Got a Cool Old Bottle to Sell? Try North Carolina

The North Carolina Senate Finance Committee passed House Bill 909 last week, which will make several significant changes to North Carolina alcoholic beverage control ("ABC") laws. House Bill 909 now heads to the full Senate for a vote. If it passes the Senate, it will be presented to the Governor for signature and will become effective immediately thereafter.

Here are the two sections that caught my eye.

Section 1 - Antique Spirituous Liquor

The bill allows restaurants, bars, and other entities holding mixed beverage permits to obtain antique spirituous liquor permits and sell antique spirituous liquor to customers. Antique spirituous liquor is liquor that has not been produced or bottled in more than twenty years, is unopened, and is not owned by a distillery. The bill provides a means for retailers to purchase antique spirituous liquor from local ABC Boards, which will purchase the antique liquor from private sellers. This process will enable retailers to obtain mixed beverage tax stamps and pay taxes on antique spirituous liquor, just as they do for other types of liquor. The North Carolina ABC Commission will adopt temporary rules by 1 September 2015 to outline this process.
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I have some questions about details, such as is a bottle of A. H. Hirsch gold foil, distilled in 1974, bottled in 2003, considered 41-years-old or 12-years-old? If it was removed from wood more than 20 years ago, does that count? I suspect the rule will be interpreted as 'bottled.' The wording also suggests that pre-1995 Old Grand-Dad won't be allowed, since Old Grand-Dad is still produced. Or how about Very Very Old Fitzgerald? Old Fitzgerald is still produced but it has been more than 20 years since VVOF was.

I know of no state that has this type of law in effect.
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Section 4 - Distillery Sales

The bill allows distilleries producing less than 100,000 gallons per year to sell one bottle of liquor per calendar year to each visitor to the distillery. This is a change from current law, which allows only ABC stores to sell bottles of liquor. Sales of bottles of liquor at the distillery shall be at the same price as sales at ABC stores, including the same taxes. Distilleries will remit applicable taxes to the North Carolina Department of Revenue. Bottles will have labels stating "North Carolina Distillery Tour Commemorative Spirit." The bill would allow each visitor to purchase one bottle of spirituous liquor per calendar year. Distilleries will be required to maintain electronic records verifying visitor purchases.

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This is similar to the way sale at the distilleries was first legalized in Kentucky and Tennessee, including the labeling requirement as a 'commemorative' product. It is looser now. The limit in Kentucky now is three liters per person per visit.

The new law surely is not everything North Carolina distillers want, but it's a start, and it's interesting to see how a control state handles this sort of thing.

To the best of my knowledge, there are no distilleries in North Carolina that produce 100,000 gallons or more per year, but why should they be excluded?

Where Do They Keep Finding More Stitzel-Weller Whiskey?

The whiskey enthusiast universe is terribly excited about a new label Heaven Hill just had approved for an Old Fitzgerald line extension, a 20-year-old bourbon called "J.E.F." (John Fitzgerald's initials). The excitement is because of these words on the back label (shown above): "Distilled by Stitzel-Weller Distillery DSP-KY-16, Shively, KY, and Bottled by Heaven Hill Distilleries DSP-KY-31, Bardstown, KY."

This is all we know. Heaven Hill isn't talking about it yet. Label approvals don't necessarily mean a product is coming out, although they obviously have the whiskey or they wouldn't have submitted it. How is that possible, many have wondered, since the youngest Stitzel-Weller whiskey in existence is 23 years old, as the plant stopped distilling in 1992?

First, age statements on whiskey labels are allowed to understate the actual product age. You can label 25-year-old whiskey as 20-years-old if you wish. That's perfectly legal. Second, it's no secret how Heaven Hill got Stitzel-Weller whiskey. They received a boatload of it from Diageo when they bought the Old Fitzgerald Brand in 1999. They probably had a few extra barrels that they allowed to keep aging, maybe until now, or maybe until they turned 20, at which point they were transferred to stainless steel drums to stop them from aging any further.

American whiskeys aged 20 years or more are a minor part of the business. Their volume is almost too low to make them viable unless the price is astronomical, which this one might well be, so magical is the Stitzel-Weller name. Heaven Hill has a habit of underpricing its products, a habit it has been trying to break at least with regard to its top line offerings. I'm guessing this will be in line with its 20+ year-old Rittenhouse Ryes of a few years ago, about $150 for a 750ml bottle. You may have noticed that the only label submitted for the J.E.F. product is for the 375ml size, so a $70 MSRP wouldn't surprise me.

