Sunday, December 4, 2016

Indy's Big Red Liquors May Be on to Something


The line to get in.
Big Red is a chain wine, beer, and spirits retailer in Indiana. On Saturday they held their third annual Pappy Van Winkle Rare Bourbon Lottery and Sale in the Champions Pavilion at the Indiana State Fairgrounds on the north side of Indianapolis. Everybody calls the event 'bourbonfest,' but there is also scotch and even some wine and beer. Even Ale-8-One, an iconic Kentucky ginger ale, was there giving out samples.

In some ways it was just like the whiskey festivals held in other major cities. There were tables, with people giving sample pours of various whiskeys and other products (e.g. Louisville's Copper & Kings Brandy). Wild Turkey's Jimmy Russell was there.

In other ways it was completely different. One was the price. General admission tickets were just $15. For that you got all the samples you cared to taste, and one ticket for the Van Winkle lottery, which also included the Buffalo Trace Antique Collection. All proceeds from ticket sales were donated to the Tony Stewart Foundation.

Inside the pavilion.
It was pretty spartan. The facility usually hosts prize livestock. There were not many amenities, a few snacks and plenty of bottled water. The lines for the small bathrooms were as long as the tasting lines. It was also in the afternoon, from 1:00 to 4:00 PM. Most people left when the lottery wrapped up, about 3:30 PM.

They won't say if it's their entire Van Winkle and BTAC allocation, but that is how it looked. It came to about 43 bottles. Lottery winners win the right to buy their bottle at the regular retail price. The bottle you get is also the luck of the draw. The last ticket drawn was for the lone Pappy 23.

The result? A huge, enthusiastic crowd of about 2,400 people, the biggest crowd I've ever seen at this type of event. All of the tables were doing a big business, but the longest lines were at the tables for Buffalo Trace and Four Roses. All of the majors were there but also many craft distilleries.

They planned well for it. Every whiskey vendor had two tables, at opposite ends of the hall. The 'sale' part of the event is the order form every attendee receives upon entering, along with a tasting glass. The form lists each table and the products available there for tasting, with the item's regular and sale price, and a space for how many bottles you want to buy. No money changes hands at the event. You indicate on the order form the Big Red store where you will receive your order. You pay when you pick it up.

People took the buying opportunity seriously. One guest brought his own set of Glencairn glasses so he could comparison-taste.

Speaking of comparisons, Big Red Bourbonfest's $15 ticket compares to $139 for WhiskyLive and $245 for WhiskyFest.

Big Red may be on to something.

Wednesday, November 30, 2016

Buffalo Trace Distillery Completes First Warehouse X Experiment and Releases Findings, 3.5 Million Data Points Captured


Warehouse X at Buffalo Trace Distillery
Buffalo Trace Distillery has completed phase one of its bourbon barrel aging experiment inside Warehouse X, the experimental warehouse built in 2013 that allows for specific atmospheric variables to be tested in four individual chambers, plus one open air breezeway.

The first experiment focused on natural light, keeping barrels in various stages of light for two years.

Chamber One of Warehouse X held barrels at 50% natural light, while matching the temperature of the barrels inside the chamber to the temperature of the barrels in the outdoor breezeway.

Barrels in Chamber Two experienced 100% darkness, while keeping the barrel temperature at a constant 72 degrees Fahrenheit.

Chamber Three also had 100% darkness, but those barrel temperatures were kept the same temperature as the barrels in the outdoor breezeway.

Chamber Four barrels saw 100% natural light as the temperature was kept the same as the barrels in the outdoor breezeway.

In the two years this experiment was conducted, the barrels in the open air breezeway (which was not climate controlled) saw a fluctuation of temperatures ranging from -10 F to 105 F, likely some of the greatest temperature variance any bourbon barrels have ever experienced. The pressure inside these barrels varied from -2.5 psi to 2.5 psi.

Workers removing barrels following
the experiment's conclusion.
The team at Buffalo Trace collected and analyzed an astonishing 3.5 million data points. Among those learnings, an interesting correlation between light and psi was realized, and a long held distiller’s theory of more heat equaling higher proof was scientifically proven (at least for now).

