The Audacity of Sourced Whiskey

The Audacity of Sourced Whiskey Moderated by Fred Minnick, author of

Bourbon Curious Presenters: Wade Woodard, consumer.

John Little, Smooth Ambler. David Dykstra, MGP.

!  Tales of the Cocktail

Sourced Whiskey

!  What is Sourced Whiskey? !  Sourced Whiskey History !  Who is involved in Sourced Whiskey? !  Legal matters in Sourced Whiskey !  The Sourced Whiskey Business

What Is Sourced Whiskey?

!  Contract Distillation – When a company hires a distillery to distill a product specifically for them. !  Purchasing Bulk Whiskey – When a company purchases barrels or tankers filled with whiskey and bottles it themselves. !  Both are commonly called Non-Distiller Producers (NDPs), but most operate under rectifier licenses.

Sourced Whiskey History

Contract Distillers • Since distilling became a business, American distilleries have provided contract distillation services to bottlers. • Historic Example: Stitzel-Weller Distillery

• Contract distilled for Austin Nichols • Contemporary Example: Brown-Forman Distillery

• Contract distilled for Heaven Hill after 1996 fire

Bulk Whiskey • When distillers have a surplus of whiskey, they often try to sell whiskey either by barrels or tanker. • Historic Example: Barton Distillery

• In 1966, Barton sold $2.45 million in bulk whiskey to other distilleries/bottlers. • Contemporary Example: Heaven Hill Brands

• Brokered or sold bulk product to many NDPs.

Historic Brand Example

!  Chapin & Gore !  Circa 1940s to 1960s !  Owned by McKesson & Robbins !  Distilled and aged by Fairfield Distillery

Historic Example

cont.

!  Marketing: Chapin & Gore claimed Frank Gore invented the Sour Mash technique. Not true.

!  No public outcry over the the false marketing practices.

Contemporary Brand Example

!  Templeton Rye Whiskey !  Owned by Templeton Rye Spirits LLC, Iowa !  Distilled and partially aged by MGP Ingredients Distillery, Indiana

Contemporary Brand Example

!  Marketing: Templeton claimed connection to Al Capone and the area’s rye whiskey.

!  Result: Public outcry and class-action lawsuit.

Sourced Whiskey Disclosures

Why Brands Don’t Disclose Sourced Whiskey Sources • There are too many sources. Jefferson’s and Angel’s Envy include three sources for their bottlings. • Non-Disclosure Agreements. Brown-Forman, Sazerac, Heaven Hill and other companies do not want their sourced whiskey clients encroaching on their trademarks. • They don’t want to. “There is no law that says I have to disclose it. I’ve got to put state on there, but I don’t have to tell you where I got the whiskey. If you buy a gallon of milk, does it say what dairy produced it?” – Steve Thompson, former president of Brown-Forman and founder of the Kentucky Artisans Distillery

26 CFR 5.36 (d) State of distillation. Except in the case of “light whisky”, “blended light whisky”, “blended whisky”, “a blend of straight whiskies”, or “spirit whisky”, the State of distillation shall be shown on the label of any whisky produced in the United States if the whisky is not distilled in the State given in the address on the brand label. The appropriate TTB officer may, however, require the State of distillation to be shown on the label or he may permit such other labeling as may be necessary to negate any misleading or deceptive impression which might be created as to the actual State of distillation. In the case of “light whisky”, as defined in §5.22(b)(3), the State of distillation shall not appear in any manner on any label, when the appropriate TTB officer finds such State is associated by consumers with an American type whisky, except as a part of a name and address as set forth in paragraph (a) of this section.  

Label Laws & Sourced Whiskey  

Simplified Version of 5.36 (d): The State of distillation shall be shown on the label of any whisky produced in the United States if the whisky is not distilled in the State given in the address on the brand label, with exceptions for certain class types.

Label Laws & Sourced Whiskey

Which class types does 5.36 (d) apply?

- Straight Whiskies

- all BIB whiskies

- Bourbon, Rye, and Corn Whiskey  

Label Laws & Sourced Whiskey

Under the penalties of perjury, I declare; that all statements appearing on this application are true and correct to the best of my knowledge and belief; and, that the representations on the labels attached to this form, including supplemental documents, truly and correctly represent the content of the containers to which these labels will be applied. I also certify that I have read, understood and complied with the conditions and instructions which are attached to an original TTB F 5100.31, Certificate/Exemption of Label/Bottle Approval.

Label Laws & Sourced Whiskey

Treaty Oak Red Handed Bourbon Example

Label Laws & Sourced Whiskey

Original Label

Label Laws & Sourced Whiskey

Revised Label

Label Laws & Sourced Whiskey

The Business Side

!  How Sourcing Whiskey Can Help Build Craft Distilling

MGP’s Side of the Story

!  The History of MGP !  Working with MGP !  Our Commitment to Our Customers !  The Uniqueness & Value Our Customers Provide

18

Questions?