Thursday, February 26, 2015

States Are Clamping Down on Illegal Alcohol Shipping

According to the software company ShipCompliant, the Illinois Liquor Control Commission (ILCC) announced at their board meeting last week that they have sent more than 100 cease and desist letters to retailers, wineries, and fulfillment houses. The letters state that the ILCC "has evidence that your business is transferring alcoholic liquor into Illinois from a point outside of Illinois without a license."

Letter recipients have five business days to respond if they believe they received the letter in error or would like to apply for the required license. The ILCC is threatening to notify the common carrier making the shipment about the non-compliance, which will result in a violation of the carrier agreement and potentially put shipments to all states at risk for that seller.

ShipCompliant reports that Iowa and Michigan are taking similar steps to compel compliance with state law regarding direct shipping.

Forty-three states now permit their citizens to receive shipments directly from producers, but only 14 permit direct shipment from out-of-state retailers.

Each state, of course, makes producers and retailers jump through different hoops, and that's why ShipCompliant puts out these reports. They want to attract attention to their product, an integrated software platform that handles all of the legal stuff on a state-by-state basis for producers and anyone else who wants to do booze business across state lines.

At this point direct shipping is mostly about wine, but every kind of beverage alcohol producer faces the same frustrations dealing with 50 very different jurisdictions. Probably the biggest shock for new producers -- whether they make wine, beer, or spirits -- is how much time they are forced to spend on regulatory compliance matters.

All of this regulation, over-regulation to some, is based on the premise that alcoholic beverages are a uniquely dangerous consumer product, evidently the most dangerous consumer product in existence, since it is the most highly regulated one. There is a good case to be made for 'normalizing' alcohol regulation, improving efficiency by making it better fit the need, but the first thing you would need to do is eliminate the 50-states solution, which probably would require a constitutional amendment since it was created by one, the 21st.

In addition to abiding all sorts of vested interests, alcohol regulation is politically charged. That's why virtually nothing has changed since 1933.

Tuesday, February 24, 2015

The Hard and Un-True Story of George Dickel

Whiskey fans are always glad to see a neglected brand get some love but, as with the Old Grand-Dad reboot, doing it with made-up history dampens our enthusiasm.

George Dickel is a small brand, a mere speck in drink giant Diageo's eye. It's hard to even find on Diageo's brand lists, so buried is it by Goliaths like Smirnoff, Capt. Morgan, and Johnnie Walker.

So here comes the new Whisky Advocate with a bright, shiny, 12-page insert for Dickel inside, with the title "Handmade the Hard Way, the Hard and True Story of George Dickel American Whiskey at Its Best."

Except the story they tell is a long way from true. We're not talking about fluff here, typical advertising exaggeration, though there's plenty of that. We're talking about blatantly false history and other false claims. Some examples:

"For nearly 150 years, our distillery has been faithful to the recipe that founder George A. Dickel created and perfected." 

There were actually two distilleries, one that operated from about 1877 until 1910, and the current one that was built in 1958, so the real number is 90 years. Worse than that, George Dickel never "created and perfected" a whiskey recipe. He wouldn't have known where to begin. He was a whiskey merchant, not a distiller.

"Soon, he discovered in nearby Tullahoma, Tenn., what he considered the perfect spot to make whisky: Cascade Hollow." 

Tullahoma is about 80 miles from Nashville, where Dickel was based. In his day, that was hardly "nearby." Even today, with the interstates, it's about a 90 minute drive each way. That's a judgment call, this isn't. George Dickel had nothing, nothing, to do with the location of the Cascade Hollow Distillery. The site was chosen and the distillery was built in 1877 by John Brown and F. E. Cunningham. Dickel never did anything but buy whiskey from Cascade. It is unlikely he ever visited the place. He certainly did not build it and he never owned it. 

"So well-regarded was this place that when Dickel first bottled whisky there, in 1870, he named it for the hollow." 

Maclin Davis, who owned Cascade when it did business with Dickel, named the brand. Dickel had nothing to do with that. It is highly unlikely there was ever a bottle filled at Cascade during Dickel's lifetime or at any time before 1959. Dickel would have bottled it in Nashville. That's what he did. He bought, packaged and sold whiskey. He was what we today call a non-distiller producer (NDP). George Dickel & Co. became the exclusive sellers of Cascade Whiskey in 1888, not 1870.

