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November 29, 2013 – Former Whyte & Mackay owner Vivian Imerman is interested in buying his old company back if UK regulators force Diageo to divest the United Spirits Ltd. unit. Imerman and his partners sold the Scotch whisky company to USL’s Vijay Mallya in 2007, and the Financial Times reports Imerman’s Vasari private equity firm would be prepared to make a bid for Whyte & Mackay. In a statement, Vasari said Whyte & Mackay would mesh well with its portfolio of spirits and beer businesses in Africa and Asia.
Earlier this week, the UK’s Office of Fair Trading essentially rejected Diageo’s plans to acquire Whyte & Mackay as part of its deal for a controlling interest in USL. Diageo has offered to sell most of the Whyte & Mackay assets in order to get the agency’s approval, and that offer is being reviewed by the OFT. The drinks giant wants to keep the Dalmore and Tamnavulin malt whisky distilleries in order to supply its needs in India and other global markets, but would sell off Jura, Fettercairn, the Invergordon grain whisky distillery, and the Whyte & Mackay-branded blended Scotch business. Diageo has declined to comment on Vasari’s interest or other issues involving Whyte & Mackay while the OFT reviews its latest proposal.
According to the FT, Imerman and his former business partner, Robert Tchenguiz, made £420 million ($687 million USD) in profits when they sold Whyte & Mackay to Mallya for £595 million ($974 million USD) in 2007. The South African-born Imerman was married to Tchenguiz’s sister, but a nasty divorce in 2008 led to allegations that Tchenguiz used his access to the partners’ shared computer network to provide his sister with confidential information about Imerman’s assets.
November 28, 2013 – Yet another distillery expansion is coming in Scotland’s Speyside region with the announcement of plans for a new £150 million ($245.5 million USD) distillery and visitors center to be built at The Macallan. Edrington plans to start construction on the new complex in the fall of 2014, with completion set for 2017.
Edrington executives told Scottish newspapers that the expansion is needed to meet growing whisky demand worldwide. The plan is to build the new complex adjacent to the current distillery, which will eventually be mothballed and could be reopened in the future if needed. The distillery’s historic Easter Elchies mansion will be left intact.
The company has selected Rogers Stirk Harbour + Partners to serve as lead architect for the new complex, which must still receive planning permission from local officials.
This story will be updated with more information as additional details become available.
November 27, 2013 – After last week’s disclosure by Diageo CEO Ivan Menezes that the drinks giant is preparing to launch two new Bourbon brands in 2014, there has been speculation on the source of the whiskies to be bottled under the Orphan Barrel and Bow & Blade brands. Diageo has only one working whisky distillery in the U.S. — George Dickel in Tennessee — and initial speculation based on label approval applications focused on Dickel as the source of those whiskies. However, Dickel has been running at full capacity just to produce enough whisky for bottling under its own brands, and sources the whisky for its Dickel Rye expression from the MGP-I distillery in Indiana — making that an unlikely possibility.
While Diageo has still not specified the source for the initial Orphan Barrel releases, a statement released today clarifies some of the questions about the source of those whiskies, and confirms that they will be bottled at the Dickel facility in Tennessee.
The goal of The Orphan Barrel Whiskey Project is to share old and rare whiskey from our barrel houses with discerning whiskey adorers. The first two whiskies to be released from the project will include the 20-year-old Barterhouse and the 26-year-aged Old Blowhard. Both are American Kentucky Bourbons, hand bottled in Tullahoma, Tennessee and are expected to begin appearing on select shelves throughout the U.S. in early 2014 under strict allocation due to limited supply. Additionally, DIAGEO is creating a separate new-to-world bourbon called Blade and Bow. Blade and Bow is anticipated to hit shelves in the second half of 2014 and is not a part of the Orphan Barrel Whiskey Project.
In theory, the whisky for the Barterhouse and Old Blowhard Bourbons could be from Diageo’s closed Stitzel-Weller Distillery in Louisville, which closed in 1993. Diageo does not routinely comment on its whisky inventories, which makes it difficult to know whether any whiskey from Stitzel-Weller remains in the distillery’s warehouses — which are still in use. It’s more likely that both whiskies were sourced from another Kentucky distillery, but which one remains unclear. U.S. regulations only require that the final bottler/producer of a whisky be identified on the labeling, and do not specify that the actual distillery be identified.
Diageo has also still not disclosed how it will resolve the upcoming supply needs for Bulleit Bourbon, which has been distilled by Four Roses under a long-term contract with Diageo. Four Roses has exercised a 6-month termination clause in that contract, effective at the end of March 2014.
This story will be updated as more details become available.
