Thursday, December 22, 2016

Sazerac Buys the Distillery Formerly Known as Popcorn Sutton

Not this guy again.
This morning, Sazerac announced its acquisition of "a distillery located in Newport, Tenn." Key staff intend to remain including Master Distiller John Lunn and Master Blender Allisa Henley. (Both Lunn and Henley previously worked at Diageo's George Dickel Distillery.) The purchase does not include any brands.

The Sazerac press release further states that, "the purchase will allow Sazerac to start producing Tennessee whiskey, using the Lincoln County process" and "Sazerac will begin investment into the Distillery to modify the pot stills for the Lincoln County process."

It is unclear what this means since the so-called "Lincoln Country Process" refers to charcoal filtration of the new make spirit after distillation and before barreling. It has nothing to do with the distillation process itself. (Sazerac clarified that it is still determining the distillery's precise capabilities and some additional investment probably will be necessary.)

What is clear from the press release is that Sazerac's primary purpose is to use the facility to make and sell a true Tennessee Whiskey. They plan to begin distilling this new product in a few months. That means, of course, that the unnamed product won't be available for sale until about 2022.

That is where the information provided by Sazerac ends and the questions begin.

Although unnamed in the press release, the "distillery located in Newport, Tenn" can only be Popcorn Sutton Distilling. It has been called Avery's Trail Distilling lately, a name that began to appear in September.

Here is the backstory as we reported it in March. Popcorn Sutton was a colorful and well-known moonshiner, a convicted felon. His widow and one of his buddies started a legit alcohol business in Sutton's name shortly after his death in 2009. It was a very slapdash and small scale operation. About three years ago it was acquired by Mark and Megan Kvamme. He is a successful venture capitalist, close to Ohio Governor John Kasich. She became Popcorn Sutton Distilling's CEO.

The Kvammes built a new distillery in Newport. It is 50,000 square feet. The solid copper pot stills are true alembics (no rectification section), built by Vendome. The two beer stills are 2,500 gallons each. The spirit still is 1,500 gallons. That's big, about the same size as the stills at Woodford Reserve. They were using only about 20 percent of their capacity, according to Lunn.

The Newport location, close to Gatlinburg and other Smoky Mountains attractions, was conceived as a tourist destination.

It is possible Sazerac and the Newport team will continue to make the Popcorn Sutton and Avery's Trail products under contract, assuming those products continue, but it appears Sazerac would like to distance itself from any public association with Sutton.

Sazerac has sent out several press releases today about acquisitions. They have purchased a Cognac distillery and brand, and will be the U.S. distributor for several Danish spirits brands. This on top of last week's high profile New Orleans real estate buy. Sazerac has been successful on many fronts lately, but one assumes this is how they are reinvesting the immense Fireball profits. Sazerac is quickly becoming a very big deal in the international distilled spirits business. They are not afraid to take chances.

It remains to be seen if Tennessee Whiskey is really even a category apart from Jack Daniel's, which represents 99 percent of all Tennessee Whiskey sold, the remaining one percent being George Dickel. Sazerac is betting the words 'Tennessee Whiskey' have some magic on their own. “We see a lot of potential in the distilling capabilities of this operation,” said Mark Brown, president and chief executive officer, Sazerac. “We are excited to have the talents of John Lunn and Allisa Henley on board and we look forward to utilizing their expertise to start laying down true Tennessee whiskey.”

Thursday, December 15, 2016

Sazerac Buys New Orleans Buildings to Create New 'Sazerac House' Attraction

The Sazerac Company, based in New Orleans since 1850, has purchased two buildings on the corner of Canal and Magazine Street, adjacent to the Sheraton Hotel, a few hundred yards from the original 1850 Sazerac Coffee House site.

The company plans to rehabilitate the nearly 200 year-old buildings into The Sazerac House visitor attraction and beverage alcohol museum. Guests will learn about the history of the iconic Sazerac Cocktail and many other original New Orleans brands while exploring the unique role New Orleans has played in the bourbon and rum industries, and in American cocktail culture. The buildings will include a gift shop and Sazerac company offices, with a projection of 60 employees eventually working there.

The two buildings, vacant for more than 30 years, date back to the mid-1800s and contain rich architectural details including wood floors, high ceilings, oversized windows, and ornate support columns throughout. As many of the original design elements as possible will be kept as the buildings undergo renovation. “We simply could not be happier than to have the opportunity to restore such beautiful buildings to their former glory, in a perfect location, so close to the original site of the Sazerac Coffee House that will act as our future New Orleans homeplace,” commented Mark Brown, president and chief executive officer of the Sazerac Company. “We’re excited to have this opportunity to preserve our roots, while at the same time explore opportunities to introduce our visitors to new product releases that have a special tie to New Orleans.”