However, another popular theory was disproved in part – as it turns out, the amount of light does not really affect the color or the proof of the bourbon inside the barrels. So much for the theory of honey barrels! But Master Distiller Harlen Wheatley has this to add about honey barrels, “Even though we proved light doesn’t affect the color or the proof of the whiskey, that doesn’t mean that honey barrels (those next to windows in standard warehouses that are typically distiller’s favorites) don’t taste a little bit better. Perhaps because of other factors than natural light.  We did prove factors like temperature, pressure, humidity and air flow all play a role in the end result.”  

Now that the light experiment is complete, Buffalo Trace is moving on to the next planned experiment, which focuses on temperature. In this experiment, the various chambers will experience different temperature variations, with Chamber One remaining the same temperature as the outdoor breezeway, plus 10 F.  Chamber Two will be 80 F, Chamber Three will be at 55 F and Chamber Four will be kept at the breezeway temperature minus 10 F.  The temperature experiment is expected to last at least two years.

For information about Warehouse X including a blog updated since the inception, visit http://www.experimentalwarehouse.com/  

Monday, November 14, 2016

New Barrel Research Center in Lebanon, Kentucky, Will Focus on Innovation



Independent Stave Company (ISC) has begun construction of a research center dedicated to oak innovation and experimentation for the spirits industry. It is being built in Lebanon, Kentucky, as an addition to the company’s Kentucky Cooperage campus. Once complete, the new research center will serve as a cutting edge resource on oak maturation for ISC’s distilling customers in Kentucky and around the world.

“We are passionate about spirits, including working closely with distillers to foster innovation and develop new products,” said Andrew Wiehebrink, ISC director of spirit research and innovation.

The research center will include a laboratory, a library of experiments, a tasting room, and offices for ISC’s Kentucky-based research and customer service team.

“We don’t want to just talk about what is possible,” said Jeff LaHue, ISC’s director of strategic partnerships. “Instead, we can demonstrate through blind tastings, sensory science and chemical analysis.”

Since the 1990s, ISC has conducted hundreds of barrel experiments and the company, working with its distillery partners, continues to lay down barrels every year. The company’s innovation team has increased the number of experiments in play for the past three years and many of these projects will come of age for evaluation as the research center becomes fully operational. 

"Independent Stave Company is committed to continuously improving the quality, consistency and variety of the barrels we offer,” said Brad Boswell, ISC president. “This research center is further evidence of how we translate that vision into action to the benefit of our customers."

As part of its mission, the research center will also explore how to enhance structural integrity and recovery yields.

“We are looking at all the elements to build a barrel–oak species, wood age, barrel shape and size, how we engineer the barrels, all the materials used–to optimize the barrels we craft,” said Wiehebrink, who works directly with ISC’s key spirits customers on innovation projects. “We encourage distillers to bring us their ideas and challenges. We know how to transform ideas into reality, with sensory and science-backed results.” 

ISC supplies whiskey barrels to most of the whiskey distilleries in Kentucky and Tennessee. The major exceptions are Jack Daniel's and the other distilleries owned by Brown-Forman, which owns its own cooperages.

Monday, October 31, 2016

Is There a Bubble Brewing in Bourbon?



"A bubble might be brewing in bourbon," headlined the Business Insider story this morning, reporting on an analysis by RBC Capital Markets. (The last time Business Insider predicted an impending 'bourbon bubble' was in February of 2014.)

The picture above shows good bourbon bubbles, not the kind Business Insider means. Economists define a 'bubble' as "a market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset. Bubbles are often hard to detect in real time because there is disagreement over the fundamental value of the asset."

The concern in this case is that the bourbon industry may be growing too rapidly. The story cites as evidence recently released data from an American Craft Spirits Association (ACSA) study that shows a 42 percent annual growth rate since 2010 in the number of U.S. distilleries.

There are several problems with the conclusions RBC uses this data to support. First, not all of those new distilleries make bourbon or even whiskey. Most do not. Second, the conclusions are based on the number of distilleries and not on their distilling capacity. 

