Bourbon Empire (29 page)

Tuthilltown blew up with the speed of a Silicon Valley start-up, aided in large part because it could reap valuable “local” cred within New York City, one of the world’s biggest whiskey markets. In 2010, just four years after the distillery started, Tuthilltown sold its Hudson line of whiskies to William Grant & Sons, a 140-year-old Scottish company (under a temporary contract). Of course, the whiskey inside the bottle might have been beside the point. In 2014, a Nielsen rating survey revealed that Gen Xers and Millennials—important demographics—ranked “local” and “authentic” higher as qualities they valued in liquor than did baby boomers, who held the quaint notion that “taste” was most important.

American whiskey’s renewed popularity is forcing the industry to define what, exactly, is “authentic”: Kentucky’s big distilleries peg it to their state’s long history of distilling, while new craft outfits claim their entrepreneurial spirit and smallholder individualism best embody American business ideals. But both positions also contain inconsistences. The big companies in Kentucky bear zero resemblance to the industry’s mythic beginnings; for new craft producers, their lack of capital and experience threatens their progress. Herein lies a paradox: Success for many smallholders will entail a compromise. Take Tuthilltown; its success arguably wasn’t built with exceptional whiskey, but by cultivating the aura of smallholder independence that modern foodies crave. Then it partnered with a large corporation overseas.

Under the temporary buyout, however, the distillery still maintains control of production. Here is an oft-overlooked opportunity distillers can seize to flip the traditional thinking about buyouts. When Hiram Walker bought Maker’s, the brand was at its peak, on guard against its standards diminishing. The Hudson line, however, could benefit from Grant’s expertise and experience. If Tuthilltown leverages the larger company’s resources to better its whiskey and lower its price, it puts a silver lining around Bill Samuels’s comment that “they’re all being built to sell out.”
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The intense but sometimes undeserved buzz created by some new distilleries worries other small producers. In March 2014, the American Craft Distillers Association held its first convention, and many attendees fretted that overrated outfits—those that had mastered the art of marketing whiskey rather than making it—would cause fatigue among consumers. Despite a surging growth rate that had prompted many first-wave craft distilleries to expand, the mood at the convention was surprisingly somber, according to Wayne Curtis, who covered it for the
Atlantic.
“Some expressed anxiety, sotto voce, that many of the new spirits being released aren’t yet ready for prime time: the liquor is too rough-edged or funky, pitiably less valuable than its $40-a-bottle price tag promises,” he wrote. “Given the current fad for local, ‘authentic’ products, selling a consumer that first bottle isn’t too hard . . . but if the quality doesn’t measure up to the price, it’s not hard to imagine a nation of home bars each containing a single, largely untouched bottle of disappointing ‘craft spirit.’”

This in mind, the most promising new American distilleries are often the most obscure. They don’t usually have the buzzy closeness to media centers like New York, and spend their time perfecting their products before talking about them, a plan that’s admittedly problematic in a world where marketing matters. Their strategies follow that of New Columbia Distillers in Washington, D.C., which decided to forgo marketing an insta-whiskey and instead started socking away standard-size barrels of rye whiskey the company decided it wouldn’t sell for at least six years. In the meantime, New Columbia survives by making a very good gin called Green Hat, which uses botanicals like cardamom instead of the traditional juniper, and doesn’t need to be aged. The Great Lakes states and the Pacific Northwest—craft brewing strongholds—also have many new distilleries that have shown great promise but get very little buzz. Westland Distillery in Seattle creates single-malt whiskies, which, due to the delicate nature of that grain, peak with relatively little time in new wood and are rich and complex (they use standard barrels and cask at a low proof, a welcome return of an old method). The company caters to connoisseurs, eagerly providing geeky details about fermentation times and exactly how their barrels are toasted and charred. It’s this kind of
new distillery—devoted to process, willing to divulge geeky details, and focused on the long term—that will bring America’s whiskey renaissance to its full potential in the next decade or two.

Relatively obscure distilleries like New Columbia and Westland are the kind that most excited Bill Samuels Jr., the de facto patron saint of the craft movement, when I asked him his opinion of whiskey’s changing landscape. Bill receives calls almost every day from new distillers seeking his guidance. “I can tell within four or five minutes which ones are interested in the product, and which ones are interested in piggybacking on the trend, sell it off for five or six million dollars. There’s a
lot
of that,” he said. “The nose-holding part of our industry is coming from all of these start-ups which are more interested in a gimmicky approach,” he added. Maker’s Mark created its own success with a few tweaks on tradition—wheat instead of rye, rotating its barrels in the rackhouse—but Bill’s comments warn against mistaking true innovation for the mere appearance of innovation with questionable shortcuts or crass slogans like Cleveland Whiskey’s “Screw Tradition.”

