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Bulleit Distilling Company; My Diageo Job Offer; & All Love Tom Bulleit

At the Bulleit Distilling Company groundbreaking today, fascinating facts just kept jumping from the podium and the crowd like a leaking bourbon barrel. (Read May post about the distillery announcement. Read my Live Tweets from groundbreaking.)

  • Diageo North American President Larry Schwartz said he didn’t want Bulleit Rye when they were first considering the brand. Now that Bulleit Rye is a category leader or rising star (depending on which report you read), he firmly supports it. He says Diageo believes in the Bulleit Bourbon founder, Tom Bulleit.
Kentucky Governor Steve Beshear speaks eloquently about Diageo and how bourbon is essentially becoming water in Kentucky. The Diageo plant will bring 30 jobs to the Bluegrass State.

Kentucky Governor Steve Beshear speaks eloquently about Diageo and how bourbon is essentially becoming water in Kentucky. The Diageo plant will bring 30 jobs to the Bluegrass State.

  • Kentucky politicians love Diageo. From the locals to Kentucky Governor Steve Beshear to Congressman Steve Massie, they couldn’t stop raving about how great of a company Diageo is.
  • Diageo loves Tom Bulleit. When Diageo personnel spoke, they gushed over Bulleit, a Vietnam Veteran (read my American Legion story on Tom) and a cancer survivor.
  • An inside source also told me they will move the Stitzel-Weller stills to the new Shelby County facility. I expected that to happen. Why wouldn’t you move those historic stills?

But the most-interesting conversation I had was after the press conference. Diageo’s executive vice president Guy Smith is quickly becoming a top-level interview on the American whiskey scene, because you just don’t know what he will say. He recently commented on Chuck Cowdery’s blog with a few typos and always offers an interview that I can’t tell whether he’s serious or joking.

In this is the interview, Smith kind of offered me a job.

Diageo executive vice president Guy Smith talks on the phone prior to the groundbreaking's press conference.

Diageo executive vice president Guy Smith talks on the phone prior to the groundbreaking’s press conference.

What is the timeline on the Bulleit Distillery?

I won’t give you a specific date because you’ll hold me to it. Construction is a fairly close science, but you always run into things. We’re looking at being operational in about two years—around late 2016.

I was told the Stitzel Weller stills will be coming over here….

We’re looking really hard at that…

We know Bulleit Bourbon will be made here. Will you also make Bulleit rye here?

Probably. We’ll make different kinds of whiskies, some we don’t even have the names for yet.

Are you planning a George Dickel brand here?

Dickel is a Tennessee brand.

I know, but there have been reports that Diageo will make George Dickel here. You could always make George Dickel’s Cascade Bourbon, which was made in Kentucky in the early 1900s.

It’s a pretty good idea… I wish you’d quit being a journalist and come into our innovation department. … I can’t speculate.

Analysts were recently beating up Diageo for its lack of American whiskey efforts. Does this distillery indicate Diageo is going all-in on American whiskey and pulling back on Scotch?

We ain’t pulling out of nothing. But we’re clearly moving into American whiskey even more with a $115 million distillery. It’s our expectation to meet consumer demand and there’s a lot in American whiskey.

Are you looking at buying other American whiskey brands?

Gee… I don’t know. What do you think?

Yes.

Well, it was you who said yes.

What about Stitzel-Weller? Are you keeping it as a visitor center?

Stitzel-Weller has the history and heritage. It is very important to the company and we’re looking at all kinds of opportunities. I think if we see continued demand we’re going to be taking advantage of those opportunities, and the Stitzel-Weller heritage is an incredible component of that.

Will Diageo continue to rent warehouse space to competing distilleries at Stitzel-Weller?

The industry is a big club. And we will do everything we can to be helpful to craft and old time big guys.

Who is making Bulleit right now?

Some very, very talented whiskey makers.

Is there more than one distillery?

I don’t know.

Flavored Whiskey, Big Money and the Toilet Bowl

Like many great stories, this adventure begins on a plane ride to Las Vegas, where porn-flickers and timeshare salesmen awaited my 15-second attention span.

