Each week, we bring you the latest whisky news on WhiskyCast, but a lot can happen during the week. Now, you can keep up with whisky news as it happens here on WhiskyCast.com!

Bladnoch On The Auction Block

The legal notice offering Bladnoch Distillery for sale as a going concern. Courtesy Ernst & Young. This is not a paid advertisement.April 3, 2014 – As expected, the court-appointed administrator for Bladnoch Distillery plans to sell the Wigtown distillery as an ongoing business, and has started seeking expressions of interest from potential bidders. Luke Charleton of Ernst & Young was named as the administrator for Bladnoch last month after Colin Armstrong, one of the four investors in Bladnoch and the brother of managing director Raymond Armstrong, sought a court order to wind up the business. The Armstrong brothers were two of the four investors who acquired the closed distillery in 1994 and reopened it in 2000, but were at the center of a long-running family dispute on the distillery’s future. According to Raymond Armstrong, two of the investors wanted to sell, but no buyers could be found for a 50% stake in the company.

A legal notice on Charleton’s behalf describes the Bladnoch assets as “a whisky distillery with annual production capacity of 1.25 million litres, a long established brand (founded in 1817), aged Bladnoch whisky stock, full-laden bonded warehouses with 5.5 million litres of cash generative capacity, visitor centre, tea room, shop, and premises.” Most of the distillery’s current income is generated by renting space in its maturation warehouses to other distillers, and limited amounts of Bladnoch’s Lowlands single malt have been available for sale since 2008. The notice asks for interested bidders to step forward by April 9.

However, the notice does not specify whether the new owners will be able to run Bladnoch at full capacity. When the Raymond Armstrong-led investors bought Bladnoch in 1994 after it had been closed by UDV (now part of Diageo) the previous year, the contract specifically forbade the new owners from resuming whisky production. That restriction was later relaxed to allow around 100,000 liters of spirit production each year, and the distillery has been producing single malt stocks since 2000. However, production was stopped when the court ordered Bladnoch into administration, and all of the Bladnoch workers have been laid off until the distillery is sold.

An Ernst & Young spokesman declined to comment Friday on whether the production cap would apply to a new owner, since the issue is still being reviewed by legal counsel. This story will be updated when more details are available.

Editor’s note: This story was updated to include information provided by Ernst & Young. 

Links: Bladnoch | Ernst & Young

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Elmer T. Lee Commemorative Bourbon To Benefit Veterans

Elmer T. Lee Commemorative Edition. Image courtesy Buffalo Trace. April 3, 2014 – When Buffalo Trace Master Distiller Emeritus Elmer T. Lee passed away last year at the age of 93, he left behind not only a legacy of service to the Bourbon industry, but also to his country. Buffalo Trace is honoring that legacy with a limited-edition release of Elmer’s namesake single barrel Bourbon to benefit the Veterans of Foreign Wars Post #4075 in Frankfort, Kentucky. Elmer was a proud member of the VFW post, having served as a radar bombardier in the Army Air Corps during World War II.

The whiskey for this commemorative edition comes from the same warehouse location Elmer preferred for the casks he selected to be bottled under his name until shortly before his death. However, it has been bottled at 93 proof (46.5% ABV) instead of the usual 45% ABV in honor of Elmer’s age when he died on July 16, 2013, just a few weeks shy of what would have been his 94th birthday. The square bottle remains the same, but carries special labeling that includes a tribute to Elmer T. Lee.  In a news release, Buffalo Trace’s Kris Comstock said all profits from the sale of the limited-edition release will go to the VFW post in Frankfort.

“We’re remarkably fortunate to have known Elmer. His contributions to the bourbon industry, Buffalo Trace Distillery and all our lives are countless. We want to honor our friend and give back to his family and his favorite cause, the Veterans of Foreign Wars.”