In any case, the first wave of this century’s new American whiskey companies are coming of age in a radically different business environment than the one navigated by Maker’s Mark just three decades earlier. Today’s upstart companies operate in a world where the concept of time has become compressed—instantly, new businesses can find themselves multibillion-dollar entities existing only in a nebulous digital realm, whereas their predecessors were built of bricks and steel and took decades to grow. Distilleries like Tuthilltown match the trend perfectly—it was able to sell out to William Grant & Sons in roughly the same amount of time it took Maker’s Mark to make its first batch of whiskey. But even though everything moves faster now, the standards for truly superlative bourbon don’t budge. Bourbon became great by having the self-discipline to
delay
gratification, by sitting aboard boats on the Mississippi River waiting for the water level to change so it could meander down to New Orleans. This is one of the reasons we’ve returned to drinking it today—because it’s an antidote to modern chaos, and refuses to be rushed.

W
hen Vietnamese people open a bottle of liquor or soda, they expect to hear a popping sound—like a muted version of a champagne bottle opening. The noise tells them that the liquid is good, and listening for it is part of Vietnamese drinking culture. “The ‘pop’ is important,” a scientist in a white lab coat explains to me while holding a can of Jim Beam Cola, a product that the bourbon maker has developed for Asian markets.

I’m standing in what’s called the “Liquid Arts Studio,” the room where Jim Beam evaluates new products. It’s housed within Beam’s Global Innovation Center and sits on the campus of the main Jim Beam Distillery in Clermont, Kentucky, but is off-limits to most visitors. The fifty-seven-thousand-square-foot complex was built in 2012 for $30 million. Sleek and modern, it was designed by the same firm that has built similar research facilities for companies like Adidas, Office Depot, White Castle, and J.P. Morgan. Natural light streams through giant windows that frame the rural Kentucky landscape where, a couple of centuries earlier, thousands of farmer-distillers, sans white lab coats, plied their craft.

Two guides give me a tour, and they are joined along the way by various other scientists. MaryKay Bolles is Beam’s vice president of global research and development. Over the decades she has amassed a
wealth of knowledge about how to navigate major brands through a global marketplace. For a previous employer, she once worked on a campaign to develop a “taco-flavored” sports drink for Latin American markets.

My other guide is Adam Graber, Beam’s global innovation director. Adam is politely soft-spoken, in his early forties, and has a background keenly appropriate for managing the stable of scientists, psychologists, and other researchers responsible for charting bourbon’s path through the future. After drifting in and out of a few uncompleted PhD programs in fields such as South Asian languages, cultural anthropology, and soil science, he got an MBA and landed in the marketing world. At Beam, Adam tells me, his job is to “combine science plus consumer needs and trends to create the product story.”

Few people associate the stories of liquor brands, especially bourbon, with scientists in white lab coats. Pappy Van Winkle famously hung a sign over the door at the Stitzel-Weller distillery reading “No Chemists Allowed.” Here at Beam’s Global Innovation Center, however, multiple floors are crammed with equipment such as texture analyzers, spectrophotometers, nanophotometers, and ultrasound equipment. It begs the question: how does a cobalt-60 irradiator help create a product story?

Much of the equipment actually helps
protect
the product story, as Adam and MaryKay demonstrate. One lab contains counterfeit bottles of Jim Beam products that were seized in China. The liquor inside one bottle is dark as squid ink, another is full of what looks like tobacco juice. China today is a bit like America during the Gilded Age: the world’s factory, following its own set of rules. The technicians are testing the counterfeit liquid for the same kind of poisons America added to whiskey during its own Gilded Age, in case they need to alert foreign public health officials. As America today toils away in its role as global policeman, Beam has become the world’s bouncer.

Other parts of brand protection simply involve keeping costs down. Technicians study bottle structures and packaging materials designed to minimize breakage. A “pallet transport simulator” helps the company
determine how much rough handling can be endured during international voyages. A cork extractor evaluates how much pressure it requires to pull a cork, a task that’s harder in warmer temperatures. Like James Crow learned 150-odd years before and a few counties over, God is in the details, as are additional profits.

As for actual product development, that happens in a series of other rooms. In one I’m given a sample of Jacob’s Ghost, a white whiskey Beam offers to capitalize on the faux-moonshine fad (the irony of a scientist serving moonshine in the middle of a multimillion-dollar laboratory is lost on nobody in the room). Admittedly, a lot of new product development at Beam isn’t focused specifically on bourbon as much as it is on creating products that capitalize on the bourbon maker’s powerful brand name. Like Jim Beam Cola, many new products are tailored specifically for markets other than the United States. Heather Daines, a food scientist, walks me through a collection of sample cups full of base spirits and paper test strips containing aromas of lemongrass and lime—someday it might all become some sort of bourbony mojito concoction.

