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The New Whiskey Paradox

Posted on  | April 22, 2015   Bookmark and Share
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Amid High Demand and Short Supply, How Do Distillers Manage to Keep New Whiskies Flowing?

It was the best of times, it was the worst of times. This is how American whiskey lovers might look back on these days. Decades of abundant and affordable old bourbon and rye whiskey, usually dusty bottles tucked on the shelf below the single malt Scotch, are gone. Today, whiskies are allocated; cult favorites like Pappy Van Winkle and Old Forester Birthday Bourbon even have whiskey lovers stalking small Kentucky package stores, lined up like they are waiting for the new iPhone. Yet, in the face of what can only be called a shortage, new brands and new expressions continue to appear.

Joseph J. Magliocco, President of Michter’s Whiskey, understands the pressure of success. “We just got a wonderful international order, which we quickly cut in half,” he says. “We are trying to figure out the most intelligent way to sort of spread the goods around so everybody has the opportunity to enjoy Michter’s.” At the same time, Michter’s, like other American distilleries, continues to conjure up special releases that keep fans engaged while extending the brand’s reach. “I think it is sort of like space exploration,” says Magliocco. “Maybe it doesn’t pay high short-term dividends, but it’s necessary to reach ever higher in our long-term goal to make the greatest American whiskey.”

Creating New from Old

In many instances, the key to new whiskey releases is that they are not entirely new. It is just not possible to go back in time and alter certain elements, like putting more rye or less wheat into a whiskey mash. But you can do plenty with whiskey that’s already distilled. This is precisely how many of today’s exciting new whiskies come about.

In the case of Michter’s US*1 Limited Release Toasted Barrel Finish Bourbon Whiskey, fully matured Michter’s US*1 receives additional aging in barrels specially constructed with oak cured by 18 months of air-drying. These barrels are then toasted, not charred like normal barrels; no flames touched the barrel, agitating the cellulose in the wood and coaxing out more vanilla and cinnamon flavors, rather than more oak flavors. In addition to the added expense of the barrel, the limited release resulted in 2,000 less cases of the standard Michter’s US*1. “Whenever you do something like this, it is in a sense robbing Peter to pay Paul,” notes Magliocco.

Brown-Forman takes a similar tack in their new release of Old Forester 1870 Original Batch, designed not as a limited edition but a permanent offering, bottled at 90 proof (between the existing 86 and 100 proof Old Foresters). Master Distiller Chris Morris makes other deviations as well, notably no chill filtering and no active carbon filtering.

Among the most anticipated limited releases from Brown-Forman is the Master’s Collection from Woodford Reserve. These experiments range from longer (Classic Malt Woodford Reserve, made with a mash bill of malted barley) to shorter in their duration (the current Sonoma-Cutrer Pinot Noir is finished in wine barrels). “The Master’s Collection was designed for PR value, but it has turned into a business,” says Morris. “There are multiple audiences now [for Woodford Reserve]. We have the people who don’t want it messed with and also those who are excited for something different, so we have to satisfy both.”

Perhaps one of the biggest lessons for distillers in these challenging times is what not to mess with. Maker’s Mark learned this in 2013 when, rather than create a separate expression, they moved to reduce proof from 90 to 84 in order to stretch existing stocks. They quickly reversed the decision when thousands of consumers grabbed digital pitchforks and made themselves heard.

Age Not Required for Beauty?

When it comes to age statements, however, American whiskey buyers seem to have far less attachment, according to Susan Wahl, Group Product Manager at Heaven Hill Brands. “Amongst premium products, there is great sensitivity to proof. Unlike Scotch, however, age has never been a critical factor in the premium whiskies, where taste and quality trump all. To be able to enjoy one of our products consistently is the primary desire of these consumers. For products at the super-premium level, a mix of exclusivity, age, proof and flavor are critical. For our Bernheim Wheat Whiskey, the addition of an age statement has been a tremendous asset,” says Wahl.