November 25, 2013 – The UK’s Office of Fair Trading has concluded that Diageo’s acquisition of a controlling stake in India’s United Spirits Ltd. (USL) would likely reduce competition in the Scotch whisky market, and Diageo has offered to sell most of USL’s Whyte & Mackay unit to satisfy those concerns. The OFT’s issue was primarily over bottled blends, with the tie-up of Diageo’s Bell’s blend and the Whyte & Mackay-labeled blend seen as having the potential to cause price increases and reduce competition. The agency has put plans to refer the case to the UK’s Competition Commission on hold while it reviews Diageo’s proposal.
In the OFT’s news release, Chief Economist Chris Walters said his analysis found that other blended Scotch whisky producers would not be able to overcome the competitive disadvantage that the combination of Bell’s and Whyte & Mackay would create.
“These companies are two of the leading suppliers of blended bottled whisky in the UK, especially to supermarkets and other large retailers. Our investigation considered a wide range of evidence and we concluded that the likely loss of competition could give rise to higher prices for retailers, and ultimately consumers. We are now considering Diageo’s offer to sell the bulk of the Whyte & Mackay business with the exception of two malt distilleries, to address our concerns.”
Diageo proposes to keep the Dalmore and Tamnavulin malt whisky distilleries and brands (including the maturing whisky inventory of both distilleries), while selling off the rest of Whyte & Mackay. That would include the Whyte & Mackay blended Scotch brand, the Invergordon grain whisky distillery, the Jura and Fettercairn malt whisky distilleries, and all of Whyte & Mackay’s private-label business.
In an email to WhiskyCast’s Mark Gillespie, Diageo director of whisky outreach Dr. Nick Morgan explained that Dalmore and Tamnavulin are needed to supply whisky for USL’s operations in India and other markets. The decision must still be approved by the Office of Fair Trading and the UK’s Competition Commission.
Editor’s note: This story was updated with additional comment from Diageo.
November 23, 2013 – Franklin County (Kentucky) sheriff’s deputies have cleared Bardstown High School principal Chris Pickett as a suspect in the theft of approximately $26,000 worth of Pappy Van Winkle whiskey from a warehouse at Buffalo Trace Distillery. The Lexington-Herald Leader reported today that Sheriff Pat Melton no longer considers Pickett a suspect in the the case.
Pickett was spotted on surveillance cameras at a liquor store in Elizabethtown, Kentucky several days after the theft was reported. A clerk told investigators that Pickett inquired about selling a “large amount of Pappy”, but Pickett and his lawyer said the principal was actually trying to buy some Pappy Van Winkle whiskey, not sell it. 65 cases of Pappy Van Winkle’s Family Reserve 20-year-old Bourbon and 9 cases of Pappy 13-year-old Rye were stolen from Buffalo Trace in what deputies believe was an inside job that was carried out over several weeks. Melton told the Herald-Leader that more than 100 people have been questioned so far, but no arrests have been made in the case and none of the stolen whiskey has turned up so far.
Melton plans to make what he described as a “significant announcement” on December 2 in a news conference at his office in Frankfort. So far, the Van Winkle family and Buffalo Trace (which produces Pappy Van Winkle whiskies under contract for the Van Winkles) have not commented on the thefts, and no rewards have been offered yet for information in the case.
This story will be updated as more details become available.
November 22, 2013 – There have been announcements of several new whisky releases this week that will be arriving in various markets soon, in addition to the previously reported return of Wild Turkey 101 Rye.
Old Pulteney is releasing a “peated” 1990 vintage single malt. While the distillery in Wick doesn’t use peated malt in its production, this whisky was matured for around 23 years in ex-Bourbon and ex-Sherry casks previously used for maturing heavily peated malts. Those casks imparted a peaty essence to the Old Pulteney whisky, which has been bottled at 46% ABV with no chill-filtering.
Only 900 cases of Old Pulteney 1990 Vintage will be available worldwide, with a recommended retail price of £120 ($195 USD).
Glenfiddich is releasing another edition in its Age of Discovery series. Age of Discovery Bourbon Cask Reserve was matured for 19 years in ex-Bourbon casks, and represents the first expression from Glenfiddich to use ex-Bourbon casks exclusively. It’s bottled at 40% ABV, and carries a recommended retail price of around $180 USD per bottle.
Sazerac’s A. Smith Bowman Distillery in Fredericksburg, Virginia has released the second edition of its Abraham Bowman Port Finished Bourbon using Port wine casks from a nearby winery. This edition is 12 years old, and spent four months in the Port casks. The 2012 edition used 8-year-old whiskey, and was finished for eight months in similar Port casks from a different Virginia winery. The 2013 edition will be available in very limited quantities with a recommended retail price of $69.99 per bottle.