Jaclyn and I were reading the in-flight magazine, imagining how much money we’d win (correction: lose), when the lovely flight attendant slipped me a liquor bottle. The words “finely crafted” and “original recipe” made me chuckle. It was Jack Daniel’s Tennessee Honey. What the heck, we thought, we poured the container in our clear plastic cups, swirled it around, smelled it and tasted. Sadly, my tongue will never get back those 45 seconds of pure gross and vile flavors ripping my taste buds apart. It tasted chemically unbalanced.

That was the first and last time I knowingly tasted Tennessee Honey. I say knowingly because at the San Francisco World Spirits Competition I receive the flavored whiskey panel. It’s on this panel that my opinion of flavored whiskey gets worse every year.

My theory: Flavored whiskeys don’t work. The barrel chemically alters whiskey, giving it color and flavor. The charred wood filters out the moonshine-type sulfuric nose and replaces the whiskey with beautiful hemicellulose-laden properties (wood sugars). Flavored vodkas chemically work because they’ve not touched wood. Vodka needs flavoring for flavor. Whiskeys do not.

Why my theory is wrong: Flavored whiskey is the hottest category in all of spirits. According to the Distilled Spirits Council of the United States, flavored whiskey accounts for 45% of whiskey’s growth. In business, money doesn’t lie. People are buying flavored whiskey.

Why my theory is right: The true bourbon brands slapping their names on the flavored products risk the loyalty of their product. Can you see a 21-year-old Evan Williams Honey fan drinking Evan Williams Black when he turns 35 and has some money? Maybe. But in 1994, the Harvard Business Review studied the logic of product-line extensions and determined the costs are “dangerously high. The strategic role of each product, for example, becomes muddled when a line is over segmented. Furthermore, a company that extends its line risks undermining brand loyalty. Line extensions rarely expand category demand, and retailers can’t provide more shelf space to a category just because there are more products. Most important, the costs of overextension can remain hidden.” I imagine new consumers will remember the toilet bowl when they see the brand name associated with their flavored whiskey adventure.

Things You Should Know(section updated from original post): According to Pierre Ferrand Cognac owner Alexandre Gabriel, if a producer attempted a “Grand Champagne” flavored Cognac, they would receive harsh sanctions from the French government, maybe even jail. The Scotch Whisky Association objected to Dewar’s Highlander Honey. But several brands use “Kentucky Straight Bourbon” whiskey on the label and there was even a bottled-and-bond flavored whiskey approved by the U.S. TTB. Why hasn’t anybody in Kentucky threatened a distiller for flavored products?  Perhaps the strong history is the reason why.

This Robertson's Genuine Bourbon Cordial label was found in the Library of Congress' photo collection. While the label says 1847, the Library says it was printed in 1857.

This Robertson’s Genuine Bourbon Cordial label was found in the Library of Congress’ photo collection. While the label says 1847, the Library says it was printed in 1857.

In his book, Kentucky Bourbon Whiskey: An American Heritage, bourbon historian Mike Veach gives an 1810s-era recipe for “cherry bounce” whiskey. In my research, I’ve found several recipes for sprucing up bourbons with peaches and a few other choice fruits. But there was also a market for actual bourbon cordials. They fell out of fashion before Prohibition and never made a come back. Until now.

The difference between the bourbon cordials of the 1800s and today: Back then, the whiskey was horrid. Today, it’s pretty damn good.

 

 

Announcement: My Future in Whiskey Blogging

As a spirits writer, I find it incredibly difficult to maintain a blog. Every story I post here takes away my special writing juices for magazine clients and books. But I love the idea of blogging.

Under the pen name Sminklemeyer, I blogged while in Iraq, becoming one of the first so-called “Milbloggers,” and have since been an on-again, off-again blogger on this fine wood-paneled website.

