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American whiskey has grown exponentially the past decade. (Photo by Jane Barlow/PA Images via Getty … [+]
For the past decade, American whiskey’s grown like a weed. Bourbon, especially, has entered the mainstream, with television series writing brands into their scripts and music promoters building festivals around the spirit.
Bourbon’s growth has allowed me to live a dream I never thought possible. I write books, have a television show, two podcasts, a magazine and more, all because I love and study American whiskey.
But with great success also comes the occasional scandal or mishap. And these are some of the more noted ones of the past decade. Grab your popcorn and relive whiskey’s interesting moments from 2010 to 2019. (Note: I could have added the whiskey tariffs here, but that story is still playing out.)
Secondary Market
State attorneys general have worked with social media organizations, such as Facebook, to shut down … [+]
When a luxury good is popular, the crazy demand creates a secondary market and knock offs. In the digital age, the secondary market easily existed in the social media platforms.
Occasionally, authorities would arrest an individual caught attempting to sell without an alcohol license. But recently, the vast majority of state attorneys general announced their efforts to end all secondary markets, citing their quest to protect underage drinking. Louisiana’s even declared he’s tracking the resale of Pappy Van Winkle empty bottles on eBay.
In July, Facebook banned all groups that covertly traded and sold whiskey amongst enthusiasts. Meanwhile, retailers jack up rare bottle prices with impunity and bourbon fans have fewer places to find limited edition products.
Pappygate
In 2015, a Buffalo Trace employee led a group who stole a good deal of Pappy Van Winkle. He later … [+]
In 2015, nine people stole whiskey from Buffalo Trace and Wild Turkey distilleries. That included 20 cases of Pappy Van Winkle, which could have fetched $150,000 to $200,000 on the then secondary market.
At the time, Franklin County Sheriff Pat Melton said the “organized crime” involved steroids, Wild Turkey and Eagle Rare barrels, as well as cases of Pappy Van Winkle and Eagle Rare. The ringleader was released from prison last year.
This became a national story and put Pappy Van Winkle over the edge. While it had been highly allocated, this theft now attracted people who cared nothing about bourbon. After all, if somebody risked going to jail for it, Pappy must be good.
This inflated demand made Pappy even harder to get.
Balcones Fight
In 2014, Balcones Distillery founder Chip Tate very publicly separated from the company he founded. Tate and new investors had several disagreements, leading to Tate’s refusal to attend board meetings.
The investor, Virginia businessman Gregory Allen, took a majority share in the distillery for $8.5 million and essentially created one of the more magnificent-looking pot still concepts in America. However, when Allen and Tate settled a lawsuit, the distilling industry—right or wrong—largely sided with Tate and it changed how upstart distillers pursued capital.
To this day, when craft distillers speak with investors, they often say, “I don’t want to get Chip Tate’d.” Another way to put it, don’t give up your majority control if you want to make the final decision.
Tate’s started a new venture, while Balcones is one of the most successful American single malt companies. But anytime you mention one, you almost always mention the other.
State of Distillation
When Pernod Ricard sold its Lawrenceburg, Indiana, distillery to CL Financial in 2007, the new owners sat on a surplus of rye whiskey that was used for blending.
Renamed Lawrenceburg Distillers Indiana (LDI), the distillery placed its 95% rye mashbill on the open market and new business plans were created around this liquid. With slight upticks in American whiskey sales, business-minded whiskey saw the future: Buy well-aged whiskey and bottle it for your own brand.
Nothing wrong with that. Since the dawn of whiskey time, distillers have sold their barrels to independent bottlers for their own brands. And the federal government didn’t mind, either, as long as bottlers followed the federal code, which stated all whiskey must have its state of distillation. This code had been on the books since the 1930s.
But if you’re a brand who’s trying to look authentic maybe you don’t want to tell people where you really got your whiskey. So, brands, notably Templeton, didn’t disclose their state of distillation and it led to class-action lawsuits around 2014.
These lawsuits eventually went away, but an immediate distrust was born. People didn’t trust the sourced whiskey market and consumers began reporting whiskey brands to the federal authorities for label violations.
To this day, many whiskey nerds don’t trust the non-distiller producers and it all stems from a handful trying to avoid their state of distillation.
Maker’s Mark Deproofing
Maker’s Mark built a loyal following with its red dripping wax. That base taunted them after they … [+]
In 2013, as bourbon’s boom is just really getting going, Maker’s Mark made a decision that left many people scratching their heads.
They lowered their proof from 90 to 84, which allowed them to more easily meet demand. This decision led to widespread outrage from Maker’s fans and even landed them on late night TV.
Dealing with it former chairman Bill Samuels Jr. came out of retirement and told me then: “We thought enough of our customers to tell them. All the other companies that have taken a move similar, for whatever reason, have tried to slip it under the radar screen. We never considered that. Am I really surprised? No, I am not really surprised. … People are entitled to their opinions. This new proof would have never been released had I not been 100-percent convinced that it is indiscernible.”
However, the letters, phone calls, emails and social media hate got the company to thinking that maybe they made a mistake. Eight days after lowering the proof, they returned it to 90 and the chief operating officer, Rob Samuels (Bill’s son), apologized for it.
When I asked him if it was all just a marketing ploy, he said: “We aren’t that smart.”
Inside the distilleries, the reaction to this proof lowering and dropping age statements (another method of meeting demand) has influenced to just create new brands instead of tinkering with existing ones. Now, instead of lowering a proof, they cut back on scale, create a new product and charge twice as much.
Fred Minnick is a longtime American whiskey writer. Sign up for his free drinks newsletter, subscribe to his YouTube channel and following him on Instagram.