"[After his death, Dickel's widow and business partner] changed the whisky's name to George Dickel Tennessee Sour Mash Whisky." 

No, they did not. The name change happened in 1964, when the first whiskey from the new Tennessee distillery was ready to sell. Schenley, the brand's owner at the time, changed the name to compete more directly with Jack Daniel's. Schenley had just tried, unsuccessfully, to buy Jack Daniel's. Rebuilding Cascade and launching George Dickel was their Plan B.

As with the Old Grand-Dad reboot, not everything about the Dickel insert is bad. Most of it is great. The photography is beautiful and appropriate, and the present day whiskey-making process is thoroughly and accurately explained. George Dickel makes excellent whiskey and because its owners neglected the place for so long, it has never been fully modernized making its "handmade" claim more legit than most.

What Diageo has done with Dickel's history isn't glossing over the real story, or spinning it. This isn't prettying it up, this is making it up. That's not 'cute' or 'fun,' it's offensive. The true story is told in my books but also here, courtesy of the Tennessee Historical Society. It is all very well documented and easy to find. Diageo knows its version is false.

In business and life, a person or company who will lie to you about something will lie to you about anything. Diageo has shown, and not for the first time, that it can't be believed. That's a problem. 

Sunday, February 22, 2015

The Good and Not-So-Good of the Old Grand-Dad Reboot

Beam Suntory has given Old Grand-Dad Bonded a bright new look and a fancy new price, $24.99 MSRP. (It has been selling at closer to $20.) But the upgrade is a nice job and Old Grand-Dad bourbon deserves more attention. It's also good that Beam is emphasizing the bond, rather than the other Old Grand-Dad expressions. Historically, Old Grand-Dad Bonded was the #1 bonded bourbon when bottled-in-bond meant something to bourbon drinkers.

The new label emphasizes the brand's high rye mashbill. The label is printed on the glass and the bottle is tall and sleek, for a modern look. It now has a cork topper instead of a screw-cap.

These are all improvements, but they made one screw-up. There is no evidence to support the new claim that Basil Hayden "was known for distilling bourbon with a high rye content." In fact, no one really knows when the current Old Grand-Dad recipe was adopted, as the brand had many different owners before Beam acquired it in 1987. What is known is that Beam continued to use the same recipe the previous owner was using, the same recipe Beam still uses, but that's about as far as it goes.

Of the many bourbon brands Beam acquired when it merged with National Distillers in 1987, the Old Grand-Dad recipe was the only one Beam continued to make the same way. All of the other National brands, such as Old Crow, were simply switched to Jim Beam distillate when the liquid made by National ran out.

Although Beam doesn't officially disclose mashbills, Booker Noe told me many years ago that the Old Grand-Dad recipe is about 30 percent rye, as compared to Jim Beam at about 15 percent. Four Roses also uses more rye than average in both of its mashbills. At the other extreme, some major bourbons contains as little as 8 percent rye.

It is important to challenge this new exaggeration about the origins of the Old Grand-Dad recipe because there is real history here, important history that deserves to be told without brand-hyping distortion.

Here's a little bit of it.

Basil Hayden was one of the leaders of a migration of Catholics from Maryland to Kentucky in the late 18th and early 19th centuries. Although they came west in small groups over about a 30-year period, they all came with the intention of settling in what are now Marion, Nelson, and Washington Counties. They wanted to settle close together for mutual support and, specifically, so they could attract a priest.

Maryland, which had been established as a colony for English Catholics, eventually turned on them. After 1692, Maryland established the Church of England by law and forced Catholics to pay heavy taxes to support it. Catholics were cut off from all participation in politics. The Mass, the Sacraments, and Catholic schools were all outlawed.

When the successful conclusion of the Revolution opened up more of the interior for American settlement, many Catholics headed west. The Kentucky Catholics were the first large Catholic enclave west of the mountains.