I love writing the journalistic-style whiskey stories, but they’re a pain in the ass. Nobody wants to talk, and I get tired of wading through the marketing. Plus, sources don’t really know what they think they know. For example, back in January a source told me Diageo was planning a $15-million distillery. When the spirits company announced its $115-milion distillery in Shelby County, imagine how stupid I’d have looked if I ran with the “anonymous” source’s comments.

I’ve tried to break news here, but investigative stories take anywhere from 12 to 60 hours to develop and write. If I dedicated all my time to investigative booze stories, I couldn’t support my family. I’ll still break news here or at the Whisky Advocate blog when I can, but I’m planning to use this blog to cover the ultra geeky stuff I’ve always wanted to write.

With that said, I need something from you. Please subscribe to this blog (right-hand corner). In return, I’ll write a blog every Friday and will commit to an editorial calendar, so you can salivate for a story days in advance.

FredMinnick.com Editorial Calendar for five weeks

8/15 – Flavored Whiskey: My Favorite Subject

8/22 – Blind Taste Off: 1970s Jack Daniel’s vs. 1970s Jim Beam

8/29 – Experiment: Two Week Study of Evaporation

9/5 – Blind Taste Off: 2014 Single Barrel Limited Edition Four Roses vs. Crown Spirits Award Winning Private Barrel Selection Four Roses Single Barrel

9/12 – 1940s Kentucky Tavern: The Greatest Bourbon Ever Made?

So, there you have it: Five stories I want to write so badly I’m giving myself deadlines. I hope you’ll read, share, tell your friends, buy my books and tip your bartenders, because I badly want this experiment to work. Cheers!

Russia Targets Bourbon

As things heat up between the U.S. and Russia, a bourbon brand faces a Russian ban.

According to The Moscow Times, Russia’s state consumer protection watchdog is planning to suspend Kentucky Gentleman bourbon.

The article says the government agency found “signs of phthalates — organic chemicals — in the bourbon.”

The makers of Kentucky Gentleman indicated the Russian agency has yet to reach out to the company.

Kentucky Gentleman bourbon is a cheaper bourbon, but joins other agricultural goods caught up in the Russian trade feud.

I’m also aware of major brands cancelling marketing trips to Russia and Ukraine. They view the market as too risky right now.

But Russia and Ukraine love American whiskey.

From 2012 to 2013, American whiskey exports increased from  $1 billion to $1.5 billion thanks to reduced international tariffs and substantial increased demand in Russia. According to the Russian Federal Customs Service, American liquor imports increased by 67 percent from 2009 to 2013.  That number is likely to take a downward spiral if tensions continue.

People frequently ask me: What will stop bourbon’s rise?

Well, trade tensions with one of bourbon’s fastest growing markets does not help.

Exclusive: The ‘Unsanctioned’ Secret About Tales of the Cocktail

Prior to attending Tales of the Cocktail last week, I received hundreds of pitches from publicists trying to set up meetings with their respective brands. One caught my eye. It was an apology from WhistlePig Rye Whiskey: “We have been informed by Tales of the Cocktail that our previous invitation represents an unsanctioned event. WhistlePig is an official participant and proud sponsor of Tales of the Cocktail, however, we were unaware that our affiliation is limited to on premise events. The fault is entirely ours…”

Bad, WhistlePig!! No more premium Canadian whisky barrels for you!

Wait, what is an unsanctioned event anyway?

It’s basically a party, seminar or cocktail event away from Tales, a non-profit cocktail festival that earns its revenue off of sponsorship and ticket fees. You can read sponsorship levels here, but they start at $250 and go up to $10,000. (Other for-profit cocktail festivals ask upwards of $50,000 for private rooms.)

Going to Tales, I wondered if I’d catch wind of other unsanctioned events. And if I did, would I investigate them? Why were people doing them? And what did Tales think about somebody using the event as a platform to schmooze its attendees?

Lo and behold, while sipping a Pernod Absinthe cocktail in the lobby of Hotel Montleone, a friend asked me if I was going to the unsanctioned Brown-Forman event. No, I said. He then gave me a discrete black card with an old timey key stringed inside. The invitation for Brown-Forman’s House of Whiskey felt secretive and featured Woodford Reserve, Jack Daniel’s, Old Forester and Gentleman Jack. Surely, ever-ethical Brown-Forman wasn’t trying to pilfer people from Tales of the Cocktail.