Sazerac has a history of buying hidden gems and restoring them to their natural beauty. In 1992 the company bought Buffalo Trace Distillery in Kentucky, complete with ramshackle buildings, barbed wire fences surrounding the property, and an employee base which had dwindled down to 50 from its thriving post World War II days of 1,000 employees. Today, Buffalo Trace Distillery is one of only 2,600 national historic landmarks in the United States, employs nearly 500 workers, and welcomes 165,000 visitors a year who enjoy its lush restored gardens and picturesque campus.

New Orleans historic preservation architects Trapolin-Peer and Ryan Gootee General Contractors have been selected to renovate the structures and plans are being finalized. Sazerac expects the building to be complete by late 2018. Upon completion, Sazerac projects 100,000 visitors in its first year of operation. The purchase price is not being disclosed.

Friday, December 9, 2016

Get Ready to Pay More for Booker's -- a LOT More

It started as a rumor. Beam was going to double the price of Booker's Bourbon as of the first of the year and start allocating it.

It seemed too crazy to be true. Sure, producers hike prices all the time, especially these days, but doubling it? With the increase the retail price will be about $100 per 750 ml bottle. Today, although the suggested retail is about $50, it is commonly found on deal in the low 40s. Such a huge price hike for any brand is a huge risk. It felt like brand suicide. It couldn't possibly be true.

But it is.

Here are the facts, from an official Beam Suntory spokesperson. Suggested retail will be $99.99 and the wholesale price is rising accordingly. At the same time, they will cut back from six or seven batches per year to four, with the batch size staying the same (about 350 barrels). Essentially, that means the number of bottles available will shrink by about one-third. They expect this will cause demand to exceed supply immediately, so they will began allocating the available bottles so every part of the country gets its fair share.

They have their own way of explaining why this is happening but it boils down to this. They are doing it because they can. The brand is strong. Other super-premium whiskeys are selling in that price range, so why shouldn't they enjoy some of the available profit? This keeps Booker's as the top of their line (except perhaps for their very limited 'craft' offerings), rather than creating something new in that high-price segment.

Seen in that context it doesn't seem so crazy after all. Perhaps the fact that Booker's Rye sold out quickly at $300 a bottle gave them the idea.

If you like Booker's and don't want to pay the higher price, or have trouble finding it, Jim Beam Black at about $22 is a good substitute. The biggest difference is the proof, 43% ABV for Jim Black versus more than 60% for Booker's. For about $40 a bottle you can get Knob Creek Single Barrel, which is nearly the same ABV as Booker's. On paper they are virtually identical, but no two products are ever exactly the same due to flavor profiles. Still, $40 versus $100 is worth considering.

This may have been part of the equation. Knob has been creeping up into Booker's price segment. In fact, all four of Beam Suntory's 'small batch' bourbons are bunched up at about the same price. It makes sense to put some distance between them. (The other two are Baker's and Basil Hayden's.)

No doubt there will be much weeping and gnashing of teeth about this, with accusations of greed and probably some xenophobia aimed at the parent company. If you swing that way, knock yourself out.

Realistically, no one in the whiskey business is organized as a not-for-profit. Beam has a huge American whiskey portfolio, with something for everyone. The whole industry right now has more demand than supply and the aging cycle means there is a several year lag between production increases at the distillery and supply increases on the street. The smart business play is to increase profits and tamp down demand a little bit with price increases, hopefully without hurting overall demand growth and customer loyalty.

Wednesday, December 7, 2016

My Dad's Pearl Harbor Story

Seventy-five years ago today my father, J. K. 'Ken' Cowdery, was in the Army stationed at Schofield Barracks in Hawaii. This is his account of that morning. He wrote it in 1991, for the 50th anniversary, for our local newspaper the Mansfield News Journal (Mansfield, Ohio). It was later published in the AARP magazine. Dad died in September, 2010, age 90.

This is just one of his stories from that fateful day. I heard them all about 100 times but it never got old. He had an amazing memory. How he got to Hawaii is quite a story too, as is what happened next, but I'll leave it at this for now.

Sunday, December 7, 1941, dawned bright and clear at Schofield Barracks, Territory of Hawaii. At least I assume that it did because it was bright and clear when I got up at about 7:45.