Most of the migrants were farmers and many of them were distillers. So far as we know, Basil Hayden was a typical farmer-distiller of his era. Nothing has come down to us about his recipe and it is probable that he, like his contemporaries, distilled whatever he had on hand without consideration of niceties like mashbills. Again so far as we know, Basil's son Lewis was a farmer-distiller much like his father.

The Maryland Catholic families stuck together and intermarried. Many of those families are still prominent in those same three Kentucky counties. In 1818 Lewis Hayden married Mary Dant, daughter of another famous distilling family in the Kentucky Holy Lands. They had 14 children, including a son named Raymond.

After the Civil War (1861-1865), whiskey-making left the farm and became industrialized. In about 1882, Raymond Hayden teamed up with a former treasury agent to establish a commercial-scale distillery at Hobbs, Kentucky, a stop on the then-new branch of the Louisville and Nashville Railroad. They named the distillery Old Grand-Dad and put a portrait of Raymond's grandfather, Basil, on the label. With the industry growing rapidly, many producers cultivated the image of 'old time' distillers like Raymond's grandfather.

Although Hayden's distillery made both rye whiskey and bourbon, this was common at the time and doesn't prove the bourbon recipe was uniquely high-rye. It was Old Grand-Dad bourbon that became successful nationally and the rye was discontinued.

After Hayden's death, Old Grand-Dad was acquired by members of the Wathen family, who also had been part of that Catholic migration. They continued to sell Old Grand-Dad bourbon as medicinal whiskey during Prohibition and their company, American Medicinal Spirits, became a major component of National Distillers after Repeal.

As for the recipe, it's likely that when National revived the brand after Prohibition, they simply developed a recipe they thought would be appropriate. As rye whiskey and bourbon had been about equally popular before 1920, it is likely that bourbon recipes containing a healthy dose of rye were also common. But after Prohibition, consumers want a softer taste, and rye can taste hot and harsh, especially in a young whiskey. Rye whiskey itself struggled after Repeal and many bourbon makers reduced the percentage of rye in their mashes to produce a milder taste. In addition to softening the taste, rye was (and is) much more expensive than corn, so reducing the rye content also saved money.

Old Grand-Dad was positioned as a premium brand and also as an old, traditional one, so it retained its old, traditional recipe. That's important, even if the recipe isn't 200+ years old. Beam Suntory does a disservice to the brand's authentic heritage by exaggerating it.

Saturday, February 21, 2015

No Additives in Bourbon, No Way, No How

WARNING: This entire post is about geeky labeling rules stuff.

The picture above came to me from Germany. It is the back label of a bottle of Bulleit Bourbon. In English, the phrase indicated means "Contains Caramel." I posted it elsewhere and a lively discussion ensued. Another correspondent in Germany theorized that, because Diageo sells so many scotches, and they contain caramel (which must be disclosed in Germany), the person in charge of their German label compliance must have assumed bourbon contains caramel too. The statement no longer appears on Bulleit Bourbon labels in Germany, so his theory seems sound.

What does Diageo say about it? I asked but they never answered.

The discussion caused some people to refer back to a post here in September, where we discovered that flavoring is permitted in American whiskey in some very limited circumstances. We also noted a seeming conflict between the rules themselves and the TTB's Beverage Alcohol Manual (BAM).

The BAM is a tool created by TTB for the convenience of producers. It is easier to use than the rules but is subordinate to them. If they conflict, the rules rule.

In the comments to that September post, we received some very good input from some very knowledgable people and also, offline, a clarification from TTB itself, which we published as a comment in the same thread.

It's there, in the comments, and has been since September, but in light of yesterday's discussion I now realize it didn't get enough play at the time, so here it is again. This is TTB's statement:

"Bourbon whisky can't have coloring, flavoring, or blending materials because 27 CFR 5.23(a)(2) allows the use of such materials up to 2 ½ percent only if  'customarily employed therein in accordance with established trade usage.' TTB’s interpretation of this is that Bourbon whisky does not customarily include such usage (straight or otherwise).