The secret  invitation to Brown-Forman's Tales event.

The secret invitation to Brown-Forman’s Tales event.

Then, I received an email from the Tales Founder Ann Tuennerman urging me, other media and sponsors to not attend the Brown-Forman event and other unsanctioned parties. “Brown-Forman has elected to use the popularity of Tales of the Cocktail, and the fact that the Event attracts tens of thousands in the Spirits and Bartending Community, from around the World to New Orleans, while continuing to not participate as a Sponsor,” Tuennerman wrote. “I have said in the past, it is unfortunate but some brands elect to not support the bartending community and ride on our proverbial coattails. …”

Brown-Forman did not comment on the unsanctioned event, but said there is a history between the spirits conglomerate and Tales. “We have a right to do promotions when we want to do promotions,” Brown-Forman spokesperson Phil Lynch told me.

But it may not be that simple.

Tales of the Cocktail saved the New Orleans bar scene, says Neal Bodenheimer, owner of the popular Cure in Uptown NOLA. On a more global scale, Tales reinvests its revenues into financial aid and education for bartenders.

After Hurricane Katrina, the spirits community was one of the only factions that came to New Orleans, Bodenheimer told me. “Ann is trying to protect her sponsors and New Orleans,” Bodenheimer says. “I can understand why a smaller brand would do an unsanctioned event, but Brown-Forman has no reason. They have the money to be active. … There’s a lot that Ann does year-round to make sure this is a great event. People try to take advantage of that; I can see why she is frustrated. She has to protect New Orleans.”

Tuennerman’s home flooded during Hurricane Katrina and she found herself displaced, living in Houston and New York. When she returned to New Orleans January 1, 2006, her then boyfriend (now husband) took out a loan to execute Tales of the Cocktail. She had no major sponsors. “It took several years for me to pay that loan back,” she told me.

As Tales has grown to an annual attendance of 15,000 to 18,000 bartenders and developed events in South America, Tales is largely thought to be a cash cow and Tuennerman’s sponsorship advocacy has rubbed many sponsors the wrong way. But Tuennerman says Tales is not making money “hand over fist. … I understand this perception is out there, but I don’t even have a retirement savings and my husband works a full-time job so I can do Tales full time.”

The Tales Spirited Awards cost $300,000 to produce, Tuennerman says, and “we lose money on that.”

Last year, according to the University of New Orleans, more than 200 Tales events yielded a $14.1 million impact on the New Orleans economy and an additional $1.1 million in state and local tax revenue. Bodenheimer says unsanctioned Tales events could hurt this impact because they keep patrons from visiting New Orleans restaurants and bars.

“Tales is becoming a lot like the Super Bowl,” Bodenheimer says. “During the last Super Bowl, hotel venues and parking lots were the only places that made money. People weren’t out in restaurants as much.”

Bodenheimer says a small party in a hotel room, aka an unsanctioned event, is not effective. “Go host people at a bar,” he says.

When it comes to unsanctioned events, I have heard rumors about crazy stripper parties and witnessed smaller brands bringing bottles into another brand’s tasting room or placing stickers on people’s cups as they left. “You just tasted so and so’s tequila; now try mine.”

Steve Gubb, who spent $6,750 on a couple sponsorships for his new rum, Gubba Rum, says these guerilla marketing tactics are “dirty. To show up at somebody else’s tasting room is a sleazy way of doing business.”

To stop unsanctioned events, Tuennerman plans to research and pursue a “clean zone,” which New Orleans created in 2013 to protect Super Bowl vendors from losing revenue to non-vendor outfits. New Orleans mayor Mitchell J. Landrieu said {for the Super Bowl} the clean zone eliminated confusion and “requires that commercial businesses get the appropriate permits if they wish to operate….”

If Tuennerman receives this special ordinance, New Orleans essentially says Tales of the Cocktail is as big and important as the Super Bowl.