As titans take sides, Tennessee lawmakers look to dilute whiskey rules

Diageo is the world's largest spirits company, but a small player in American whiskey. But its new Barterhouse 20 year old bourbon is part of its Orphan Barrel project, which is generating a lot of buzz despite the fact that the company actually doesn't own an operating bourbon distillery. Barterhouse was made at Bernheim distillery. (Photo by Michael A. Lindenberger)

Diageo is the world's largest spirits company, but a small player in American whiskey. But its new Barterhouse 20 year old bourbon is part of its Orphan Barrel project, which is generating a lot of buzz despite the fact that the company actually doesn't own an operating bourbon distillery. Barterhouse was made at Bernheim distillery. (Photo by Michael A. Lindenberger)

Lawmakers in Tennessee will be weighing new bills in the House and Senate Tuesday that would weaken the requirements that Tennessee Whiskey be a whole lot like Kentucky Bourbon, when it comes to how it is distilled and, critically, how it is aged. 

The Wall Street Journal has a fascinating read this morning about a tussle between the parents companies, both Fortune 500 firms, of Jack Daniel's and George DIckel Tennessee Whiskey.

Dickel's owners, the UK-based Diageo, the world's largest spirits company, wants to do away with the rules that require all Tennessee Whiskey to be aged in new charred barrels, just like bourbon. They argue that the primary requirement for whiskey to be allowed to be called Tennessee Whiskey should be that it's made in Tennessee. 

Louisville-based Brown-Forman owns the far larger distillery at Jack Daniel's, and it says relaxing the rules would diminish the quality of the whiskey marketed as Tennessee's finest, a position many whiskey experts agree with.  

But it's not just Dickel and its parent company that want to relax the rules, which were just enshrined in state law last year at Brown-Forman's behest. Joining in the fight is a push by new boutique bottlers who, just as in the bourbon industry, are popping up with increasing frequency as the American whiskey industry continues to boom. The WSJ notes: 

Popcorn Sutton Distilling LLC, one of a growing number of small distillers in the state, also wants the rules relaxed. The Nashville distiller recently began aging whiskey without charcoal filtering—a recipe it says it inherited from Marvin "Popcorn'' Sutton, a legendary Tennessee moonshiner who died in 2009.

"Popcorn Sutton naturally wants to call their product Tennessee Whiskey,'' said William Cheek, an attorney for the company, which began distilling in 2012 and last year produced about 10,000 cases of so-called white whiskey that wasn't barrel-aged.

State Rep. Bill Sanderson says he wants to roll back last year's legislation after some small distillers also told him they are struggling to secure new barrels because of booming demand. "I'm not doing it for Diageo. I'm doing it for the little guy,'' said Mr. Sanderson.

The WSJ isn't the first to look closely at the debate over the meaning of Tennessee Whiskey. On Saturday, The Bourbon Truth published a piece asking whether we weren't seeing the dumbing down American whiskey.

Diageo now wants to change the Tennessee law on Tennessee Whiskey. You see Tennessee Whiskey must use all the Bourbon requirements plus the Lincoln County process which is putting the new make through 10 feet of Maple Charcoal. One distillery, Prichard’s filed for an exception and got it so their Bourbon doesnt need to use the process. They also use a rebarreled sourced product in the Double Bourbon but are up front about it and its good stuff.

A new Whiskey barrel costs about $150 a used one around $80 unless you own them, like Diageo’s Dickel, and they are free. Diageo nor others own their own Cooperage that makes barrels such as Brown Forman does and there is a barrel shortage currently. Barrels are the most expensive part of Bourbon/Tennessee Whisky production unless the law was changed to make it permissible. 

There's plenty of irony in the story, including the fact that Brown-Forman is a Kentucky company, defending the integrity of the Tennessee whiskey industry. After all, Jack Daniel's is made in a way that would qualify it to be called bourbon, but it has always preferred to emphasize its Tennessee roots, and the famed charcoal-filtering that it says makes it different than bourbon.

Diageo says it has no plans to stop using new barrels for Dickel, but others aren't so sure. The Telegraph in London also weighed in Monday, with a piece pitting the struggle as one between two titans in the spirits business. 

The standards and special branding of Tennessee whiskey are an outgrowth of the special designation granted long ago to bourbon. Half a century ago, Congress declared bourbon a distinctive product of the US. By law, bourbon must be made of a grain mix of at least 51pc corn, distilled at less than 160 proof, have no additives except water to reduce the proof and be aged in new, charred white oak barrels.

Spirits that don’t follow those guidelines can’t be sold as bourbon. One example is Brown-Forman’s own Early Times, which is marketed as a “Kentucky whisky” because it is made in reused barrels.

Phil Lynch, a vice president at Brown-Forman, said Jack Daniel's competitors are free to make whiskey in Tennessee anyway they want to, but they just have to call it something different. 

"If you don't want to use new barrels or charcoal filtering, you can't call it 'Tennessee Whiskey.' You can call it 'whiskey from Tennessee' or 'whiskey made in Tennessee' or any other combination,'' he told the Journal. 

My bottom line: It's nice that so many start-ups are trying new things with their whiskeys -- and the lawmakers in Nashville ought to give them what help they can. But they ought to also keep in mind that the less stringent the requirements for calling your whiskey Tennessee Whiskey become, the less powerful the brand will be in the eyes of the consumers. 

In an market where so many of the players, big and small, are so busy creating new bottles, new brands and new story lines, consumers are already hard-pressed to know what they can expect when they take a bottle off the shelf.

If all it takes to be called Tennessee Whiskey is that it be made in Tennessee, the appellation will no longer mean anything at all. How much information does calling a wine a 'California wine' give you? None at all, until you know the grape at the very least. Tennessee Whiskey gives the brands that can use it an advantage -- it communicates something to consumers about what's in the bottle. Its rivals can thank Jack Daniel's for that -- and they may well find that they'll miss it when it's gone, if the legislation passes.




 

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Michael Lindenberger

Michael Lindenberger is a 2012-13 Knight Journalism Fellow at Stanford University, where he will spend a year developing a business model for blogs that looks beyond advertising and subscriptions for revenue. He is on leave from The Dallas Morning News, where he is a senior reporter writing about the nexus between the politics and policy of transportation on the local, state and national level. He is founder and co-author with Rodger Jones of the Dallas Transportation Blog. His print journalism was recognized in 2012 as the previous year's best example at The News of work that brings perspective, interpretation and analysis to bear on difficult topics. Also in 2012, the newspaper nominated his work for the Pulitzer Prize in local reporting. A 2006 graduate of the night program at Louis D. Brandeis School of Law at the University of Louisville, Michael also is a contributing national legal affairs writer for TIME.com and a former adjunct professor of media law at the University of North Texas Mayborn School of Journalism. His work has appeared in newspapers, wire reports and magazines around the world, including The New York Times, Reuters, The ABA Journal, Robb Report Magazine and others.