Discussion of private labels/independent bottlers

[jeff]

I believe you are correct Pharaoh, and that's why nothing will change without force of legislation, because it isn't in the interest of the distilleries to do so. IMHO.

[cowdery]

Another point that Pharaoh's post sparked in my mind. If my business is primarily contract distilling, then I have a business incentive to give my customers my best product at every opportunity.

But if my business is primarily my branded products and my contract or bulk business is secondary, then what is my incentive? Is it to put the best whiskey I have in my own bottles or is it to sell that whiskey to other people?

I guess what I'm getting at is that the independent bottler would like to give the impression of being able to shop around and buy gems, but especially in the US market, considering the limited number of producers and the limited amount of whiskey that is even available on the spot market, do you think what the distillers are making available is their best or their worst?

[Pharaoh]

Another point that Pharaoh's post sparked in my mind. If my business is primarily contract distilling, then I have a business incentive to give my customers my best product at every opportunity.

But if my business is primarily my branded products and my contract or bulk business is secondary, then what is my incentive? Is it to put the best whiskey I have in my own bottles or is it to sell that whiskey to other people?

I guess what I'm getting at is that the independent bottler would like to give the impression of being able to shop around and buy gems, but especially in the US market, considering the limited number of producers and the limited amount of whiskey that is even available on the spot market, do you think what the distillers are making available is their best or their worst?

On that note or the flipside Chuck I think it goes both ways, a distillery with a zillion gallons of whiskey is going to want to sell at least a brazilian of those gallons :cool: . An indie is likely able to be more selective, even in the trash a distillery might force them to sort through - no?

In that regard, here, I think it's a two way street and thus you get the mutual cooperation on both ends.

[Pharaoh]

To better elaborate on why I believe distilleries are somewhat happy to accomodate indie bottlers more so than we might believe...

I seriously doubt 25 years ago Julian and all the big boys sat around the campfire and conspired with each other to distill whiskey that would be in a barrel 20 some odd years later. What do you think? Especially when it seems like their target was often under 10 years of age.

No, I think it's much more likely the bulk of all the well-aged whiskey before us right now is whiskey that simply was not SOLD based on a lack of takers - thus it aged and got older and older. Were it not for a recent shift in domestic consumers taking to old whiskey - you'd find the said highly aged whiskey available on the Japanese market like it use to ONLY be (what 4-5 years or so ago?).

Again, I think you are right, Chuck, in that the distillery is gonna try or want to hold back on what it let's indies buy, but based on my guess on things, the well-aged and in many instances OVER-aged whiskey on the market right now sorta' telegraphs how bad some distillieries NEED IBs and rightfully couldn't care what a bottle claims as long as it disassociates itself from distillery of origin and culpability.

At some point I believe it comes down to selling what you can, even your best to an Indie... or hoarding it and having a large supply of 20+ year old whiskey that desperately needs to be unloaded (just like some of the good stuff and of course the not so good crap in our laps now).

Question, do you think all that 20 year old rye floating today was by design, or a design flaw that's just happening to work out for the better right now as we speak? And do you believe if an indie came along 10 years ago and wanted to buy it up (essentially what Julian did) the distiller would have said, nahhh we'll be keeping this until it's so old it's eligible for social security?

I'm betting they'd have offed it even the better portions rather than be stuck with it 23 years and risk total loss. Just a guess though.

I hope what I said makes some sense, it's still early and I haven't had a drink - yet, so excuse my incoherence! lol

[bluesbassdad]

Chuck,

Another question of possible interest: How has the situation changed over time, during periods of glut and paucity?

Yours truly,

Dave Morefield

[Gillman]

I think that all distilleries generally have stuff they want to off-load. It might be regular stock that can't fetch a sale (how many people in business can sell all they have when they want to sell it?).

It might be stock that is very drinkable but doesn't meet their current brand profiles (say e.g., for HH, 14 year old whiskey with enough in stock to age into EC 18).

Maybe a distillery has some stock felt less than ideal for its regular brands (sub-par if you will).