The commemorative bottles will be available at retailers starting this month with a recommended retail price of $39.99 USD. Buffalo Trace has pledged to keep producing the standard Elmer T. Lee Single Barrel Bourbon “as barrels come of age and are deemed worthy of Elmer’s legacy.”

Listen to Mark Gillespie’s 2006 interview with Elmer T. Lee.

Links: Buffalo Trace

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Diageo Makes Case For Fighting Tennessee Maturation Law

April 2, 2014 – Diageo’s lawsuit to overturn a 1937 Tennessee state law limiting where the state’s distillers can mature their spirits is headed for a Nashville federal court, but the drinks giant hopes to avoid a trial if an agreement can be reached with state regulators. The lawsuit was filed last Friday (March 28) against the Tennessee Alcoholic Beverage Commission and executive director Keith Bell in response to a TABC inquiry about Diageo’s practice of moving barrels from the George Dickel Distillery in Tullahoma to warehouses in Kentucky.

The original 1937 law was part of Tennessee’s repeal of Prohibition, and required distillers to mature all of their spirits in the same county as the distillery. It was amended as part of last year’s “Tennessee Whiskey” law to allow distillers to use warehouses in adjacent counties. However, Diageo’s lawsuit claims the requirement violates the US Constitution’s protections for interstate commerce. Zack Nobinger of Taylor Strategy, Diageo’s external public relations agency for the Dickel whiskies, said in an email that federal court was the logical place to challenge the state law on constitutional grounds.

“According to the 1937 Storage Statute, manufacturers of all types of alcoholic beverages licensed in Tennessee are prohibited from storing the distilled spirits they manufacture in Tennessee anywhere other than the Tennessee county in which they were manufactured or an adjacent county.  As a result, Diageo has filed a lawsuit against the Tennessee Alcoholic Beverage Commission for depriving manufacturers of their constitutional rights to engage in interstate commerce because it does not allow Diageo to store distilled spirits anywhere other than the Tennessee county, or adjacent county, where it was produced.  However, based on discussions between both parties late Friday we are hopeful that we can come to a mutually agreeable solution on this matter in short order.”

Keith Bell of the TABC confirmed in a Monday email that this is the first time the agency has raised a question about a distiller’s use of warehouses outside the state, while making it clear that the TABC has not opened a formal investigation or enforcement action. According to Diageo’s court filing, the company does take some spirit produced at the Dickel distillery to its warehouses at the Stitzel-Weller Distillery in Louisville, but none of that spirit is used for Dickel-branded whiskies. Nobinger confirmed that the Dickel distillery produces whiskey used in other Diageo products and for sale to third-party bottlers, and some of that whiskey is being matured in Kentucky.

The state has not yet filed its response to Diageo’s lawsuit.

Links: Diageo | George Dickel | Tennessee Alcoholic Beverage Commission

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Kentucky Coach Honored on Maker’s Mark 2014 Keeneland Bottle

The 2014 Maker's Mark Keeneland label featuring Kentucky football coach Mark Stoops. Image courtesy TTB.gov. April 2, 2014 – University of Kentucky basketball coach John Calipari has his team in the NCAA’s Final Four this weekend in Arlington, Texas, but his football counterpart gets the trophy at Keeneland for the running of this year’s Maker’s 46 Mile on April 11. Mark Stoops is featured on the commemorative Maker’s Mark bottle that will go on sale Friday (April 4), with a part of the proceeds to benefit the University of Kentucky’s Gill Heart Institute. 10,000 bottles will be available in Kentucky, and Stoops will join Maker’s Mark’s Rob Samuels and Bill Samuels Jr for a bottle signing at Keeneland on the morning of the Grade 1 stakes race.

Stoops is the brother of Oklahoma football coach Bob Stoops and Oklahoma defensive coordinator Mike Stoops. They lost their father to a heart attack at the early age of 54, and in a news release, Stoops said he jumped at the chance to help raise funds to improve cardiac care in Kentucky.

