Diageo v. Brown-Forman

[kaiserhog]

Anybody heard of the battle in the Tennessee Legislature over a bill to permit the use of refill casks to age Tennessee Whiskey. Diageo for it, B-F against. I'm squarely with B-F on this one, even though I prefer George to Jack.

[Tucker]

http://www.usatoday.com/story/money/business/2014/03/14/tennessee-whiskey-barrels-liquor-giants-fight/6409747/

Edit to add: I'm not picking sides, I'm just for truth in labeling. I like to know what I'm buying.

Edited March 15, 2014 by Tucker

[squire]

That is interesting, wonder how this one will play out.

[portwood]

Makes no sense for Diageo to push for re-use of barrels as they are probably they world's LARGEST user of ex-bourbon barrels.

I've been saying over on the Scotch forums that the world producers of whisky better hope demand for American straight whisky continues to RISE (mainly due to the new wood requirement). If demand drops and/or Americans start to re-use barrels:

a) quality of all other whisky will suffer (supply of fresh ex-bourbon barrels will drop and they will be forced to use more and more tired casks to age their own whisky), and/or

they will be forced to use more new wood which will impact costs AND taste.

SO, why Diageo would argue for change in American whisky law, is beyond me.

Edited March 15, 2014 by portwood

[tanstaafl2]

Apparently Diageo feels it has a plethora of fresh used barrels and as you note new oak increases cost. Unfortunately Diageo it seems is all about 1) making it as cheap as possible, 2) hiding the truth of what they are doing and 3) selling it for as much as possible, often by bending the truth in marketing the product as much as possible (and sometimes more than just bending it I suspect).

I am all for capitalism in the marketplace but in my opinion in the long run capitalism will only truly succeed with a dash of ethics sprinkled in. Otherwise eventually the consumer base is going to wake up and vote with their wallets. It seems to be a component of capitalism some companies either aren't aware of or choose to ignore in search of the short term gain.

Makes no sense for Diageo to push for re-use of barrels as they are probably they world's LARGEST user of ex-bourbon barrels.

I've been saying over on the Scotch forums that the world producers of whisky better hope demand for American straight whisky continues to RISE (mainly due to the new wood requirement). If demand drops and/or Americans start to re-use barrels:

a) quality of all other whisky will suffer (supply of fresh ex-bourbon barrels will drop and they will be forced to use more and more tired casks to age their own whisky), and/or

they will be forced to use more new wood which will impact costs AND taste.

SO, why Diageo would argue for change in American whisky law, is beyond me.

[sku]

That is interesting, wonder how this one will play out.

[squire]

Will be interesting if the bill isn't changed. After all, it was Brown-Forman who started aging Bourbon in used barrels and got it approved as "Old Style Kentucky Whisky". Prior to the recent Tenn law was there any actual legal requirement that would not have allowed Dickel to use refill barrels and still call it's product "Old Style Tennessee Whisky"?

[sku]

Will be interesting if the bill isn't changed. After all, it was Brown-Forman who started aging Bourbon in used barrels and got it approved as "Old Style Kentucky Whisky". Prior to the recent Tenn law was there any actual legal requirement that would not have allowed Dickel to use refill barrels and still call it's product "Old Style Tennessee Whisky"?

No, prior to that law, nothing would have kept them from using reused cooperage. Even with the current law, they could age in reused cooperage and just change the name to "Old Style Whisky Distilled in Tennessee." Would anyone really notice the difference? Given that, it seems silly to pursue legislation.

[squire]

Considering the number of dry counties in Tennessee who send Representatives to the State House it's a bit surprising the Legislature passes any pro liquor laws.

[Harry in WashDC]

Considering the number of dry counties in Tennessee who send Representatives to the State House it's a bit surprising the Legislature passes any pro liquor laws.

[squire]

My favorite lobbyist was wont to say, "All you need is money and me".

[p_elliott]

If it passes it will kill for all time the argument is Tennessee whiskey bourbon.

[tanstaafl2]

If it passes it will kill for all time the argument is Tennessee whiskey bourbon.

