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  1. #1

    'Trading' Brands?

    Is it conceivable from a business standpoint for distillers to sell off brands currently in their portfolio and other distillers take over manufacture of the brand? From a taste standpoint, how difficult would it be to maintain a similar profile in a new location? I have never had the opportunity to taste classic Old Crow or OGD to experience how these brands may have changed with change of ownership.

    I could envision a distiller acquiring cheap brands much the way Pabst Brewing Company acquired a wealth of cheap beers (Schaefer, Old Milwaukee, PBR, Old Style, Schlitz, Stroh's etc.) By my thinking this distiller would probably thus aim more for profit by volume, leaving the distillers manufacturing premium brands to fill the profit by mark-up role. Could we see a single distiller carving out a niche by manufacturing the likes of Ten High, Early Times, Ancient Age, and Old Crow or have I been thinking too hard?

  2. #2
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    Re: 'Trading' Brands?

    Quote Originally Posted by RoyalWater View Post
    Is it conceivable from a business standpoint for distillers to sell off brands currently in their portfolio and other distillers take over manufacture of the brand? From a taste standpoint, how difficult would it be to maintain a similar profile in a new location? I have never had the opportunity to taste classic Old Crow or OGD to experience how these brands may have changed with change of ownership.
    It's a lot more than "conceivable." It's been happening for the last 40 years or so. It's called industry consolidation. In most cases, no effort is made to really match the brand profile. The new manufacturer simply puts their bourbon into bottles with the acquired brand's labels. Old Grand-Dad was an exception because of its high-rye mash bill. Beam then and now uses the Grand-Dad mash bill and yeast for its Grand-Dad. Old Fitzgerald is another example. Heaven Hill had never made wheated bourbon until it acquired Old Fitzgerald.

    I could envision a distiller acquiring cheap brands much the way Pabst Brewing Company acquired a wealth of cheap beers (Schaefer, Old Milwaukee, PBR, Old Style, Schlitz, Stroh's etc.) By my thinking this distiller would probably thus aim more for profit by volume, leaving the distillers manufacturing premium brands to fill the profit by mark-up role. Could we see a single distiller carving out a niche by manufacturing the likes of Ten High, Early Times, Ancient Age, and Old Crow or have I been thinking too hard?
    Here again, what you're imagining has been happening for 40 years or so. All of the Pabst brands are made by Miller, but when it was still G. Heileman that owned a lot of those brands, they made them in LaCrosse, WI, but essentially put the same beer into a whole bunch of different cans. A parallel in bourbon would be a compnay such as Luxco, which buys bulk bourbon for the brands it owns (Ezra Brooks, Yellowstone), but both Heaven Hill and Buffalo Trace (which are distillers) have built their business to a large part on "cats and dogs" they acquired from other companies that were either exiting the business or shedding a few brands. Buffalo Trace (i.e., Sazerac) got into bourbon with Benchmark and Eagle Rare, two brands it acquired from Seagrams. Although Heaven Hill's biggest bourbon brands are two it created, Evan Williams and Elijah Craig, it has always had a big stable of acquired brands such as J.T.S. Brown, Henry McKenna, Mattingly and Moore, J.W. Dant and many others.

    It's equally true of Buffalo Trace. Although they created Buffalo Trace itself, Blanton's, Stagg, ETL and Ancient Age. Weller, Charter, Eagle Rare and Benchmark were all acquisitions.
    Last edited by cowdery; 04-04-2007 at 06:55.

  3. #3

    Re: 'Trading' Brands?

    I am aware that most brands are consolidated under a few manufacturers. What I am trying to get at is whether certain companies might attempt to maximize their portfolios by selling the brands which they consider non-essential. If so might we end up with a premium bourbon specialist or a cheap bourbon specialist etc. Obviously, certain brands are off limits; WT could not sell WT or even RR and still maintain the name and tradition of their company, Beam could not part with JB or Bookers etc. Is there talk of certain brands being available or, on a different note, certain brands being dis-continued?

  4. #4
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    Re: 'Trading' Brands?

    There a dozens of brands that have been discontinued that still are owned by the companies. I guess if the price is right anything is for sale
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  5. #5
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    Re: 'Trading' Brands?