“I’m certainly honored to be on the label of this year’s bottle, especially with the proceeds helping to bring ever-better cardiac care to the people of Kentucky. I’ve been here long enough to appreciate both the significance of the Gill Heart Institute’s work and the unique role this commemorative bottle plays to help support it. I’m deeply grateful to Keeneland and Maker’s Mark for making this happen.”

This is the 18th year for the commemorative Maker’s Mark Keeneland charity bottlings, with more than $7 million raised for Kentucky charities so far. Calipari was featured on the 2010 Keeneland bottle.

Links: Maker’s Mark

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New Host Named for WhiskyCast

Hunter Smith, the new host of WhiskyCast. File Photo ©2013 by Mark Gillespie. April 1, 2014 – CaskStrength Media is pleased to welcome a new host for WhiskyCast, as Hunter Smith will replace Mark Gillespie starting with this week’s episode. Smith, an 18-month-old child prodigy, earned the position because of his appeal to a new generation of whisky consumers. In a news release, CaskStrength Media managing director Christina Philburn said the weekly show’s new host will guarantee the long-term future of WhiskyCast.

“Mark’s done a great job over the last nine years, but just as people today don’t want to drink their grandfather’s whisky, they don’t want to hear about it from an old guy. Hunter’s appeal stretches across all generations, and look at those cheeks! You just want to pinch them!”

While it is highly unusual for an 18-month-old to become a whisky journalist, Mark Gillespie pointed out that Hunter’s family ties were a key factor in his selection. “We knew the kid had talent when he started experimenting with fermentation at 13 months by hiding bottles of apple juice next to the radiator. After a couple of weeks, they had a smell not unlike some young whiskies. True, he hasn’t taken the next step to distilling anything yet, but the quality of his fermented spirit makes him a Master Distiller in my book. Plus, if you’ve ever changed one of his diapers, you know Hunter has peat in his DNA.”

In the news release, Hunter Smith was quoted as being honored to take on the series of podcasts his grandfather created in 2005.

“Boppa baaa boo gaa, umm, ha, ha, ha. Boppa old, da da da.”
(Translation: “Mark has worked hard for many years, and it is an honor to be asked to take on this responsibility.”)

While there are no laws prohibiting minors from writing about distilled spirits, Hunter and the CSM management team have agreed that he will not publish whisky tasting notes for now. “It’s probably not a good idea for the Whisky Fairies to visit Hunter before the Tooth Fairy does,” CSM executive Aria Gillespie-Smith noted.

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Kentucky Lawmakers Approve Distillery Tax Relief

A Maker's Mark Distillery worker fills a new barrel with "white dog" spirit. Photo ©2008 by Mark Gillespie.March 31, 2014 – Kentucky’s House of Representatives has signed off on a bill that gives the state’s Bourbon distillers a long-sought break on the taxes they pay each year on every barrel of maturing whiskey in their warehouses. The so-called “ad valorem” tax generates about $13 million each year for local governments and school districts, but the bill passed today preserves that revenue stream while allowing distillers to take a credit on their corporate income taxes to offset the ad valorem taxes.  The compromise requires the distillers to reinvest that money in their Kentucky operations, and the credit will be phased in over the next five years.

“We are appreciative that the General Assembly recognizes our signature Bourbon industry as a major economic development engine of the Commonwealth,” Kentucky Distillers Association president Eric Gregory said in a news release. “This reinvestment tax credit will allow our distilleries to create more jobs and increase investment in the state.” According to the KDA, Kentucky’s taxes on distilled spirits are the third-highest in the nation, and the Commonwealth is the only state that imposes the ad valorem tax on distillers. Gregory said the offset will encourage more growth in the craft distilling community, along with another bill approved by the General Assembly that creates a special license for craft distillers with reduced licensing fees.

The bill was part of a package of tax reforms recommended in 2012 by a commission appointed by Governor Steve Beshear, and was approved by the Senate last week. The bill now goes to Gov. Beshear for his signature.