These are all good reasons to sell to independent merchants. If a distillery is concerned that its name remain secret, it can stipulate that in the supply agreement. Maybe it doesn't care. Maybe it will stipulate that the buyer must mingle the whiskey with other lots of its own sale or sourced from a competitor - that would remove any argument that its regular-line products are being discounted.

If the consumer likes what is in the bottle, he will buy it again.

Who can lose under these arrangements?

Gary

[TNbourbon]

I don't think I've seen mentioned in this thread yet custom distilling. I've been led to believe that at least one or two of the larger independent bottlers have some of their whiskey distilled to their specificiations. True? And, if so, is that in some way better than simply buying excess whiskey to age and bottle at a later date?

[cowdery]

To answer both Pharaoh and Dave, we're talking about this precisely because of what Pharaoh describes. There are a number of brands out there that were built on the Great Whiskey Glut. Without going into that whole story, the bottom line is this: that stuff is just about all gone and many if not all of the independents are struggling to keep their current age-stated brands supplied with whiskey of the stated age.

To answer Tim, yes, there is such a thing as contract distilling.

Distilleries can sell whiskey a couple of different ways.

1. Through their own brands.

2. Contract sales. In some cases this is a "special recipe," but more often than not it's the distillery's standard recipe, but the contracting party is buying the whiskey when it is distilled, then either taking delivery of it to age it themselves or, more typically, paying the distillery to age it. Heaven Hill even sells its own brands this way to distributors. It's like buying futures. The distributor owns 10,000 cases of Evan Williams black label to be delivered in 2010, for example.

3. Bulk sales. This differs from contract sales in that it is generally fully-aged whiskey, ready to be bottled and sold. Even Heaven Hill, which has long been known to be in this business, doesn't like to talk about it. Everybody has sold bulk whiskey at some time or another, just to even out their stock.

Right now, if you want to make a contract deal with somebody, and you have enough money, you probably can make that deal. There's enough capacity out there to get that deal done somewhere. If you want to buy bulk whiskey at, let's say four years old, you probably can get that deal done too, although you'll probably pay more for it than you would have a few years ago.

But if you want to buy bulk whiskey that's older than 8 years old, there is a good chance you won't be able to do that deal at any price. Obviously there's always a price, but the point is that there isn't much available and it's not cheap.

A decade ago, and certainly 20 years ago, if you wanted, say, 15-year-old whiskey, they were practically giving the stuff away. You probably would have paid less for a barrel of 15-year-old whiskey than you would for a barrel of 4-year-old whiskey.

No more. Those days are over and most of that whiskey is gone.

Could it happen again? Sure. The good news, for me, anyway, is that considering how long this stuff takes to play out, it probably can't happen again within my life time. (but then, I'm old, and I drink too much.)

[TomH]

I guess I come down right in the middle on this one. I don't have any problem with a "hidden" distiller marketed with a DBA or bottler name as long as the product comes from the same source.

Where I have a problem is where a bottler fills the same label with 2 completely different products without providing any means of allowing the customer to know which product they are getting. When I buy a Pappy 15 I would really like to know whether it is SW or Buffalo Trace before I purchase it.

Tom

[Hedmans Brorsa]

Where I have a problem is where a bottler fills the same label with 2 completely different products without providing any means of allowing the customer to know which product they are getting. Tom

Good point, Tom!

I would also, somewhat belatedly, like to adress the Finlaggan issue. I know about Finlaggan (and many others, too). It is sold under various names in different countries. Here in Sweden it is called The Ileach.

The main difference, as I see it, is that very rarely, if ever, do these "mystery malts" come with an outrageous price tag. On the contrary, as you yourself point out in your post, they are more often than not firmly placed in the low budget department.

Nor are they being promoted as major players. This is also, to me, a big difference. It was a while since I last visited the Whisky Magazine forum (they have introduced spyware some six months ago) but if you look there you will probably find that posts about Finlaggan are few and far between. Black Maple Hill, on the other hand, is discussed extensively on this forum.

Lastly, if you are familiar with Finlaggan, you have probably noticed that there are no attempts whatsoever to make it appear like an own product. This is also true of at least the other "mystery malts" that are sold here in Sweden.

