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  1. #11
    Quote Originally Posted by Gillman
    . Any single barrel product, if 4 years old and 100 proof or more, is a bonded albeit the label does not say so.
    I'm confused. Doesn't it have to come out of a bonded warehouse (or a bonded part of a warehouse) to be bonded? Even if it's 4 years old, 100 proof, all from the same season and master distiller, is it still technically bonded if there's no government agent monitoring it?

  2. #12
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    All of the warehouses are bonded, as the distilleries want to take advantage of the tax payment deferral on all of the whiskey they make. That has nothing to do with whether the product is eventually sold as a bond or not.

    Bonds today are probably less than 5 percent of the American whiskey market, maybe less than 2 percent. They're very small.

    Bonds are, in some ways, an anachronism, but they can be considered by consumers as an intermediate step between a straight and a single barrel, because although a bond can be the product of many barrels, they all have to be from the same distillery, season and distiller, just like a single barrel and unlike a straight.

    A straight can be polished by adding a small amount of very fine whiskey to an undistinguished base. Typically this polishing whiskey is significantly older than the base whiskey. With a bond, all of the whiskey has to be the same age, so instead of trying to polish (i.e., improve) a base whiskey, the emphasis is on selecting only the best barrels that are available from the available batch, much the way a single barrel is selected. The difference is that a single barrel series can vary in age, although they usually don't.

  3. #13
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    This of course would be my understanding, too, that no federal excise tax is paid on aging whiskey until it is bottled, even if (as most of it) it is bottled at under 100 proof and does not otherwise meet the test of bonded whiskey. Therefore, what is the current significance of the bonded category? Is it that once it is bottled-in-bond whiskey can be stored for a further period (up to 20 years) and the excise tax not paid until it is sent out from the bonded area? Bettye Jo said there is still such an area in the distillery even though it may not be physically marked off any more (if I understand this right). I could see that distillers, at one time anyway, might have wanted to bottle whiskey but not ship it for a while, e.g., to preclude further outage (evaporation) or for logistical or other business reasons. So in other words, is it correct that once you bottle any whiskey that is non-bonded the excise tax must be paid, even if you don't ship the bottles right away, but if the whiskey meets the bonded test you can store it for longer and only pay the excise tax on shipment. Can anyone who knows the actual position confirm if this is correct? If I am right, then one can see that whiskey that might meet the bonded test (e.g., Knob Creek as I understand) doesn't need to be so described on the label because it is not intended probably to keep it in storage once bottled and second, the perception that formerly obtained of bonded whiskey's superiority is much less current amongst consumers today, so why bother using the designation?

    It would be interesting to see not just a full explanation of how the exise tax works but all taxes in general on bourbon.

    Gary
    Last edited by Gillman; 03-02-2006 at 05:46.

  4. #14
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    Quote Originally Posted by Gillman
    This of course would be my understanding, too, that no federal excise tax is paid on aging whiskey until it is bottled, even if (as most of it) it is bottled at under 100 proof and does not otherwise meet the test of bonded whiskey. Therefore, what is the current significance of the bonded category? Is it that once it is bottled-in-bond whiskey can be stored for a further period (up to 20 years) and the excise tax not paid until it is sent out from the bonded area? Bettye Jo said there is still such an area in the distillery even though it may not be physically marked off any more (if I understand this right). I could see that distillers, at one time anyway, might have wanted to bottle whiskey but not ship it for a while, e.g., to preclude further outage (evaporation) or for logistical or other business reasons. So in other words, is it correct that once you bottle any whiskey that is non-bonded the excise tax must be paid, even if you don't ship the bottles right away, but if the whiskey meets the bonded test you can store it for longer and only pay the excise tax on shipment. Can anyone who knows the actual position confirm if this is correct? If I am right, then one can see that whiskey that might meet the bonded test (e.g., Knob Creek as I understand) doesn't need to be so described on the label because it is not intended probably to keep it in storage once bottled and second, the perception that formerly obtained of bonded whiskey's superiority is much less current amongst consumers today, so why bother using the designation?

    It would be interesting to see not just a full explanation of how the excise tax works but all taxes in general on bourbon.

    Gary
    I will try to clarify a bit here I speak from the bottlinghouse point of view.

    First, as for separate storage places in the warehouse (bottlinghouse) --->I should have been more descriptive...There is a section in the "full case" warehouse for BOND...For location purposes so that fork truck drivers will be able to find it easier. There "used" to be partitions (in the bottlinghouse) that made the the lines separate during bottling of Bonded product.

    Federal excise tax is not paid till the product goes out (sold) the door. This is all product...BIB, 80 proof, 90 proof etc...

    There is a advalorium (sp?) tax---sorta like a property tax that is paid every year for stored bourbon.