Links: Kentucky Distillers Association

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Diageo Lawsuit Challenges Tennessee Maturation Law

March 31, 2014 – Diageo may have lost a battle temporarily to change last year’s Tennessee state law setting standards for what can be called “Tennessee Whiskey”, but is now challenging part of that law and the state’s interpretation of it in a Nashville federal court. The 2013 legislation also updated a long-standing state law requiring Tennessee distilleries to mature all of their spirits within the same county as the distillery. That law has been on the books since 1937, when Tennessee repealed its Prohibition-era ban on distilling for Moore, Coffee, and Lincoln counties only. The 2013 change allows distillers to expand their maturation sites to adjacent counties only.

Diageo is suing the Tennessee Alcoholic Beverage Commission and director Keith Bell with the hopes of overturning not only the 2013 expansion, but the original 1937 requirement. According to the Nashville Business Journal, Bell notified Diageo on March 20 that it was potentially in violation of the “Storage Statute” for moving spirits from its George Dickel Distillery in Tullahoma (Coffee County) to the Stitzel-Weller Distillery’s warehouses in Louisville, Kentucky for maturation. Bell’s letter requested the company’s response by March 28, which was the day Diageo’s lawsuit was filed. In an email, Bell explained that his agency was following up on a media report that Dickel-produced spirits were being moved to Louisville.

“Our inquiry was the first step to determine whether further investigation was warranted. At this time, no citations have been issued nor administrative proceedings initiated by the TABC.”

In its court filing, Diageo acknowledges that it has moved some of its distilled spirits — other than the distillery’s flagship George Dickel Tennessee Whiskey — from Tullahoma to Louisville (while not specifying which products those spirits were being used for). The lawsuit claims Tennessee’s law violates the U.S. Constitution’s protection of interstate commerce, and would force the company to either invest in new maturation facilities near the distillery or lease warehouse space from other property owners in the immediate area. The lawsuit also suggests that Diageo could cut back on production of those spirits at Dickel or move that production outside of Tennessee, with a potential loss of jobs in either case.

Bell and the Commission have not filed a response to Diageo’s lawsuit with the court. WhiskyCast has reached out to Diageo for more details, and this story will be updated as more information becomes available.

Links: Diageo | George Dickel | Tennessee Alcoholic Beverage Commission

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Tennessee Lawmakers Punt On Whiskey Legislation

March 25, 2014 – With no agreement between competing Tennessee distillers on proposed changes to the state’s 2013 law setting specific standards for “Tennessee Whiskey”, Sen. Mark Green followed through on his threat to pull the bill from the floor and refer it to a “summer study” committee. During an interview with WhiskyCast’s Mark Gillespie last Friday, Green said he wanted a “win-win” compromise that would be supported by all of the state’s distillers while helping smaller ones become more competitive.

The referral means changes won’t be considered during this year’s legislative session, which is scheduled to end around May 1, and is a short-term victory for Jack Daniel’s owner Brown-Forman, which pushed for passage of the original legislation last year. That law requires any whiskey carrying the designation “Tennessee Whiskey” to be matured in new charred oak barrels and conform to other production standards as Bourbons, along with using charcoal “filtering” (also known as the “Lincoln County Process”). Brown-Forman wanted the law in order to keep producers of unaged white whiskies and moonshine from being able to call their products “Tennessee Whiskey”. However, the state’s Alcoholic Beverage Commission has interpreted the law to allow the use of modifying words such as “White” between “Tennessee” and “Whiskey”.

A group of distillers led by George Dickel owner Diageo asked Sen. Green to sponsor changes amending the 2013 law to allow smaller distillers to use “rejuvenated casks”, in which layers of wood that had been saturated with whiskey in previous uses is removed to expose fresher wood. Green had supported the idea on the grounds that it would allow small-scale distillers to save money, but ran into opposition from Brown-Forman and a handful of other small-scale distillers. In a news release, Diageo executive Guy L. Smith IV called the “summer study” referral a positive step.

