning in the stuff and if you continue to kick regular, day-to-day bourbon fans to the curb, China and India won't save you.

My Recommendation for a Mother's Day (or Father's Day) Bourbon Gift

My suggestion for the perfect gift is bourbon, of course, but with a twist. A bottle of one of the limited editions like the Parker's Heritage Collection 13-year-old wheat whiskey is a great gift, but this is different.

Micro-distilleries aside, every drop of American whiskey (bourbon, Tennessee and rye) is made by eight companies at 13 distilleries. The gift? A sampler of one bottle from each, either the eight or the 13.

Put them in a big basket if you want to.

For example, one from each of the eight companies: Maker’s Mark (Suntory Beam), Woodford Reserve (Brown-Forman), George Dickel No. 12 (Diageo), Bulleit Rye (MGP), Evan Williams Single Barrel (Heaven Hill), Four Roses Single Barrel (Four Roses), Buffalo Trace (Sazerac), Rare Breed (Wild Turkey).

One from each of the 13 distilleries: Maker’s Mark (Maker's Mark), Knob Creek (Jim Beam Clermont), Bookers (Beam Booker Noe), Woodford Reserve (Woodford Reserve), Old Forester Birthday Bourbon (Brown-Forman), Jack Daniel's Single Barrel (Jack Daniel's), George Dickel No. 12 (George Dickel), Bulleit Rye (MGP), Evan Williams Single Barrel (Heaven Hill), Four Roses Single Barrel (Four Roses), Buffalo Trace (Buffalo Trace), Ridgemont Reserve 1792 (Barton 1792), Rare Breed (Wild Turkey).

Okay, so we can't be sure what, exactly, comes from Beam's Booker Noe Distillery, but its namesake bourbon seems appropriate. And MGP doesn't own Bulleit Rye, but it is made there and Diageo actually admits it, which is something rare and special in itself.

You can, of course, modify the selections based on price or personal preference, but doesn't mom (or dad) deserve the best?

This gift, of course, is for moms and dads who value good bourbon over rarity and fancy packages. If you don't have a parent or spouse who appreciates that, buy it for yourself.

Buffalo Trace Addresses Bourbon Shortage

According to Buffalo Trace Distillery, in a press release today, the bourbon boom shows no signs of letting up and Trace, like all producers, is having trouble meeting demand. Although Trace continues to take steps to mitigate the problem, shortages remain.

About a year ago, Trace warned consumers a shortage was looming, but many markets across the nation are just now feeling the full effects. “We're making more bourbon every day. In fact, we’re distilling more than we have in the last 40 years,” said Harlen Wheatley, master distiller. “Still, it’s hard to keep up. Although we have more bourbon than last year when we first announced the rolling blackouts, we're still short and there is no way to predict when supply will catch up with demand.”

Along with increased production, adding more bottling lines, and hiring more people, Buffalo Trace has hired a full-time barrel allocation manager, as the company announced it would last year. The new allocation manager will balance bourbon inventory with sales volume. Monthly allocations will ensure all markets get some Buffalo Trace, Eagle Rare, and Blanton’s, preventing long periods when these brands are unavailable.

“We taste, approve and bottle what barrels we have available each month. There are shortages because Buffalo Trace, Eagle Rare, and Blanton’s sell out quickly, but no shortage should last more than one month before reinforcements arrive,” said Kris Comstock, bourbon marketing director. “We're asking for continued patience from our fans. The recent surge in demand is quite flattering, but we just need to keep in mind these bourbons were put into the barrel many years ago.”

Comstock added that other highly allocated whiskeys such as Pappy Van Winkle and the Antique Collection will continue to be released annually every fall.

Despite the increase in distillation over the past few years, bourbon demand still outpaces supply. The overall bourbon category is experiencing 5 percent growth, but premium brands are up nearly 20 percent from last year. Bourbon must be matured in new oak barrels and Buffalo Trace ages many of its whiskeys for eight to ten years, some for more than two decades.

What Effect Will Suntory Have On Beam?

This is the third ownership change I've been through with Beam. That may sound odd, since this is the first time Beam has been sold, but stay with me.

In 1987, Beam parent Fortune Brands bought National Distillers and merged it with Jim Beam. National was the larger company and had many more brands, but since it was failing hardly any of its management was retained, although some of the sales force was. I was working for a Beam agency at the time and worked on the transition directly.

In 2005, Fortune and Pernod teamed up to dismember Allied Domecq. Again, Fortune added its parts to Beam. Lots of management came over too. I was doing then what I do now and didn't have many friends at Beam, at least not in Deerfield. One man changed that.

Last month, Suntory closed on the purchase of Beam Inc. Suntory is much more than a distilled spirits company but its distilled spirits business will be attached to Beam and not the other way around. The new company will be headquartered at Beam's headquarters in Deerfield, Illinois. Its 'new' president is Matt Shattock, who has been running Beam since 2009.