The English Whisky Company is releasing Chapters 14 and 15 of its British single malt whisky. Chapter 14 is the distillery’s traditional single malt, while Chapter 15 is the peated version. Both were matured for around 5 years, and are bottled at 46% ABV, with a recommended price of £44.99 ($73 USD) A limited number of cask-strength bottlings of both are available through the distillery’s web site at £75.00 ($122 USD) each.
Compass Box’s John Glaser combined his blending skills with a classic movie reference for “The General” — which was an old steam locomotive featured in a Buster Keaton movie. Glaser was recently offered two batches of vintage blended Scotch whisky from different companies that had been left to mature in casks for years — 33 years in one case. He decided to blend the two batches together, and the result is “The General”. It’s being bottled at 53.4% ABV, with just 1,678 bottles to be sold. The whisky will go on sale in the UK and Europe this week, with a launch in the US expected next March.
As reported earlier this year, Cutty Sark is releasing Prohibition Edition to mark the 80th anniversary of Prohibition’s repeal on December 5. The blend features a spicier and stronger recipe than the traditional Cutty Sark whiskies, and is being bottled at 50% ABV. The recommended price is $29 USD for a 750ml bottle.
Johnnie Walker has announced a partnership with Brooks Brothers to celebrate the clothing retailer’s 195th anniversary. The Brooks Brothers Limited Edition Johnnie Walker Blue Label features an engraved Golden Fleece logo on the bottle, and will retail for $249 USD. In addition, Brooks Brothers is offering an exclusive tie featuring Johnnie Walker’s Striding Man logo, and will offer customers the opportunity to host an exclusive Johnnie Walker Brooks Brothers Experience tasting in their home for 26 guests. The Experience costs $10,000, and will be led by one of Johnnie Walker’s brand ambassadors. Each guest will receive a bottle of the Brooks Brothers Limited Edition Blue Label and a Striding Man necktie. A percentage of the proceeds from the Experience will benefit Career Gear, a charity which provides career counseling and clothing for people in need.
November 20, 2013 – Glenmorangie’s expansion plans have been criticized by Highland Council members, who accused the company of starting construction on an access road for construction vehicles without permission. A Council committee approved plans for the access road Tuesday, but blasted Glenmorangie for building a temporary road before receiving approval. The road was created to separate construction traffic for four new maturation warehouses from distillery staff and visitor traffic entering Glenmorangie off the A9 highway.
The Ross-Shire Journal reports Glenmorangie engineering manager Charles McEwan was equally critical of Council members, and maintained that the company has been working with local and regional leaders to comply with planning guidelines. The Journal’s report quotes McEwan as defending the company’s actions:
“Throughout the process we have worked with Highland Council to ensure that we have followed planning guidelines,” he said. “Within these guidelines it is permissible to construct a temporary road to allow construction traffic to access our warehouse construction site, ahead of full permission being granted for the secondary access road. This temporary road is necessary to divert all industrial traffic away from the main distillery and away from staff and visitor traffic. Planning permission was unanimously granted to build a permanent secondary access road within the distillery to address a number of access and safety issues at the site.”
McEwan indicated that Transport Scotland, which has authority over the A9, had no objections to the temporary road. Highland Council members still have their own objections, and plan to demand that the distillery improve its communications with them in the future.
November 20, 2013 – Analysts have been predicting ever since Beam Inc. became a standalone spirits company that Diageo would launch a takeover bid at some point, since the company’s Bourbon portfolio would mesh with Diageo’s one weak spot in the U.S. market. Diageo CEO Ivan Menezes threw cold water on those predictions Tuesday in London following his first investor meeting as CEO, saying that the company will not only put the brakes on its recent acquisition spree, but that it doesn’t need Beam at all.
Reuters reports Menezes unveiled plans for at least two new Bourbon brands to debut during 2014. Orphan Barrel will retail for between $75-125 USD per bottle when it hits the market early next year, while Blade & Bow will be launched later in the year. Menezes also cited the success of Bulleit Bourbon, which he estimated will sell around 600,000 cases this year, and could expand to a million cases. Menezes also plans to expand Bulleit distribution internationally. He described Diageo’s North American whiskey portfolio as strong, with around 23% of the market counting sales for Bulleit, Crown Royal, George Dickel, and 7 Crown whiskies.
However, Diageo has yet to address the upcoming supply problem for Bulleit. As WhiskyCast reported exclusively in September, Diageo will need to find a new source for Bulleit at the end of next March. Four Roses has supplied the new make spirit for Bulleit since Tom Bulleit launched the brand in 1987, but has exercised a six-month termination clause in its contract with Diageo. The company does not have a working distillery of its own in Kentucky, but sources within the company indicate that plans have been in the works to reopen the Stitzel-Weller distillery for the first time since 1993.