In the blogosphere, statements that such-and-such a thing is possible turn into 'facts' in an instant. This is sure to happen with this product since people will immediately start saying it's "the same as Pappy Van Winkle." (There are reasons it's not.) All we know about J.E.F. at this point is what is on the approved label and what we can logically surmise from that information. Don't believe anything else you hear about it unless it comes from Heaven Hill.

Wherein I Talk to Bloomberg About NDPs

I did this interview last summer. I recall it was a hot day and we had to turn off the AC at Scofflaw (3201 W Armitage) because it was too noisy. Bloomberg posted the finished five-minute video today with a story headlined "Bourbon Bait and Switch. What's Really in Your Glass?" I don't know if the video has seen the light of day before now, but this is the first time I've seen it. I should lose some weight.

Be sure to read the short article too. It's a little more up-to-date, noting that Four Roses stopped making Bulleit Bourbon at the beginning of last year. Bloomberg did a good job with both the article and video.

Between articles like this one, and excerpts and reviews of Reid Mitenbuler's new book, Bourbon Empire, the popular press is once again all abuzz with shocking news about non-distiller producers (NDPs) and the misleading tales they tell. Of course, none of this is news to regular readers of this blog, my newsletter, or my books, particularly my most recent one, Bourbon, Strange, which was published in September of 2014. The media likes to hype as 'unknown' information that is well known, just not widely known. You know better.

Despite the publicity, there are more Potemkin Distilleries today than ever. Why? Because stories sell and making them up is cheap, certainly cheaper than actually building a distillery and making whiskey yourself. I don't favor more regulation of labels, although the regulators need to do a much better job applying and enforcing the rules they already have. Many Potemkins break with impunity the rules about identifying the state where the whiskey was distilled, and about how old the whiskey really is if it is less than four years old.

For other things, consumer education is the best solution. If the consumer knows Templeton Rye is made in Indiana, not Iowa, and buys it anyway, no one is harmed.

But getting true information to the people who need it is hard. When you're not spending money making whiskey, you have a lot more to spend on marketing and most whiskey consumers get most of their information from the marketers, either directly or indirectly through bars and liquor stores.

If consumers are to be educated, they have to play their part too. Much would be solved if more people were just a little more curious about where the products they buy really come from, although I'm sure many of us are afraid to know. In today's multiple-channel media universe, multiple-channel messaging is the only way to reach a large number of people. Accurate information about American whiskey is available here and elsewhere if people bother to look for it, but an outlet like Bloomberg can put it in front of many more whiskey buyers than I can. In this case, both the story and video are original reporting too, not just a rehash of other published media reports like most of what you read today online.

Enthusiast publications such as WHISKY Magazine and Whisky Advocate do a good job, even though they are supported by whiskey advertising. The people who write for them as well as their many very knowledgeable readers won't stand for any whitewashing. Whether it is them or the fat guy in the red shirt, all any of us has is our credibility. If you want to know the truth about what you are drinking, your best bet is to get your information from a variety of sources and stay at least a little bit skeptical about all of them.

Owner and Injured Distiller Sue Still Maker Over Deadly Silver Trail Explosion

WPSD-TV, the NBC affiliate in Paducah, Kentucky, is reporting today that Silver Trail Distillery owner Spencer Balentine and Jay Rogers, one of the employees injured in the distillery accident on April 24, are jointly suing Oregon still maker Revenoor for damages.

The family of Kyle Rogers, 27, who died from injuries he received in the explosion, has not yet decided how they want to proceed.

On Thursday, Amanda Powell, Silver Trail Museum Manager, issued a public statement to other owners of Revenoor stills. "DO NOT operate until you have spoken with the Kentucky State Fire Marshal's office in Frankfort," she warned. "The model 300 gallon Revenoor used by Silver Trail failed massively, hurtling 50 feet and bending a 10' X 10' sliding steel door before landing in the gravel lot." Jay Rogers said the explosion was totally without warning and occurred four gallons into a normal run.

In her statement, Powell also made allegations about the Revenoor Company and its owner, Terry Wilhelm of Yamhill, Oregon. "The very day of the accident Mr. Wilhelm began placing Revenoor Stills into bankruptcy and pulled the website down according to the insurance investigation," she claimed.