[TunnelTiger]

Article in this mornings Chatt Times Free Press indicates that this is going to pass to help the "little guys". Qouted a few of them saying numerous whiskeys are agde in used barrels and that JD shouldn't have a lock on the term "Tennesee Whiskey".

I infer they want to use it on moonshine and anything else they distill.

[Don't Shoot!]

In both my online and on-site communication with them, the people at George Dickel deny any intention to change the way they make their whisky; they just don't want Jack Daniel's telling them how to do it.

[squire]

Sounds like an old fashioned feud in the making.

[Gillman]

I think B-F has the better argument, though. But for Jack Daniels, the concept of Tennessee Whiskey, as a thing, wouldn't (likely) exist. They basically created it. Therefore, if the type will be enshrined in the law, it should be the style they created. It's like saying in France, we will amend the Champagne compositional law. I don't know if one exists, let's assume it does, to leave out the part about secondary fermentation in the bottle because it is not the only way to make Champagne. And so I, a sparkling wine maker in [name other place], should be able to set up a business in Champagne and call it that even though my product is only fermented in bulk.

How is this different?

Gary

[squire]

Early Times . . . . . . . . . .

[docbible]

Looks like the legislation to rewrite the definition of Tennessee Whiskey has been withdrawn as reported by tennessean.com. tim

[cowdery]

Round two. On Friday, Diageo filed suit against the Tennessee Alcoholic Beverage Commission (TABC) to overturn a 77-year-old law that says any distilled spirit manufactured in Tennessee must be stored (i.e., aged) in Tennessee. Diageo got cited for violating it because Diageo has moved some products to Stitzel-Weller in Louisville.

Diageo goes to great pains to assure everyone that it is not aging any George Dickel Tennessee Whiskey in Kentucky, just other products it makes at the George Dickel Distillery. It doesn't say what those are, and in the past Dickel master distillers have claimed that Dickel doesn't make anything except George Dickel there. This has gotten mixed up with the whole standards thing, but it's a completely different issue. For more go here.

[Gillman]

As I said there in the comments (Chuck's always-excellent blog), Diageo argued the matter well in its complaint. However, the state may have a trump: the nature of whiskey-making, in which distillation is just a first step. For products like whiskey which require maturation (not just the more neutral-sounding "storage" in the well-worded language of the complaint), the product isn't finished until the aging is finished. And so, if you can license distillers, why should you not require aging in the jurisdiction, so you can monitor what is being made? Let's say the stuff is trucked over to a place where the air is heavily polluted, or something is added to the barrels. The state of licensing naturally has an interest to monitor the product until it is ready for sale; and it might pull the license or warn the license-holder if it is not satisfied the licensee is exercising its privilege properly. But it can't do that, or as well, when the product is being aged in another state. So if I was Tennessee, I'd argue this in addition to the apparent 21st Amendment arguments Chuck adverted to in his informative article.

Gary

[squire]

Gary I should think the State is in a rather awkward position to argue that because they allow Prichard to make and market a Tennessee Whisky that doesn't follow the JD derived requirements.

I also think the selective enforcement of this law against Diageo (only one complaint filed in the 77 years the law has been in place) is problematic.

Edited March 31, 2014 by squire

[Gillman]

Squire this is a different issue, there are 2 issues which Diageo has with Tennessee, Chuck explains it all in his blog. Or if you are still referring indeed to issue no. 2, I see what you are saying, but I don't think the State can be defeated by that kind of argument. Surely whether it enforces any particular law at a particular time is in its discretion, otherwize you could tie government's hands interminably with this kind of argument, on any issue... It is a good political argument though, i.e., viz whether it should have issued the citation. But once having done that...

Gary

Edited March 31, 2014 by Gillman

[squire]

As I said there in the comments . . . . Diageo argued the matter well in its complaint. However, the state may have a trump: the nature of whiskey-making, in which distillation is just a first step.

Gary I was referring to the single issue of the State of Tennessee singling out Diageo for selective enforcement of an archaic law that hasn't been used against anyone else in the 77 years it has been on the books. Isn't that what your post was about?

[Gillman]

Thanks for clarifying, but I still think Tennessee has a good argument in response, for the reasons I stated.

Gary