Before the 1987 merger, Beamville was a one horse town. It sold Jim Beam bourbon and not much else. Although Jim Beam was doing better than most, the bourbon category was struggling. Beam was interesting in acquiring some big brands that were growing. The prize at National? DeKuyper Schnapps, a line of liqueurs with some very hot flavors. DeKuyper Peachtree Schnapps was, all by itself, a million case brand.

Suddenly having so many brands in so many categories was a shock to the system. My contribution was a merchandising manual to show salespeople where, ideally, each of their new wards should be placed on store shelves. It was the same people running things after the merger as before, but the culture changed because they were forced to take a much broader world view.

My transition from sales promotion supplier to spirits journalist was rocky at Beam. There were some misunderstandings that left me on the outside. I had great relationships with production people in Kentucky but the Deerfield folks barely spoke to me. It wasn't a big problem for me, but one of the managers who came over from Allied decided it was a problem for them. He was the VP of Corporate Communications and reached out to me in a very personal way to mend fences.

He's gone now, but he and the other Allied transplants changed the Beam culture again. They took a company that had become very self-satisfied and made it try new things. Suddenly, the most influential person in the company creatively was Maker's Mark president Bill Samuels, himself an Allied transplant.

It's hard to predict how Suntory will change Beam. It's easy to say it won't, since on the ground it looks like Beam took over Suntory and not the other way around. It surely will. It may make Beam more effective in those parts of the world that aren't North America, Europe or Australia. Since it is no longer publicly traded, it might be able to think more long term. Those would both be good things.

One thing I've learned about Beam over all these years is that while I may not always agree with them, I'm reluctant to bet against them. They survived and controlled their destiny during a very rough patch in the distilled spirits business. They have both grown their mainstays and created successful new brands. They have made money for their investors. They'll get through this too.

What If Distributors Were Optional?

As American laws go, the 21st Amendment to the Constitution is stunningly brief, not even 100 words and most of them are boilerplate. The first section repeals the 18th Amendment. The third section sets out the window for ratification: seven years. It's the second section that concerns us today. What it says in 31 words I can say in eight: states may regulate alcoholic beverages however they want.

Although each state does it differently, a key feature common to most is the three-tier distribution system. The three tiers are producers, distributors, and retailers. The issue with the three-tier system is not whether or not the system provides value, it's whether or not requiring the 3-step process is justified. If I can streamline the process by eliminating the middle man, what is the public policy benefit of preventing me?

Pre-Prohibition, 'tied houses' were a common feature of the retail landscape. A 'tied house' was a saloon owned by a producer. It was widely believed that when producers controlled retailers in this way, consumers and communities suffered because all the far-away producer cared about was increasing sales and profits. After Prohibition, it was believed that preventing the tied house and keeping retailers as far away from producers as possible would prevent those abuses.

Today, because so much has changed, distributors (for beer, wine, and spirits) can sometimes seem like a vestigial organ. Big producers would love to be able to sell directly to large chain retailers. Brown-Forman would love to distribute Jack Daniel's to Walmart through Walmart's distribution system, not through 50 different distributor locations in 50 states. They'd love to be able to do the same thing with TGIF and Chili's. They can't.

Big producers essentially do sell directly to national customers, but distributors have to handle the paperwork and, more importantly, physically move the product. Is there a genuine public policy justification for requiring that? Probably not.

One reason the present system seems like a waste of money is how easily most of the rules are circumvented, at least for some purposes. 'No cross ownership' is a joke. They have to look separate on paper, but distributor/producer cross-ownership is common in fact. Distributors as in-state businesses? Also a joke. Most distributors are national or nearly so, they're just separately incorporated in each state where they do business. Does it make sense that a distillery gift shop has to buy its own distillery's products through a distributor?

Okay, so if the current law makes no sense, why not change it? That's easy to say, virtually impossible to do. Most states have made very few changes to their laws regulating alcoholic beverages since Prohibition ended 80 years ago. That's because distributors and government (both the elected part and the bureaucracy) have a vested interest in the status quo. Small retailers do too.

Producers of all sizes and large retailers would like to see the distributor made optional, not mandatory.

How would small producers benefit? One of the reasons small producer products are expensive is that they need those prices to interest distributors. Most micro-producers in most places have no trouble getting distribution because at current prices it's a very profitable business for the distributor. If micro-producers could sell directly to retailers, some might be able to build a respectable business just by keeping the ten (arbitrary number) bars and liquor stores closest to the distillery supplied and happy.

It could be a kind of partnership, nothing like the tied houses of old. If the producer could charge the same wholesale price to the retailer that they were charging to the distributor, the retailer would be able to charge less and sell more. That scenario does nothing for the distributor but it could be terrific for the producer, its preferred retailers, and their customers. It's not a model that would work for everyone but right now it can't work for anyone because it's against the law.