[Gillman]

"The main difference, as I see it, is that very rarely, if ever, do these "mystery malts" come with an outrageous price tag. On the contrary, as you yourself point out in your post, they are more often than not firmly placed in the low budget department.".

Good point Lennart, but it must be remembered too that few mystery malts are sold at 16, 18, 21, 23 years ...

Gary

[Pharaoh]

"The main difference, as I see it, is that very rarely, if ever, do these "mystery malts" come with an outrageous price tag. On the contrary, as you yourself point out in your post, they are more often than not firmly placed in the low budget department.".

Good point Lennart, but it must be remembered too that few mystery malts are sold at 16, 18, 21, 23 years ...

Gary

Gary,

While your point is perfectly clear I'd suggest perhaps considering it stated: few mystery malts are sold AS... rather than at, given that often all we know is the minimum guarantee.

There are some significant differences between the current Scotch whisky and American whiskey market. Chuck touched upon one which is the limited number of players with American whiskey stock sufficient to prop up phantom brands (at least ones that want to sell 12+ year old whiskey). Which leads to a different set of issues and circumstances.

[Gillman]

You are right, thanks, but this means the higher-priced (in relation to mystery malts) American phantom brands would justify their price even more since they offer often a longer-aged product than what is stated on the label. That of course assumes older is better, something which is not always true, but I think the general consumer perception is to that effect no matter what many of us here believe.

But Lennart's point is still valid in general in that most malts not specified to a given distillery or group of them are sold at a moderate price. Yet a number of phantom bourbon brands of no great age often command a relatively higher price here, or so I believe.

Gary

[Pharaoh]

You are absolutely right Gary. Again I find much of this goes to Cowedry's earlier contribution in this thread, which in comparison there is no great shortage of single malt whisky just around the bend on the Scottish market.

There are many clues presenting themselves in front of us. I look at a brand like Jefferson's Reserve, and watch it go from 15 years old to (smoke and mirrors) 14.5 years old if you buy that 12-17 year old line in the manner they're attempting to sell it. Why? Because they have an abundance of 17 year old whiskey to get rid of, or because they haven't enough 15 year old whiskey available to keep the statement?

What's equally interesting to me and maybe this is just imagined on my part but it seems to me that several entities that release these whiskies have tried to hide or at least disguise the facts from the unwitty by doing things like leaving their ages purposely understated etc.

On that same note, I notice the specific age related information has now disappeared from certain other sought after bottles released annually. One might wonder why, but then again if the distilled / bottled dates remained, wouldn't it become painfully obvious that a couple of things had to take place, particularly when the distilled year suddenly stopped increasing?

That, to me, would signify that (A) the supposed maker suddenly and unexplaineably stopped producing the spirit or ( the supposed maker bought its whiskey from the same well aged spirit glut we've been discussing - which explains away the (now hidden) finite distillation year issue - don't it?

[JRomain]

I couldn't agree more, Chuck. If they're ashamed to tell you who made the stuff (for crying out loud!), then something instantly raises a red flag. There's simply no excuse for it and, frankly, there should be a law to prevent this sort of stuff. Just as there should be a law to prohibit the use of caramel coloring in scotch whisky. It's a blatant lie/false advertsing/duping the consumer. Bullocks.

[cowdery]

Gary raised something a while back that just struck me. Do distilleries unload whiskey they won't use in any of their brands to independent bottlers who will?

Don't be too quick to answer either way. I know bad whiskey can be sold to a redistiller, who will distill it out to GNS, but the amount you get for that is the price of GNS less the cost of redistilling it, i.e., not much. It's considered the last resort.

I'm not talking about something that's dangerous or even clearly faulty. I'm just asking, is it ethical to sell on the bulk market whiskey you would not sell as your own, assuming someone wants to buy it for a better price than the "last resort"?

I think it is. It's appropriate to have higher standards for the consumer market, where the buyer is trusting you, than for the trade market, where the buyer is trusting them.

Of course, you can learn to trust an independent too which, essentially, means trusting a brand. If Old Weatherproof has been keeping you dry, by all means keep buying it, but if lately it has failed to impress, at least now you have a better idea why.