In an interview with Mark Gillespie on Friday, Wilhelm denied Powell's assertions. “I started to pull the website and the phone number down on February 24th, not the day after the explosion," Wilhelm told Gillespie. "There hasn’t been anything done about a bankruptcy filing. I simply did it because there were some health and some personal family issues that were just getting to be too much along with the work with Revenoor. I simply wasn’t in a good mind to take any more orders."

An archived copy of the Revenoor web site can be seen here.

According to Gillespie, Wilhelm shut the business down because of a family dispute over ownership. Wilhelm told Gillespie that he has been locked out of the Revenoor shop on the family’s farm since February 23 with no access to the company’s equipment or records. Wilhelm also said that he has not been contacted by anyone associated with the Kentucky Fire Marshal and is willing to cooperate fully in the investigation.

A few days after the blast, Hawkins Teague reported in the Murray (Kentucky) Ledger & Times that Bill Compton, a deputy with the Office of the State Fire Marshal’s hazardous materials division, is overseeing the investigation. His office is working with Silver Trail’s insurance company to develop a theory of what exactly caused the equipment failure.

“It’s an ongoing investigation,” Compton said. “There was a catastrophic failure of the still, which caused the still to be catapulted through the building and into the gravel driveway of the facility. What exactly caused the still to over-pressurize and fail, at this point, we don’t know; it’s still under investigation.”

A final report is not expected for some time, Compton told Teague.

There have been a handful of accidents at American micro-distilleries in the last ten years, but no deaths or serious injuries until Silver Trail. The Kentucky Distiller's Association has established a support fund for Jay Rogers and the family of Kyle Rogers called 'Lifting Spirits.'

Distillery Security Post Pappygate

Today I would like to direct your attention to the Whisky Advocate website, where I will regale you with stories of empty bottles falling out of walls and other tales of distillery security.

Not surprisingly, considering the value of their products, distilleries have extensive human and technological resources devoted to security, yet for every tall fence someone else builds a taller ladder, and folks with larceny in their hearts always find a way, like bribing a security guard to look the other way (allegedly).

Click here for my Whisky Advocate story about distillery security.

Click here for the latest Pappygate news from the Lexington Herald Leader. (There has been a tenth indictment.)

Click here for Larceny, a bourbon dedicated to a better class of whiskey thief.

Buffalo Trace Distillery Issues Third Annual Bourbon Inventory Update

Buffalo Trace started all of the bourbon shortage hysteria with their first report three years ago. Since then, they have gotten increasingly careful about how they word things. I will, therefore, let them speak for themselves. By the way, Buffalo Trace is owned by Sazerac, which also owns the Barton 1792 Distillery in Bardstown. This press release refers to Buffalo Trace and its brands only.
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There’s good news and there’s bad news coming from Buffalo Trace Distillery in its third annual bourbon inventory update. The good news is that supplies of fully-aged whiskey at the 225-plus-year-old Distillery continue to increase and Buffalo Trace is making more whiskey than ever. The bad news is that demand continues to outstrip its available supply, which means all of the Distillery’s whiskey brands remain on allocation.

“This annual update relates to Buffalo Trace Distillery specifically, and is not intended to speak for the bourbon industry as a whole, or other distillers,” said Kris Comstock, bourbon marketing director.

“Not a day goes by that we don’t hear from fans asking why they can’t find their favorite whiskey at the local liquor store, so we are offering an annual update to inform people where we stand, and ensure fans we are distilling more whiskey and planning for the future.”

Since demand continues to outstrip supply, brands such as Elmer T. Lee, Rock Hill Farms, Van Winkle, and the Antique Collection (George T. Stagg, William Larue Weller, Sazerac 18, Thomas H. Handy, and Eagle Rare 17) will continue to be on strict allocation and hard to find for the foreseeable future.

Buffalo Trace, Eagle Rare, Blanton’s, Weller, Sazerac Rye, Stagg Jr., and E. H. Taylor, Jr. will continue to be in short supply, but will benefit slightly from increased production more than a decade ago. “Although we can’t guarantee that every fan will find Buffalo Trace or Blanton’s every time they visit the liquor store, things are starting to look up, and overall our inventory is in a better place than it was a year ago. We are very appreciative that fans like our whiskey and thankful for all of their continued patience,” added Comstock.