With this insight, Heaven Hill has continued to add aces to their deck, like decades-old bottlings of Elijah Craig, while recalibrating the age of entry brands, dropping Heaven Hill 10-year-old whiskies in favor of a 6-year-old, for instance. This has helped Heaven Hill keep high-end enthusiasts happy while still making higher-volume products available in supply necessary to support their growth, she adds.

According to Kris Comstock, Bourbon Marketing Director for Buffalo Trace Distillery, demand exceeds supply nearly across the board for their Buffalo Trace, Eagle Rare and Blanton’s whiskeys. However, the distillery has managed to draw on their vast experiments for highly-limited editions for fans. “Our innovation is focused on improving taste and developing new and different whiskies. We currently have over 3,000 experimental whiskey barrels maturing at Buffalo Trace, including 150 aging in our experimental warehouse, Warehouse X,” says Comstock. Buffalo Trace also has solidified a personal connection with select retailers through their single barrel program, via which merchants get their very own barrels to offer bourbon enthusiasts.

Buy, Buy Again

But what of those who don’t have existing stocks, like craft distillers waiting for their first whiskey to mature? Thankfully, another area where younger consumers seem to have little allegiance is in the traditional definitions of American whiskey. High West of Park City, Utah, casts off such sacred labels as “Bottled-in-Bond” “Straight Whiskey” and even “Bourbon” while making no secret of the origins of their aged offerings, like High West Bourye. The current iteration of the lauded Bourye is a blend of bourbon (9 years old) and rye (10 and 16 years old) sourced mainly from Midwest Grain Products (MGP) of Indiana (formerly LDI and before that Seagram’s), which only supplies to independent bottlers.

Tin Cup American Whiskey, from Stranahan’s creator Jess Graber, also defies the popular bourbon category and embraces blending. Using whiskiess distilled at Indiana’s MGP, Graber blends them together along with some of his own Stranahan’s from Colorado, and Rocky Mountain water for a hybrid American whiskey. Triple Crown North American Blended Whiskey is another example of a progressive approach to blending. It’s a blend of 80% neutral grain spirits and 20% bourbon which includes an unusually high percentage of grains other than corn, with small grain rye and barley malt making up 40% of the bourbon mash.

You Ain’t Seen Nothing Yet

Never underestimate the confluence of good whiskey and creative marketing. On top of tinkering with proof, filtering, blending, barrel-selection and aging, yet another trick up the distiller’s sleeve: not aging the whiskey at all—in the manner of Trybox, the series of “new make” American Straight Whiskeys right off the stills of Heaven Hill. Ditto Jack Daniel’s Unaged Tennessee Rye and 91 proof George Dickel “No. 1” White Corn Whiskey.

Diageo has essentially raided its own Kentucky warehouses (e.g., the Stitzel-Weller distillery, mothballed in the 1990s), transforming old stocks of bourbon into evocative new labels (Barterhouse, Rhetoric, Old Blowhard) under their Orphan Barrel series. No doubt that success helped spur Diageo’s newest project, I.W. Harper, a resurrection based on stocks retained by Diageo from the Bernheim facility sold to Heaven Hill. The new label will comprise an 82-proof four-year-old bourbon and an 86-proof 15-year version.

Nearly every American distiller will tell you they saw this coming, even if they underestimated the immensity of the recent surge in sales of American whiskey. In 2012, bourbon production in Kentucky topped one million barrels for the first time since 1973, and total bourbon inventory reached 4.9 million barrels, the highest since 1977. Distillers are keeping us well entertained while these stocks mature, but the numbers suggest the new golden era of American whiskey is still to come.

At Buffalo Trace, distilling is at the highest level in 40 years, and a recent purchase of adjacent land is slated for more warehouses. In the past three years alone, Heaven Hill has invested $40,000,000 in production and marketing. And, comparatively tiny Michter’s has recently added a 46-foot high copper column still from Vendome to their Kentucky facility. At Woodford Reserve Distillery, three round concrete pads are poured and ready to receive the companion stills to the current trio. They’ve been there since Brown-Forman began current production—just waiting. In a sentiment echoed by distillers across the region, Master Distiller Chris Morris proudly proclaims, “We’ve been planning for success for a long time.”  


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