"The formulation office would not see a formula for Bourbon whiskey as it is not required. The BAM states that harmless coloring, flavoring and blending material (HCFBM) is not allowed to be added to Bourbon whiskey. Caramel color would fit within HCFBM. (I did check the table in the BAM, and it clearly indicates that no HCFBM may be added to Bourbon whisky or Straight Bourbon whisky.)

"So, technically, the BAM is not contradictory to the regulation at 27 CFR 5.23(a)(2) … nor to the standard of identity for the class of whisky and several types in the regulations at 27 CFR 5.22(b). The answer to the question is that you may not add caramel or caramel coloring or flavoring to Bourbon."

This statement from TTB confirms that bourbon may not contain any additives under any circumstances. Through this exercise we learned that rye whiskey (but not straight rye whiskey) may. Rye whiskey may contain 'harmless coloring, flavoring, or blending materials up to 2 ½ percent,' because for that product said additives are 'customarily employed.' This is why Templeton Rye is not labeled as straight rye, according to its makers. It contains some of the permitted additives.

It is unknown at this time whether or not this dispensation exists for any other named types, such as wheat whiskey. Now at least you know that if your rye whiskey isn't labeled 'straight,' it might contain some flavoring or coloring.

Some might ask how this affects so-called flavored whiskeys such as Red Stag by Jim Beam. Short answer is, it doesn't. That's a different issue, discussed at length here.

TTB, just in case you don't know, is the federal regulator of all beverage alcohol products; beer, wine, and distilled spirits. It is part of the Treasury Department. The initials stand for 'Tax and Trade Bureau.' Technically, TTB's rules only apply to products sold in the U.S., but they do apply in Germany and many other countries through treaty agreements.

Friday, February 20, 2015

Whiskey Shortage? What Whiskey Shortage?

Readers of this space know I don't have much patience with clickbait "whiskey shortage" claims, but I haven't broken it down like I do in my guest post today on the Whisky Advocate Blog. There you can see how both The Tennessean and The Wall Street Journal managed to get 'shortage' into the headline of a story about something else entirely.

About the nascent Spanish-American War, newspaper publisher William Randolph Hearst famously wrote to one of his photographers in 1898, "You furnish the pictures and I'll furnish the war." Modern journalists have decided they don't need the war, just mention of it in the headline. Since the click is the prize, the story doesn't matter.

Not that fake, bullshit stories about a non-existent whiskey crises really hurt anyone. They're just more fake, bullshit stories in a world full of them. And we're throwing out a little bait ourselves, since next week my good friend Fred Minnick will argue that there is a whiskey shortage.

Whisky Advocate magazine is America’s leading whisky magazine and I'm proud to be in their pages from time to time, as well as guest blogging for them. With bourbon now the fastest growing distilled spirits category worldwide, maybe America's leading whiskey magazine, which is based in America and edited by Americans, should consider spelling 'whiskey' the American way, with an 'e.'

Monday, February 16, 2015

Whiskey and the Perils of Popularity

Whiskey is popular again, especially American whiskey (e.g., bourbon, rye). That means the liquid itself is popular but it also means the idea of whiskey is popular, which means producers will lead you to believe you are drinking whisky when you are not.

This is nothing new in the United States. We are the only country in the world that allows an unaged distillate (corn whiskey) to call itself whiskey, and we are the only one that allows a product that is 80 percent vodka to call itself whiskey, i.e., blended whiskey. We even allow a product that is merely 5 percent whiskey to call itself 'spirit whiskey.'

Today, the issue is so-called 'flavored whiskeys,' none of which use the TTB's Section 5.22 (i) Class 9, the rule where flavored whiskey is defined as " which [has] been added natural flavoring materials, with or without the addition of sugar, and bottled at not less than 60° proof."

Most of these products, and all of the most popular ones (Fireball, Jack Daniel's Honey) are distilled spirit specialties, a catch-all category that isn't really a category at all. The rule is simply that the label must display "a truthful and adequate statement of composition." So Fireball is allowed to be called 'Cinnamon Whisky,' defined below in smaller type as 'whisky with natural cinnamon flavor.' Red Stag by Jim Beam is 'Kentucky Straight Bourbon Whiskey Infused with Natural Flavors,' as is Knob Creek Smoked Maple. Crown Royal Regal Apple and Crown Royal Maple Finished are 'a blend of whiskies infused with natural flavors.'