This is important because most of the new distilleries started in the last ten years are tiny, with an annual production capacity of 15,000 proof gallons or less. A handful of new distilleries have annual capacities between 500,000 and 1,000,000 proof gallons, but even added together they don't equal the capacity of America's largest whiskey distillery, Jack Daniel's in Lynchburg, Tennessee.

Jack Daniel's owner Brown-Forman won't disclose the distillery's production capacity, but they confirm it is north of 10 million proof gallons a year.

As we reported in June, in 2014 there were 13 U.S. whiskey distilleries that produced more than 500,000 proof gallons each per year. Today there are 15. By this time next year, or early in 2018, there could be 20. That is in addition to capacity growth by almost all of the existing distilleries. It represents a big increase but is it too much capacity? Most of that new capacity won't impact the marketplace before 2020. By then, we should know if China and India are going to develop the way everyone has predicted. If they do, no one will have made enough. If they don't, everyone will have made too much.

The analysts also warned that "it is important to keep in mind that to be classified as a straight bourbon, the product must be aged for a minimum of four years,"

Business Insider checked with Ralph Erenzo, founder of Tuthilltown Spirits, who corrected RBC's mistake. The 'straight' designation requires only two years of aging, not four.

All that is preliminary to RBC's money shot: "This has led new entrants looking to take advantage of the category's growth to take two approaches: 1) enter the market with an un-aged product; or 2) wait a few years and launch bourbon (once it hits the 4-year mark).

"The former approach is immediately price dilutive on the broader category, and the latter approach could lead to an influx of supply over the next few years, forcing overall category prices lower (the exact opposite of the scarcity value driving overall bourbon prices today)."

Price dilutive? Not when un-aged or lightly-aged craft whiskeys routinely sell for $50 and more per bottle. And, again, the volume of un-aged and lightly-aged products is minimal. As for the fear that a 'glut' of cheap bourbon is looming, that all depends on demand. If demand growth continues to exceed supply growth, especially the demand for older whiskey, bourbon will remain scarce and prices will continue to rise. As mentioned above, export growth is key, but there is no evidence that either it or the more modest domestic growth is slowing.

Speaking of volume, The ACSA study reports that the U.S. craft spirits market reached 4.9 million cases in 2015. Jack Daniel's alone sold about 12 million cases over the same period.

RBC is a premier global investment bank. It says so right on their web site. But they are way off the mark this time.

Monday, October 24, 2016

What Started It All. "Made and Bottled in Kentucky"



In his new book Bourbon, the Rise and Fall, and Rebirth of an American Whiskey, Fred Minnick generously credits some of my early bourbon work for ushering in the new era. For me, it all began with my independent production of the documentary, "Made and Bottled in Kentucky." The 25th anniversary of its premiere on Kentucky Educational Television arrives in June. What a long, strange trip it's been.

The one-hour documentary is still available on DVD, either directly from me or from Amazon.

"Made and Bottled in Kentucky" began in 1991 as a book idea. I had yet to write my first book at that point and I didn't know where to start. Most of my experience was in writing and producing videos. When the Kentucky Educational Television Network announced that it had money to fund independent productions on Kentucky subjects, in advance of the bicentennial of Kentucky statehood in 1992, I applied and received one of the first grants awarded. Additional support came from the Kentucky Distillers Association, from a grant it had received from the U. S. Department of Commerce for export promotion.

I began the project with visits to most of the working distilleries in Kentucky, strictly as a research phase. Principal photography took place in the second half of 1991 and first half of 1992. The deadline was June 20 and we were shooting until practically the last minute because we wanted to capture the exteriors in mid to late spring. The first exteriors at Maker's Mark in mid-April had to be carefully framed. The dogwoods were in bloom and the grass was green but the rest of the trees still looked pretty bare.

Our last shot was at the grave of Dr. James C. Crow in Versailles Cemetery. Earlier in the day we had picked up some Elijah Craig 12-year-old, which we passed around and drank straight from the bottle.

Obviously, the documentary looks dated after 25 years, but now that is part of its charm. A lot has happened since. With "Made and Bottled in Kentucky," you can see what bourbon-making looked and felt like in 1991-92, when we had no idea what was to come.