A few things that Buffalo Trace Distillery will NOT do:

• Buffalo Trace Distillery won’t lower their quality standards or alcohol by volume (ABV) just to sell more whiskey. 
• The suggested retail pricing will not be raised just to take advantage of the high demand. (Note, although some stores may charge a premium for Buffalo Trace’s limited brands, the Distillery is not asking them to do so.)
• Brands won’t be discontinued. All bourbon brands will continue to be produced and allocated each year, with a focus on quality and making more.  

In addition to the previous improvements announced in 2014 such as distilling more whiskey, adding more bottling lines, and hiring more people, Buffalo Trace is taking additional steps to prepare for a growing future. The Distillery recently purchased an additional 300 acres of farmland adjacent to its current land where it intends to grow its own grains for a farm-to-table bourbon, plus potentially build more barrel warehouses. Additionally, former barrel warehouse buildings repurchased a few years ago on the main campus of Buffalo Trace are being re-ricked and used again as barrel storage warehouses, and plans are in the works to re-rick additional buildings on site in the next few years.

The innovation Buffalo Trace is so well known for is being enhanced as the Distillery expands – its experimental warehouse, Warehouse X, has had nearly one year of barrels aging in it, yielding data with very interesting results; more than 3,000 barrels of experimental whiskies are currently aging on the Distillery’s grounds; and research on DNA fingerprinting is taking place as well.

The whiskies from Buffalo Trace are benefiting from resurgence in the category as a whole.

According to Nielsen, bourbon and whiskey grew at 6% for the 52 weeks ending 3/28/15, with premium volumes up 6.2% and ultra volumes up 19%.

Use of the 'Master Distiller' Title in Kentucky

I should have been clearer about this in yesterday's post. The Louisville Courier-Journal's headline, "Bourbon Leaders Debate Term 'Master Distiller,'" wasn't true. There is no debate. Nobody is talking about it unless a reporter calls around asking questions. As a distiller friend of mine commented, "real distillers are too busy to worry about titles."

That has been the history of the term's use in Kentucky. As Fred Minnick pointed out last year, its use was not unknown in the past. Minnick's Kentucky citations are to obituaries of people like Joseph L. Beam and Michael J. Dant, whose mastery no one would have challenged. He also cites to promotional announcements, in which producers tout the credentials of their staff. They used 'master' like we might use 'awesome,' as an amplifier.

In more common usage, the title was simply 'distiller.' Every distillery had at least one. In Sam Cecil's 1999 book, The Evolution of the Bourbon Whiskey Industry in Kentucky, his Chapter 5 is entitled 'The Master Distillers,' but the word 'master' appears nowhere else in the five pages that follow. The men he writes about are simply called 'distillers.' Distiller was the job title. 'Master Distiller' was a term of honor informally bestowed by one's peers, usually near the end of a career, when the individual's mastery was beyond dispute.

No one would have been egotistical enough to to refer to himself as a Master Distiller.

But things changes. When I started in advertising more than 40 years ago, every advertising agency had one Creative Director. The Creative Director was the person responsible for the agency's creative product. Large or small, every agency had one and only one, just like every company had one president. Today, even small agencies have dozens of creative directors and the largest have hundreds. In all kinds of companies, every division head is now a president. That's just how it is.

I'll let others philosophize about why this is so, but Master Distiller is no different. Every distillery now has to have one. Some have more than one. A convenient justification is to define Master Distiller as the person in charge of a distillery, but in many cases that's not actually the Master Distiller's job. Master Distillers usually have the final word on quality control, but not always. Responsibilities vary by company.

In reality, the companies want you to look at the person they call their Master Distiller as the ultimate authority on production and quality, and the most prestigious guest you can possibly have at your whiskey event. Like it or not, that's what the title means today. I don't see how the small guys can resist using it that way when the big guys are unlikely to stop.

This use of the title can be embarrassing for all concerned, especially when the company is a non-distiller producer. A good rule of thumb would be to withhold all distiller titles until the person has actually distilled something. A person who reviews and approves liquid distilled by someone else isn't a distiller. The correct title for that person is 'customer.'

But is there a debate? Not really. Is anything likely to change? Probably not. Does it matter? Not very much.

But I will offer one small piece of advice and it's not just about the title Master Distiller. If you want to be in this business, it is in your best interest to learn and be sensitive to its history. This business didn't begin the day you became aware of it. History and heritage are very important. Newbies who immediately want to change everything catch a lot of grief. Spare yourself. Keep your head down, learn your craft, and get better every day. If you do all that, you'll probably like what people choose to call you.