“The Tennessee legislature has done the right thing and now, rather than having one company dictate for everyone, we can do this the right way and come together in an open forum to discuss how to create the best standards for Tennessee whiskey.  In the meantime, we will continue to make George Dickel the same way we always have. This is a good day for Tennessee, for distillers big and small, and for consumers of Tennessee whiskey.”

However, it should be noted that General Assembly observers have referred to “summer study” as a place where “bills go to die quietly” and there are no guarantees that changes would be introduced in the 2015 legislative session.

This story will be updated as more details become available.

Links:  Tennessee General Assembly | Brown-Forman | Jack Daniel’s | Diageo | George Dickel

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Beam Shareholders Approve $16 Billion Suntory Offer

March 25, 2014 – As expected, Beam Inc. shareholders voted overwhelmingly to accept a $16 billion takeover bid from Japan’s Suntory Holdings today during a shareholder meeting in Deerfield, Illinois. The acquisition will make Suntory the world’s third-largest spirits company, and makes the family-run company the largest producer of Bourbon whiskey while giving it major stakes in Irish, and Canadian whiskies and expanding its Scotch whisky portfolio. Suntory has owned Morrison Bowmore Distillers in Scotland since 1984, and the acquisition must still receive European Union approval.

In a news release, Beam Chief Executive Officer Matt Shattock said the merger with Suntory will create even more opportunities going forward.

“We appreciate the confidence Beam shareholders have placed in our company over the years, and we’re pleased that confidence is being rewarded.  Indeed, at the acquisition price of $83.50 per share, total shareholder return will stand at 106% since Beam began trading as a standalone spirits company in October of 2011.”

The combined Suntory and Beam whisky portfolio. Graphic ©2014 by Mark Gillespie.

Beam was part of the Fortune Brands conglomerate until 2011, when activist investor William Ackman pushed for Fortune to break up in a bid to unlock “shareholder value.” Fortune’s Acushnet golf division was sold to an investor group made up of South Korean investors and Fila Golf, while the home improvement and security division was spun off, leaving Beam as a standalone company. Suntory is taking on about $2 billion in Beam debt as part of the $16 billion acquisition.

Beam and Suntory expect to close the transaction during the week of April 28, assuming final regulatory approval from the EU. Beam’s headquarters will remain in the Chicago suburb of Deerfield, Illinois, and no major management changes are expected. Shattock and other key Beam executives hold “golden parachute” contracts making them eligible for sizable payouts if terminated during the first two years after the transaction closes.

Links: Beam | Suntory

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Diageo Faces Lawsuit from Explorers Club Over Johnnie Walker Series

March 24, 2014 – Members of The Explorers Club have traveled to the most distant reaches of the Earth and as far as the moon’s surface over its 120-year history. The club’s next expedition may be into a New York City federal courtroom, now that the group has filed a lawsuit against Diageo over its Johnnie Walker Explorers’ Club travel retail series of Scotch whiskies. The Explorers Club, which is based in New York City and has chapters around the world, claims Johnnie Walker owner Diageo is infringing on its trademark for the Explorers Club name.

According to the New York Post, the club sent Diageo a “cease-and-desist” letter last spring, several months after the line was launched in November of 2012 with the “Spice Road” expression. The “Gold Route” blend was released in March of 2013, and the “Royal Route” blend completed the Trade Routes series in October. The lawsuit claims Diageo’s use of the Explorers Club name on the three whiskies misleads consumers into believing that the group has endorsed the whiskies. The Explorers Club filed the lawsuit last week after negotiations with Diageo broke down, and the club is seeking either a licensing fee for the use of its name or the removal of the whiskies from the market. No court date has been set.

Diageo spokesman Jim Sias responded to our request for the company’s side of the story in this email. “We just learned of the actions that were filed and do not have a comment at this time.”

This story will be updated as more details become available.

Links: Johnnie Walker | The Explorers Club

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