Unfortunately, a lot of these brands were made possible by the old whiskey glut and without it, I don't see how all of them can keep going.

As many of you know, Four Roses makes ten different bourbons, by matching up five different yeasts with two different mash bills. The standard 4R is all of those bourbons, and some at more than one age. 4RSB is, naturally, one recipe. The interesting one is 4R Small Batch, which says on the label that it is "Kentucky Straight Bourbon Whiskey Crafted from Four Select Bourbons."

Now obviously in this case, Four Roses made all four of them, but if independents could get different whiskeys and come up with good mixtures (can't say "blends") of them, that would be an interesting role for them to play that is sustainable.

Shame on me, but I'm more interested in whiskey that tastes good than I am in whiskey with a big number on the label.

[Gillman]

I think this is a relative matter though because I have had whiskey sold under regular brand names that, in my opinion, was sub-par or that diverted from the brand profile. No doubt the distillery would not agree, but I believe I can tell when something is not quite right.

Independents might have certain challenges, e.g., ensuring currently a continuous supply of well-aged whiskey, but they can also mingle whiskeys from different distilleries, of different ages and tastes than one distillery might offer, perhaps altered through additional aging or marrying in their own facilities. This can turn a seeming disadvantage into an advantage.

Gary

[Pharaoh]

Again Gary no disagreement out of me there.

However I'd like to highlight what this has all led up to (for me - at least) is in Chuck's initial post, the concept was somewhat frustration with the deception perpetuated by Indie labels & bottlers.

One of the points I believe lost in this was that we'd quickly label an Indie propped marquee 'phanton', but if a big time legitimate distillery like, I dunno... Buffalo Trace bought some of the very same whiskey and didn't exactly put up a billboard and FDA disclosure announcing the whiskey's true provenance etc., we'd more than likely simply assume and respect it as Buffalo Trace distilled whiskey.

Really what I heard in Chuck's original post is: Bring back more 'Bond' like rules or requirements that might limit the ability to deceive.

To go back to the major differences between privately labeled single malt scotch whisky and private labeled American whiskey:

First the water is not running from the shore in Scotland - so there is no sunami warning issued. The water here is definitely receeding.

Second, because there is an abundance of choice of origin in Scotland there isn't the same sort of pressure on all parties involved to hide as much of the details as possible.

With-in the second point, In all honesty how well do you think indie bottlers A-Z would do if it were known that all the whiskey they were selling is likely derived from one of the same two or three sources... is all pretty much the same age, was matured in the same condition barrels... matured for great periods in the exact same manner, same housing etc. etc. all the same.

To some that would eliminate the need for CHOICE as I'm sure the less sophisticated palate and those that bought whiskey primarily on "how old is it" would simply buy the CHEAPEST of what's available since "it's all the same anyway - right?"

Third, the specific segement I think Chuck was referring to in the indie single malt trade differs significantly from most of the American indie labels / bottlers' trade.

If you pay close attention, the single malt scotch brands that are indie bottled but built on a perpetual brand specific item with a continuous profile - those do not typically disclose specific distillery origin. At best they often give sketchy hints that to the untrained eye are meaningless (as intended).

OTOH, to get more to why Chuck's comparison sort of differs (though I truly feel his frustration), you take Murray McDavid's or Cadenhead's (just to name two) - can you honestly pin a profile or even a region generically on either??? No. Therefore the distillery disclosure becomes much more the requirement on the bottlers end - the actual distllery probably doesn't care for it though.

Four, following point #3, the whisky typically bought by these indie bottlers is by the cask (or several casks) from a multitude of distilleries NOT warehouse size stocks of the same one or two source run-offs from a 3 or 4 year, production window. Because of the variety available the supression of data on the bottler's end in Scotland is a liability more often than an asset. On this side of the Atlantic, the detail supression is an asset.

Five, those Indie purchased casks (again what I believe was the specific market segment Chuck was referring to), are destined to be sold as single malt whisky making it impossible to marry outside of the original distilling source.

There's more, but I figure I'm certainly already talking to myself here by now, as the average reader likely dozed off around the second paragraph or so.