Many of the interview subjects are no longer with us: Booker Noe, Owsley Brown, Ova Haney, Elmer T. Lee, Walter Doerting, and Sam Cecil. Also featured (and still living): Bill Samuels Jr., Max Shapira, Jerry Dalton, Jimmy Russell, Flaget Nally, Dixie Hibbs, Ed Foote and others. All of the interview segments are longer than what you usually see in documentaries today. I was strongly influenced in my style by Donna Lawrence, a Louisville-based producer who didn't like narrators and wanted interview subjects to tell the story in their own words. For that reason, I didn't write the script until after everything was shot. I built the story from the interviews and augmented it with narration.

Making "Made and Bottled in Kentucky" was a great experience and it inspired me to keep studying Kentucky's bourbon culture. The rest, as they say, is history.

Sunday, October 23, 2016

Old Grand-Dad Discontinues 1.75 L Size



Old Grand-Dad Kentucky Straight Bourbon Whiskey is no longer available in the 1.75 L size. Discontinuing the 1.75 L is another strategy for stretching limited supplies of whiskey. Like Maker's Mark, a brand that briefly discontinued its 1.75 L a few years ago, Old Grand-Dad is a Beam Suntory product.

The goal is to keep a brand that is under supply pressure on the shelf, because available whiskey will go further in the smaller sizes. It is also possible that Old Grand-Dad, being a relatively small brand, was not selling enough in the jumbo size to justify its continued distribution. Most likely the decision was due to multiple factors.

Some people worry that the discontinuation of a size means the brand itself is in jeopardy. Nothing could be further from the truth. The brand is doing very well, despite a minimal marketing spend. That doesn't mean there won't be more changes. The brand's high proof expression, Old Grand-Dad 114, probably will be discontinued next year, Beam sources say.

Like Maker's Mark, Old Grand-Dad uses a different recipe from Jim Beam and other company brands such as Knob Creek, Booker's, Baker's, and Old Crow. Old Grand-Dad contains twice as much rye as Jim Beam (about 30%). Basil Hayden is the only other brand that uses Old Grand-Dad liquid and it too is growing.

A venerable old brand that originated in the 19th century, Old Grand-Dad is a good whiskey that is often not on the radar of many young bourbon drinkers. Especially with the growing popularity of straight rye, high rye bourbons such as Old Grand-Dad offer a unique taste profile. Bulleit and Four Roses are other examples of high rye bourbon.

NOTE: Information about Old Grand-Dad 114 was added on Monday, 10/24.

Thursday, October 6, 2016

Go West!


Jamieson and his fermenters.
There is a new distillery in Kentucky's far-western Fulton County. You've never heard of it, but you can read all about it in the new edition of The Bourbon Country Reader, the oldest publication in the world devoted exclusively to American whiskey.

Also in western Kentucky, the long distilling tradition of Owensboro has been revived. In this issue, the Reader explores that rich history.

In recent years, whiskey production has moved beyond Kentucky into virtually every state. We explore five craft distilleries in Illinois, Iowa, and Wisconsin in this Reader.

To experience The Bourbon Country Reader for yourself, you need to subscribe. Honoring tradition, The Bourbon Country Reader still comes to you exclusively on paper, in an envelope, via the USPS.

A subscription to The Bourbon Country Reader is still just $20 per year for addresses in the USA, $25 for everyone else. The Bourbon Country Reader is published six times a year, more-or-less, but your subscription always includes six issues no matter how long it takes.

Click here to subscribe with PayPal or any major credit card, or for more information. Click here for a free sample issue (in PDF format). Click here to open or download the free PDF document, "The Bourbon Country Reader Issue Contents in Chronological Order." (It's like an index.)

If you want to catch up on what you've missed, bound back issue volumes are available for $20 each, or three for $50.

If you prefer to pay by check, make it payable to Made and Bottled in Kentucky, and mail it to Made and Bottled in Kentucky, 3712 N. Broadway, PMB 298, Chicago, IL 60613-4198. Checks drawn on U.S. banks only, please.