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How Some US And Scottish Distillers Are Doing Exactly The Opposite To Stay Competitive — Dramming
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How Some US And Scottish Distillers Are Doing Exactly The Opposite To Stay Competitive

by Oliver Klimek on April 17, 2014

Many of you will have read about the debate in Tennessee about the legal definition of Tennessee whisky. The “bourbon + charcoal filtration” definition was adopted as state law last year. Now Diageo – present in Tennessee with George Dickel – has tried to have the law changed in a way that would also allow used barrels to be used for maturation. But this attempt was not successful, the law remains unchanged.

I don’t want to go too deeply into the pros and cons of the used barrel issue here. Some have argued that it would ultimately compromise the overall quality of the whisky or even regard Diageo’s step as an attempt to damage the status of Jack Daniel’s as global competitor of Johnnie Walker. Others see this as no big deal at all.

It should be pointed out, though, that the current requirement for fresh barrels to be used for bourbon, rye and some other types of American whisky is a result ot successful lobbyism of the cooperage union after the end of prohibition. So it was essentialy forced upon the industry by external pressure, but it was soon embraced to such an extent that it is often regarded as essential for American whisky.

1971-barton-s-whiskey-ad-every-leading-american-whiskeyBut in fact this is not the case. There have always been types of American whisky that could be made with used barrels: Corn whisky and “light whisky”. In the 1970s and 1980s when the US whisky industry was hit by a severe crisis, many producers embraced used barrels as a means of cutting costs and also attracting new customers with a lighter whisky style. As an example here is a 1971 advertisment for Barton’s QT that makes the use of used barrels a selling point. Another example is Early Times that switched to a mix of 80% fresh and 20% used barrels in 1983, thus deliberately dropping its “bourbon” status.

In America the maturation in used barrels has become eponymous with bottom shelf whisky because in most cases this is done to save on production costs. But used barrels don’t make worse whisky, it just takes longer until it is good; and fully matured American whiskies from used barrels are hard to find, if at all. This is definietly one reason why Diageo’s bid in Tennessee was seen as negative by many.

In Scotland things are entirely different. Scotch whisky has traditionally been matured in used casks, and especially bourbon casks take up the bulk of the space in Scotland’s whisky warehouses. But as we know, the Scottish distillers have been facing not a crisis, but the opposite. Growing global demand has put pressure on aged stocks, so the producers are forced to be creative in order be able to bring younger whisky to the market.

One of several options to do this is the use of fresh “virgin oak” casks which impart strong wood flavours to the whisky much faster than used casks. And it is no wonder that many of the recently released NAS expressions are relying on the effect of fresh casks at least to some extent. These casks are of course more expensive than used ones, but the shorter maturation time can offset this, at least partly. And the novelty aspect allows for higher prices and ultimately higher profits.

So on one hand we have American distillers trying to be more successful with used casks, and on the other hand their Scottish colleagues try to do the same by using fresh casks. The whisky business can be quite twisted indeed. The key to understanding this apparent paradox is the difference in problems faced.

{ 14 comments… read them below or add one }

Josh Feldman April 17, 2014 at 7:01 pm

Oliver – have a look at this trio of ads from 1939 and 1940 for a 4 year old rye whiskey from Hiram Walker that was aged in used barrels. Check out the language: “Aged in *aged* wood… Here is the reason for Signet’s amazing lightness and delicacy. First it is distilled for lightness. It is light before it even reaches the casks. Then, like the finest Canadian and Scotch whiskies and French brandies, Signed is aged in *aged* wood. Cradled for four years in casks pre-mellowed and enriched by prior use in aging other fine whiskies in the Hiram Walker distillery”.

“pre-mellowed” indeed!

The last is the funniest. “Heavy heady bottled-in-bond whiskey was the only kind that distillers could produce in those rule-of-thumb days.” “And now, let’s look in on you today. … modern methods give you light bottled-in-bond Signet – first bonded whiskey of its kind! … aged in *aged* wood. It’s delicacy of flavor and bouquet gives you a new taste thrill!”

The same kind of contortions to make using used cooperage sound superior, not cheaper.


Oliver Klimek April 17, 2014 at 7:46 pm

Interesting find! “Aged in aged wood” makes it sound like some kind of double maturation.


Josh Feldman April 17, 2014 at 7:05 pm

Sorry – I accidentally pasted the first one twice. The third one of the Signet ads – lower resolution sadly – is this: http://www.pinterest.com/pin/214343263487369388/


Chuck Cowdery April 17, 2014 at 9:35 pm

Early Times did not actually “switch to used barrels.” Eighty percent of the barrels are new, twenty percent are used.