Jack Daniel's Tennessee Honey, like Fireball one of the most popular flavored products, goes a different route. It is 'Honey Liqueur Blended with Jack Daniel's Tennessee Whiskey.' The flavored products from Wild Turkey, Evan Williams, and Rebel Yell use similar language.

With the 'whiskey with...' products such as Red Stag and Fireball, you at least know all of the alcohol in the product is whiskey. That's not true when one of the ingredients is a liqueur. When you see the word 'liqueur' on the label, it is likely that some of the alcohol in the product is grain neutral spirit, i.e., vodka, and you can't be sure how much.

But here is a clue. Section 5.22 (h) (2) defines 'rye liqueur' and 'bourbon liqueur.' Nobody uses that classification either. Why not? Probably because it requires that the product derive at least 51 percent of its alcohol from the named whiskey type. It is safe to assume, then, that the liqueur component of these products does not meet that minimum standard. When the label says 'liqueur and whiskey' you have no idea what the ratios are, so it's possible that most of the alcohol in the product is actually vodka,

None of this is presented as a criticism of any product, company, or consumer. It is an exercise intended to keep me sharp (interpreting the rules is hard) and help all of us know what we are really drinking.

Saturday, February 14, 2015

The End Came for Michter's 25 Years Ago Today

Today is the 25th anniversary of the final closing of the Michter's Distillery in Schaefferstown, Pennsylvania.

That's the day the bank called and ordered Master Distiller Dick Stoll to shut it down, send everyone home, and turn off the lights on his way out. The owners, with a big unpaid tax bill hanging over their heads, had simply walked away.

Despite its ignominious end, the distillery had a very long history. In 1753, a Swiss Mennonite named Johann Shenk built a small distillery on his farm near Schaefferstown in what became Lebanon County, Pennsylvania. At Shenk’s death the distillery passed to his daughter and son-in-law, John Kratzer. It remained in the Kratzer family until 1861 when Abraham Bomberger purchased it. He was family too, married to Elizabeth Shenk Kratzer, Johann Shenk’s great granddaughter.

For most of the pre-prohibition period, it was known as Bomberger's.

Because ownership passed through the daughters several surnames were involved, but it was always owned by descendants of Johann Shenk until it was bought by Ephraim Sechrist in 1920, after it had closed down due to Prohibition. Ownership by the same family had run for 167 years, itself a remarkable achievement. By comparison, the Beams of Kentucky only owned their distillery for about 125 years.

Although the distillery came back after Prohibition, it struggled to stay open. More than once it changed hands because the previous owners went bankrupt. In the 1970s it took the name Michter's and began to promote itself more as a tourist attraction than a working distillery. It did fairly well during the bicentennial year of 1976, then went back to struggling. By the end, the company's products had no distribution beyond the distillery gift shop.

On Valentine's Day 1990, everything was abandoned. The county sold the whiskey in the warehouses for back taxes. It was probably redistilled into ethanol. Although several attempts were made to revive it, all of the buildings gradually fell into ruin and most were demolished. There is little at the site today, not even a historical marker. While the town of Schaefferstown seems proud of its local history in general, it never considered the distillery an important part of that history.

Because all of the assets of Michter's were abandoned, that included the name and its use as a trademark. The name sat untouched for several years after the demise, when anyone could have claimed it for not much more than the modest registration fee.

Eventually a New York liquor importer and producer called Chatham Imports recognized the value, and claimed and registered the name. They acquired some whiskey from one or more Kentucky distilleries and revived the Michter's brand name with some success. Operating as Michter's, they have built a new whiskey production facility in Shively, a suburb of Louisville. They have been bottling there for about a year and will begin to distill whiskey from scratch this year. The distillery equipment is installed and in the process of being broken-in.

It is safe to say that Chatham has done better with the Michter's name than Michter's ever did.

Most of the above comes from a book I wrote called The Best Bourbon You'll Never Taste, about the A. H. Hirsch Reserve Bourbon made at the Schaefferstown distillery in 1974.