    Again, that's exactly what has been happening, though rather than specialization most companies want a balanced portfolio. As for companies shedding brands, that's exactly what happened. Companies would consolidate, find themselves with huge, overlapping portfolios, then would sell off the brands they didn't want. Sazerac, Heaven Hill, Luxco, Barton and others all built their business in large part off the "leavings" of companies such as Seagram's, Diageo and National.

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    Re: 'Trading' Brands?

    Quote Originally Posted by RoyalWater View Post
    ... we end up with a premium bourbon specialist or a cheap bourbon specialist etc. ....

    Maybe. No matter how large or small a distillery, it stands to reason that there will always be barrels in the rickhouse that don't match a particular taste profile of a brand in that distiller's portfolio. Blending a large number of barrels takes care of most of these 'oddballs' but I think you're suggesting something else.

    What I think you're suggesting is this: What if Wild Turkey were to bottle all of the stuff that fits their profile, and sell all the stuff that didn't to another company, XYZ Bottlers. This second party, XYZ Bottlers might also buy all the stuff from Barton that didn't fit "the Barton profile." This would leave WT and Barton to focus on their brands and not have to worry about stray barrels/poor stock and XYZ Bottlers focuses on selling these oddballs as bottom shelf brands.

    The thing is, thats just not the way the industry works. That's not to say that it couldn't, but it's just not the most efficient way. A smart distiller has their own bottom shelf label that can absorb these oddball barrels, which is where the consolidated labels usually come in to play. Additionally, the way I understand it, if XYZ wants whiskey from a distiller, they contract a batch from start to finish, not coming in at the end and getting the rejects as in my previous example.

    But what about Woodford Reserve? Are they not a "premium bourbon specialist?" Do they rotate barrels in rickhouses like Makers so there is very little difference barrel to barrel?
    Last edited by miller542; 04-06-2007 at 07:00.

  7. #7
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    Re: 'Trading' Brands?

    Quote Originally Posted by miller542 View Post
    But what about Woodford Reserve? Are they not a "premium bourbon specialist?" Do they rotate barrels in rickhouses like Makers so there is very little difference barrel to barrel?
    Ah, but remember most of what is in the bottle of Woodford is from the Old Forester/ Early Times plant, so ET is their bottom shelf brand to absorb crap barrels.
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    Re: 'Trading' Brands?

    Quote Originally Posted by barturtle View Post
    Ah, but remember most of what is in the bottle of Woodford is from the Old Forester/ Early Times plant, so ET is their bottom shelf brand to absorb crap barrels.
    Must say I disagree with you here Timothy. Since ET has a different mash bill and different yeast its unlikely it partly consist of bad Forester/Woodford barrels.

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    Re: 'Trading' Brands?

    Quote Originally Posted by nor02lei View Post
    Must say I disagree with you here Timothy. Since ET has a different mash bill and different yeast its unlikely it partly consist of bad Forester/Woodford barrels.

    Leif
    But it ultimately is a Brown-Foreman whiskey. Even on Woodford's website, they reference pulling select barrels and moving them to Woodford's distillery to finish aging. This would support the idea of distillers picking the best for certain brands and leaving the rest for bottom shelf brands still owned by that company. I was under the impression that all parts of the process, including distillation, occurred at the Woodford site and no other BF whiskey was brought in. Which would make that site a "premium bourbon specialist." Didn't they have plans to phase-out the other distallate and go to an all-woodford produced whiskey?

  10. #10

    Re: 'Trading' Brands?

    Quote Originally Posted by miller542 View Post
    ...I was under the impression that all parts of the process, including distillation, occurred at the Woodford site and no other BF whiskey was brought in. Which would make that site a "premium bourbon specialist." Didn't they have plans to phase-out the other distallate and go to an all-woodford produced whiskey?
    Well, they didn't even have sufficiently aged whiskey until Fall 2003 -- prior to that, it was ALL Old Forester honey barrels.
    The original plan might well have been to eventually turn to all pot-still -- and that still might be the plan -- but I think they've found that 'seasoning' that copper has taken longer than expected. Take the Four Grain (please!), for example -- the metallic finish and unmelded grains make it almost undrinkable. It's the only all-Woodford-distilled product they've issued.
    As it is, they seem to have found an acceptable balance between what they're producing on-site, and what they bring in from Louisville. For a while there, while they were still trying to use too much pot-stilled whiskey, even the standard Woodford Reserve wasn't very good.
    Tim

 

 

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