Oliver Klimek April 17, 2014 at 9:40 pm

Thanks for the clarification, Chuck. The passage has been changed accordingly.


portwood April 18, 2014 at 2:02 am

“Growing global demand has put pressure on aged stocks…”

I don’t get it. The accepted narrative is that demand (especially from “emerging markets”) is huge and is putting pressure on stocks, yet, as you pointed out recently on twitter, evidence from Diageo’s and other major producers financial statements suggest volumes are NOT really increasing.


Oliver Klimek April 18, 2014 at 5:47 am

Yes, recent business figures have been less than flattering. But you need to consider the development of the recent years and not only a snapshot of the present. The demand may have dropped now, and I do have my doubts that it will pick up anytime soon. But it sure was there in the past, causing the flood of NAS bottlings. Or would you rather say the industry has plenty of aged stock around but doesn’t want to tell us? Wouldn’t that argument support the view of the industry that NAS is merely there to give the Master Blenders more room for their creativity?


Jeff April 18, 2014 at 11:44 pm

It really is all JUST narrative and, if you don’t like the current story, the industry is busy making others and all you really have to do is just wait. The industry flip-flop on the importance of age is the whisky equivalent of “We’ve always been at war with Eastasia”, and it’s pure doublethink: age is both important AND unimportant, depending on how much age is under discussion and whether it functions to enhance or detract from the market price of the bottle. Was NAS ever about answering higher demand that did or didn’t exist somewhere at some time, or was it about making age-statement expressions into premium-priced products, or was it about making young whisky into a premium-priced product while simultaneously vatting away mediocre “older” whisky in undisclosed concentrations, or was it about the “flexibility” of doing all these things while claiming that reduced consumer information on the label was ‘unavoidable” because the industry hasn’t the lobby power and influence to get labeling legislation changed (“we’d like to tell you more, but we can’t – but there IS old whisky in there”)? Now that the demand that “necessitated” NAS is (perhaps, who knows?) slackening, will we see the glut of them disappear? No, they’re simply a too-profitable way to market what’s in them – and I’ll tell you exactly what that is as soon as the industry tells me.

But even if players in the industry DID have more old stock than they’re currently willing to admit to, perhaps holding it in anticipation OF slackening demand and a bigger need to return to age statements, would they tell you, particularly while complaining of the “need” to sell younger whisky?


Oliver Klimek April 19, 2014 at 6:49 am

I do think the demand was there to begin with, and you can see this in the rising sales figures of the past. Distillers would never have gone on such a spending spree with expansions and new projects (see Roseisle) if there wasn’t anything to back it up. Of course you never know what will happen in the future, and it has always been my stance that they were being overly optimistic. But whisky selling like hotcakes in Asia has been, or better: was, a reality. It still is unlieley that they will give NAS up anytime soon, particularly because of the rotation mantra of travel retail.


Jeff April 20, 2014 at 11:41 pm

Yes, there was increased demand, but was it “necessary” to drop a lot of age statements to meet it, using the very same whisky, but just with different labels? Forget about the “mantra” of Travel Retail – there’s simply huge money to be made in NAS and it’s a great way to market young whisky while pretending that those who would simply like to know its age are reactionaries who don’t understand “all the complexities” of blending and how age statements would do great injustice to the ancient whiskies which hide in those bottles in undisclosed (and undisclosable!) concentration.


kallaskander April 23, 2014 at 1:08 pm

Hi there,

but no friends, NAS is all about the freedom of the master blender.
We should stop fretting and start collecting money to have a statue errected – say at Dufftown market square – to celebrate the newly gained freedom of the hiterhto cruelly oppressed master blenders of Scotland!
We the whisky drinkers have held these poor but good and honest men hostage of our own follies for too long, have subjugated and gagged them under the whip of our ignorance. Age matters – pah!
We should be grateful to all those heads of whisky autrage who showed us the light and will keep doing so may it cost us what it will.

Freedom and NAS gang t’gither!



Jeff April 23, 2014 at 11:33 pm

“We may take their age statements, but they’ll never take… our FREEDOM!”.

kallaskander April 24, 2014 at 10:55 am

Hi there,

spoken like a true Scot. If you are Scottish at all 😎


Bernhard Schäfer April 18, 2014 at 11:10 am

As we know the quality argument in the discussion Brown Forman vs. Diageo is bullshit . And for sure (I assume that) US whiskey in its history must have had a longer tradition in using “used cask” , at least I can not imagine that a distiller 120 years ago would have dumped a cask afte one maturation period. Imho it is just a matter of style, and in the long disitllers would just like to sell their product, so what the customer (believes that he) wants will be produced…happy easter…


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