It should be noted that Menezes did not address where the two new Bourbons would come from. The company does not routinely comment on inventory levels, so it’s not clear whether any remaining Stitzel-Weller whiskey remains in the distillery’s warehouses. Diageo sources some of its whiskies from the MGP-I distillery in Lawrenceburg, Indiana — but those whiskies would not be able to carry the “Kentucky Straight Bourbon” designation. If Diageo chose to replace the Four Roses supply for Bulleit with whiskey from MGP-I, Bulleit’s labeling would eventually have to be changed for the same reason.
Menezes declined to comment on the delay in a ruling from the UK’s Office of Fair Trading on its United Spirits acquisition and the future of Whyte & Mackay. That ruling was originally expected in August, but has been delayed several times without explanation.
Editor’s note: WhiskyCast has asked Diageo spokesmen for comment on the source of the new Bourbons and the Bulleit supply situation. This story will be updated when we receive a response.
November 19, 2013 – As the Scotch Whisky Association fights the Scottish National Party’s attempts to impose minimum pricing standards for alcohol, the trade body’s outgoing chief executive believes foresight back in 2007 could have helped prevent the costly fight. In an interview to air on this weekend’s episode of WhiskyCast, Gavin Hewitt said a stronger push was needed as the SNP was developing its platform while in the minority at Holyrood.
The SWA is urging Scotland’s Court of Session to pass the ongoing lawsuit over minimum pricing on to the European Court of Justice, saying that it will appeal any adverse ruling to the Luxembourg-based court, and forwarding the case now will shave years off of a final ruling. The SNP-led Scottish Government opposes the move, and the next hearing is scheduled for November 28.
While restating the association’s firm stance against minimum pricing, Hewitt told WhiskyCast’s Mark Gillespie that more lobbying should have been done before the SNP took control of the Scottish Parliament. “Had we actually got a hold of them before they actually formulated policy, I think we would have saved ourselves both a lot of time and a lot of money,” Hewitt said.
“They only talked in their manifest of 2007 about, you know, worried about the price of alcohol. We told them that, you know, effectively anything which interfered other than through tax on the pricing of alcohol was likely to run into problems. I think if maybe we could have just seen a little more clearly, by the time we actually told them that minimum pricing was totally unacceptable to us and would remain so…they didn’t believe us.”
Hewitt maintains the Scottish plan to set a minimum price of 50p per unit of alcohol is “illegal, ineffective, and targets the entire population rather than the problem audience.” While the Court of Session agreed with government officials in a preliminary ruling earlier this year, the SWA has charged that minimum pricing violates European Union laws and could lead to other countries imposing retaliatory tariffs on Scotch Whisky.
The Scottish Parliament agreed on minimum pricing in 2012 as a way to target the nation’s binge drinking problem. Ireland’s government is considering a similar proposal, while Britain’s coalition government has shelved its own minimum pricing plan for now.
Hewitt will leave the SWA at the end of the year, and UK diplomat David Frost has been named as his successor. Frost has been the UK’s senior official on trade policy in his role as director for Europe, Trade, and International Affairs at the Department of Business, Innovation, and Skills.
November 18, 2013 – Wild Turkey is bringing back its highly-regarded 101-proof Rye whiskey after a year off the market because of lack of inventory, albeit in limited amounts. The move comes after bartenders led a Facebook movement demanding the return of Wild Turkey 101 Rye, which has become a popular base for many whiskey-based cocktails.
The return will be limited to 21 US markets at first, with one-liter bottles allocated primarily for on-premise sales at bars and restaurants. Wild Turkey pulled the 101-proof Rye off the market in late 2012 because the distillery didn’t have enough aged rye whiskey stocks to meet demand, and pointed customers to its 81-proof version released in the spring of 2012 instead. That version uses four and five-year-old rye whiskey, and was originally geared for an audience looking for lower-proof whiskies.
During a September interview with WhiskyCast’s Mark Gillespie, Russell said the distillery has been allocating rye whiskey supplies for some time to meet demand. “We didn’t know 6 or 7 years ago that Rye was going to make this big jump, and you know, we can’t make it overnight, so we’re still on allocation…we know right now through 2014,” Russell said.
In a news release announcing the return, Russell said the demand from bartenders forced them to change the strategy slightly to make more Wild Turkey 101 Rye available.
“To be completely frank, we didn’t realize bartenders had such a passion for it. Given the bartending community can be directly attributed for the current resurgence in Rye and classic cocktails, we had to listen and take the necessary steps with our available aged stock to bring 101 Rye back.”
Earlier this year, Wild Turkey released Forgiven, a limited-edition blending of the distillery’s Bourbon and Rye whiskeys created accidentally when workers at the distillery pumped straight rye whiskey intended for Wild Turkey 101 and 81 Rye whiskies into a tank filled with straight Bourbon. While the accident created a whiskey with a very interesting taste, it set Wild Turkey’s rye production plans even farther behind.
Links: Wild Turkey