    The only real advantage to Bond now?...Is for the consumer. It assures the consumer that the DSP# number (or name) on the bonded back label is produced by that noted distillery

    Ohhhhhhhhhhhhhhhhhhhh Yeahhhhhhhhhhh

    Bettye Jo
    Last edited by boone; 03-02-2006 at 12:33.
    Colonel Bettye Jo Boone
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    Heaven Hill Distilleries
    Bardstown, Kentucky

  5. #15
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    Thanks Bettye Jo. The position seems clear in regard to the federal excise (not the annual tax paid to Kentucky on warehoused whiskey). It only applies when any kind of filled bottle is shipped, an advantage once reserved to bonded whisky only. So clearly the bonding thing has held on only because of its perceived consumer advantage, the quality coming from production by one distillery in one season under one owner, 100 proof and at least 4 years old. But that assurance is less important today than many years ago when whiskey was regularly tampered with in the wholesale trade. Still, it has a resonance amongst some consumers and that is why some whiskey is still held cased in a bonded area, so it can still be called "bonded" on the label as a selling point. A lot of boubon meets the bonded test even if not held in that area and so labelled. I expect the practice of calling whiskey bonded to die out before long, there seems no further reason for it, especially since the advent of single barrel whiskey 100 proof or over.

    Gary

  6. #16
    So, if Knob Creek suddenly decided they wanted to put "Bottled in Bond" on their bottles, they wouldn't have to actually change anything except the label?

  7. #17
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    I believe the answer is yes, provided the whiskey was bottled in a part of the warehouse designated as bonded. If no part of the warehouse still needs to be designated in this sense by law (I guess I am not 100% sure), then even that step could be dispensed with. And I say that because I understand Knob Creek, a 100 proof bourbon, is made at one distillery in season under one ownership. So I understand is Old Forester 100 proof.

    If I am wrong I stand to be corrected.

    Gary

  8. #18
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    Quote Originally Posted by cowdery
    Bonds are, in some ways, an anachronism, but they can be considered by consumers as an intermediate step between a straight and a single barrel, because although a bond can be the product of many barrels, they all have to be from the same distillery, season and distiller, just like a single barrel and unlike a straight.

    A straight can be polished by adding a small amount of very fine whiskey to an undistinguished base. Typically this polishing whiskey is significantly older than the base whiskey. With a bond, all of the whiskey has to be the same age, so instead of trying to polish (i.e., improve) a base whiskey, the emphasis is on selecting only the best barrels that are available from the available batch, much the way a single barrel is selected. The difference is that a single barrel series can vary in age, although they usually don't.
    Thank you for that Chuck! I have wounded what practical meaning BIB has today and here is the answer!

    Leif
    Swedish lover of American whiskey

  9. #19
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    I think there is a general misapprension that whiskey marked as "bonded" is superior to whisky not so marked. No doubt this arose in good measure because the general sense of the word bonded is promised or guaranteed. But the term bonded comes from bonded warehouse. This meant and still does a segregated, controlled area (controlled by the government). The important thing today is not whether areas of warehouses or the whole warehouse still can be legally designated as bonded (although it seems separate areas can be per Bettye Jo's notes); the important thing is whether the quality associated with bonded whiskey is associated to bourbon, or rye, not labelled bonded. And, for most whiskey sold today it is excepting to be sure all whiskey sold at under 100 proof. If we stick to the 100 proofs or higher, it either is the same inherently as bonded (e.g., Knob Creek), as good or maybe better, but rarely inferior.

    Whiskey batched from more than one season or even more than one year isn't inherently inferior to bonded whiskey; either may be better than the other. Rare Breed is not a bonded but is better than most whiskey on the market today, in my opinion. A single barrel whiskey may be better than a bonded composed of barrels batched from that season - or not. The important think to remember about bonded whiskey is it was a minimum guarantee of quality. This was in a time when much bourbon was not 4 years old; or was mixed from numerous distilleries (which doesn't much happen today and where it does the bourbon is of high quality to begin with, not always the case in 1899, say); or was mixed with neutral spirits or worse, water; or flavored in some way; or all of the above. The bonds I've had in the last few years have been mostly so-so in fact, nothing special. I had e.g. a bonded Grandad I bought in Florida a couple of years ago: just average, raw and hot. Rare Breed, by which I mean the current batch mentioned in recent threads, is better than all those bonds. Although I did like a bonded Ancient Age a lot from about 1990, but it was in a different style. Knob Creek certainly is better than that bonded Grandad was. I know the term bonded has a resonance for some people but really it is more a marketing thing today than anything else and even that is an attenuated datum.

    Finally, all the warehouses today may be bonded under law but if so, clearly the law no longer requires that whiskey held in such bond be 100 proof and meet the other requirements of bonded (to benefit from the tax deferral), since most whiskey issuing from warehouses isn't 100 proof, 4 years old and/or made in one season.

    Gary
    Last edited by Gillman; 03-02-2006 at 17:48.

  10. #20
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    Products such as Knob Creek and the 100 proof version of Old Forester chose not to use the term "Bottled in Bond" because those producers think it just confuses the average consumer, who doesn't know what it means and doesn't care.

    To another, earlier, generation "bottled in bond" meant "the good stuff" simply because you were assured that the whiskey was "real." Bottled in Bond predated most other truth-in-labeling laws.

 

 

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