Our interests as consumers are supposed to be paramount to the regulators, but a more efficient system would surely benefit consumers in terms of lower prices and greater convenience. More liberal laws in general would liberate the creativity of producers, in terms of better fulfillment of consumer wants and needs. Policies intended to limit the harm caused by alcohol abuse could be focused directly on the problem instead of on a very broad proxy for it.

Many of our liquor laws, directed as they are at 19th century problems, badly need a 21st century upgrade.

Time Is Running Out to Join the Chuck Cowdery Magical Mystery Bourbon Tour, June 11-13

If you're thinking about joining me in June for my exclusive, 3-day tour of Bourbon Country, reserve your spot now by calling Josh Dugan at 502-583-1433, ext 107, or email him at josh@mintjuleptours.com. Time is running out.

The format is simple. Each morning we meet at The Galt House Hotel, board a clean, comfortable Mint Julep Tours bus, and head out to a distillery or some other cool place. If it's a distillery, we don't take the standard tour, we're treated to something special.

But we don't just visit distilleries. We go to Vendome, where the stills and other equipment are made. Vendome does not normally give public tours, but it's a place every whiskey fan should see. We also see how whiskey barrels are made, visit a couple of historic sites, and lunch each day at some characteristic Kentucky eatery. I'm with you the whole time. Since it's just 20 people, we all get to know each other and I have time to answer everyone's questions.

We cram a lot into each day without it seeming rushed. Mint Julep is very accommodating, so if the day runs a little long, everybody is okay with that. We usually get back to The Galt House by about 7 PM and the rest of the evening is yours. There are several restaurants and bars in The Galt House and many others within easy walking distance. Louisville also has a 'trolley' that circulates around downtown for a modest price.

Lodging is your choice, but Mint Julep is happy to make suggestions. They also receive preferred rates from several hotels. Simply call Josh Dugan at 502-583-1433, ext 107, or email him at josh@mintjuleptours.com.

The first Chuck Cowdery tour, back in March, was a lot of fun. I promise that this one will be equally fabulous.

In Which I Help Pick Your Next Bottle of Booker's

A few weeks ago, I participated in a tasting panel to select the next batch of Booker's Bourbon. This is the third Booker's panel of which I have been a part.

The backstory is that Booker Noe would choose the whiskey for Booker's with help from an informal panel of friends, assembled around his kitchen table. We do it over the phone. It's Booker's son, Fred Noe, and three or four writers. Usually some Beam PR folks are on the line too.

We are sent three samples to taste. Fred explains the provenance of each (distillation date, warehouse, warehouse location, barrel proof, that sort of thing). We taste, discuss, and ultimately vote on which of the three should be the next Booker's.

Booker's was the first bourbon to use the term 'small batch.' Beam never explained what the term meant unless asked. Many people assume it means small from beginning to end, starting with a unique recipe and a small fermentation and distillation. The producers are happy with that misinterpretation, but it's not that and never has been. 'Batch' means bottling batch, the contents of one bottling run, which in turn means the contents of one tank into which some number of barrels have been dumped.

Just as the whiskey from each barrel is unique, so is each combination of barrels, and it is that combination that allows a batch to be tweaked to better match the brand's profile.

In the case of Booker's, a batch is 360 barrels and lasts about three months at retail. Although Beam Suntory (we might as well get used to it) has rackhouses at various locations in Kentucky, the whiskey for Booker's always comes from Clermont, usually from the older, seven to nine story, rack-style houses.

Since they're only sending us three samples, all three are pre-determined by Fred and his panel at the distillery to be suitable for the Booker's profile, yet one of the most revealing parts of the experience is how different they can be. This is why single barrel bottlings are interesting too. I've participated in private barrel selections at several distilleries and had the same experience. Even within a brand profile there is a lot of variation. So, yes, it is possible that the bottle of Old Whatever you bought last week tastes a little different from the one you bought two years ago.

Matching a brand's profile is how whiskey-makers ensure consistency from batch to batch and no taster for that purpose works better than a human one. The large producers typically have a rotating panel of tasters, maybe 30 to 40 people. They are employees who normally work in some other part of the operation. They receive special training and every few weeks they participate in a tasting.

It's a little different from what we did, as we were given three choices and asked to pick the one we liked best. Tasters at the producer are usually given a glass of the standard and two candidates, and asked to pick the candidate that best matches the standard. Or they may be given three or four candidates and asked to rate each one's similarity to the standard on a four-point scale.

Every company does this for every brand they sell, but it's fair to assume they use more care with their best-selling and highest-priced products than they do with their cats and dogs. Still, it's reassuring that humans still do this job better than any known machine.

Booker's puts the batch number on the label. The batch I helped select will be Batch No. 2014-4.