To get breakfast I had to be in the chow line out behind the barracks before 8:00. I made it.

Someone noticed a column of smoke coming from the vicinity of Wheeler Field, the fighter field, south of our location. There were comments and conjecture that the fly boys must be having some kind of exercise and that one of them had cracked up.

At about the same time we noticed a line of planes coming over Kole Kole Pass, which was about three miles northwest of us and in full view because there was nothing in the way. Our barracks was the furthest northwest barracks on the post. As the first plane in the line passed overhead I could not only see the red circle markings on the plane but could see the pilot's face, he came in so low that he cleared the two story barracks by about 5 or 6 feet.

At that point he also started his guns. We never did figure out why he didn't start strafing a few seconds sooner and try to get some of the 30 or 40 guys in the chow line. I have no idea what the second plane in the line did, by the time he got there I was long gone.

We all made for cover, I went into the building via the back door to the kitchen. The kitchen was about 20 feet wide by about 30 feet long. Just inside the back door, to the right, was the walk-in cooler. I hit the floor at the far end of the cooler, putting the cooler between me and the line of fire.

There must have been several planes in the line as the firing kept up for quite a long time--at least it seemed like a long time. After the firing stopped everything was completely silent, there was not a sound. I wondered if I was the only one still alive.

There was a line of preparation tables down the center of the room, with equipment and utensil storage drawers below, and ranges along the far wall at the other end of the room. Looking around I could not see another human being, everyone was obviously hugging the floor. Then I saw a hand rise up, pick up a spatula, turn over two eggs frying on the range, then replace the spatula and again disappear.

Regardless of the circumstances, duty comes first.

I might add at this point that this was the 90th Field Artillery Battalion of the 25th Infantry Division, a Regular Army outfit.

When it seemed that the attack was over and people started stirring again I grabbed a plate, claimed the eggs, and sat down to eat my breakfast.

Sunday, December 4, 2016

Indy's Big Red Liquors May Be on to Something

The line to get in.
Big Red is a chain wine, beer, and spirits retailer in Indiana. On Saturday they held their third annual Pappy Van Winkle Rare Bourbon Lottery and Sale in the Champions Pavilion at the Indiana State Fairgrounds on the north side of Indianapolis. Everybody calls the event 'bourbonfest,' but there is also scotch and even some wine and beer. Even Ale-8-One, an iconic Kentucky ginger ale, was there giving out samples.

In some ways it was just like the whiskey festivals held in other major cities. There were tables, with people giving sample pours of various whiskeys and other products (e.g. Louisville's Copper & Kings Brandy). Wild Turkey's Jimmy Russell was there.

In other ways it was completely different. One was the price. General admission tickets were just $15. For that you got all the samples you cared to taste, and one ticket for the Van Winkle lottery, which also included the Buffalo Trace Antique Collection. All proceeds from ticket sales were donated to the Tony Stewart Foundation.

Inside the pavilion.
It was pretty spartan. The facility usually hosts prize livestock. There were not many amenities, a few snacks and plenty of bottled water. The lines for the small bathrooms were as long as the tasting lines. It was also in the afternoon, from 1:00 to 4:00 PM. Most people left when the lottery wrapped up, about 3:30 PM.

They won't say if it's their entire Van Winkle and BTAC allocation, but that is how it looked. It came to about 43 bottles. Lottery winners win the right to buy their bottle at the regular retail price. The bottle you get is also the luck of the draw. The last ticket drawn was for the lone Pappy 23.

The result? A huge, enthusiastic crowd of about 2,400 people, the biggest crowd I've ever seen at this type of event. All of the tables were doing a big business, but the longest lines were at the tables for Buffalo Trace and Four Roses. All of the majors were there but also many craft distilleries.

They planned well for it. Every whiskey vendor had two tables, at opposite ends of the hall. The 'sale' part of the event is the order form every attendee receives upon entering, along with a tasting glass. The form lists each table and the products available there for tasting, with the item's regular and sale price, and a space for how many bottles you want to buy. No money changes hands at the event. You indicate on the order form the Big Red store where you will receive your order. You pay when you pick it up.

People took the buying opportunity seriously. One guest brought his own set of Glencairn glasses so he could comparison-taste.

Speaking of comparisons, Big Red Bourbonfest's $15 ticket compares to $139 for WhiskyLive and $245 for WhiskyFest.

Big Red may be on to something.