Along the walls are bottles of other flavored drinks such as Red Stag, a bourbon base mixed with cherry flavor that takes its cue from the flavored vodka market. It has become a big seller in the United States, although predictably not to whiskey geeks, who view such things as a kind of sacrilege. A member of the extended Beam family once told me that other family members also sniff at flavored whiskies (“sticky cup” bourbons, he called them, referring to whiskies mixed with syrups carrying the flavors of honey, cinnamon, cherry, and so on). They think it cheapens the name of a family known for straight bourbon, but their argument has been drowned out by the lucrative profits these products generate.
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The lineup of different products reflects Beam’s growth from a midsize bourbon maker in the 1950s into a large company with a vast portfolio. By 2014, Beam Global had acquired many onetime competitors:
Canadian Club, Laphroaig scotch, Courvoisier, Old Overholt, Old Grand-Dad, and Maker’s Mark. Outside of whiskey, it owns a stable of other brands, including tequilas, rums, vodkas, and even the line of Skinnygirl wines that was started by a reality TV star. When the Global Innovation Center opened, Beam CEO Matt Shattock announced that 25 percent of the company’s annual sales growth would come from new products.

But regardless of Beam’s other brands, bourbon is still at the core of the company’s mystique. Ninety-five percent of the world’s bourbon is made in Kentucky, and Beam alone is responsible for 50 percent of it. At the center of it all is the flagship Jim Beam Kentucky Straight Bourbon Whiskey, easily recognized by its signature white label.
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This is the brand that was developed in the 1930s and carried the company through its twentieth-century rise—it’s the one that was popular on military bases during the Cold War, positioning itself as a taste of home for soldiers and a symbol of America for foreigners. As with any icon with such primacy—and perhaps in conjunction with the United States’ own parallel international ascent—this famous brand is both loved and hated.

Jim Beam has become an icon by mastering the sort of nonfussy tone that’s the holy grail of mass marketing. It’s a relatively modern creation, but draws from the wellspring of frontier iconography that strikes just the right notes of rugged individualism, self-sufficiency, and practicality that people admire. This marketing triumph has turned it into the sort of affordable, mid-tier workhorse that’s beloved at tailgate parties and backyard barbecues. It’s not the best bourbon out there, but it’s far from being the worst.

Beam’s ubiquity also draws a predictable amount of snobby criticism, although most serious professional whiskey writers recognize its charms, even though few can remember the last time they bought a bottle of it for their home bar. It uses a wild yeast strain that gives it a foxy, spicy quality, and it’s smoother than most other four-year-old
bourbons that cost far more. It’s a little thin at only 80 proof, and its youth shows through with a few too many grain notes and not quite enough wood. Yes, you can do better, but you don’t always need to. Prestige aside, it’s the world’s best-selling bourbon brand, and has made Beam a juggernaut success.

The public face of Beam is Fred Noe, the great-grandson of James “Jim” Beam. He is in charge of more than a dozen whiskies that the company makes, including all the Jim Beam labels, Knob Creek, Baker’s, Booker’s, Basil Hayden’s, Old Crow, and Old Grand-Dad, among others. Admittedly, the recipes and production for these brands is well established, and Fred’s role as a master distiller is defined less by sweating over a mash tub than it is by serving as a brand spokesperson (master distiller positions at the biggest companies require comfort with posing for publicity photos: nose buried in a snifter of bourbon, eyes closed, an expression of serenity across the face). On the strictly business side of things, there’s a fair argument that the most influential person in the Beam empire is its biggest shareholder—a billionaire hedge fund manager named Bill Ackman resided in the wings when the company was bought by Suntory—but Fred is the public face who helps provide a sense of history and heritage for customers.

Beams are to bourbon what the Kennedys are to politics—they are
everywhere,
and even like to call themselves the “first family of bourbon,” not that the word bourbon needs any more dynastic connotations than it already has. Many Beams have even landed outside the confines of the company bearing their name, working for competitors. Charles Beam was a master distiller for Seagram in Baltimore, and Everett Beam made bourbon for a distillery in Pennsylvania after World War II. Go back far enough, and you’ll find Beam blood in competing brands such as Pappy Van Winkle, Four Roses, Elijah Craig, and Evan Williams. During Prohibition, Guy Beam ran a distillery in Canada, while Joseph and Harry Beam made liquor in Juárez, Mexico. Joseph was the one who helped found the Heaven Hill distillery, and two Beams, Parker and Craig, remain master distillers at the competing company today. Fred Noe’s son, Freddie Noe IV, currently works for
Beam, and appears set to assume his father’s position when he’s ready to retire, maintaining the company’s valuable connection to its legacy name.

The Beam dynasty’s patriarch—the man at the top of the family tree—is Johannes Jacob Boehm. Jacob was a German Mennonite farmer who was part of that early wave of settlers to Kentucky in the last part of the eighteenth century. Very little is known about him, and the company explains that he got his start selling a brand called “Old Jake Beam Sour Mash.” No such thing ever actually existed—the term “sour mash” wasn’t widely used and brand names weren’t common until decades after Jacob’s death. Nonetheless, the invention of the brand and the Americanization of the name are helpful ways for the company to place Jacob in a context that modern consumers can easily understand. Whatever kind of whiskey Jacob made was vastly different from the bourbon we know today.

James Beauregard Beam, born in 1864, was Jacob’s great-grandson. During his career, Jim was a respected part of that small group of distillers who earned an adequate living by making quality whiskey during the era when the wider industry was highly corrupt and unaccountable. The names within this coterie paled in comparison to big-wheel distillers like Joseph Greenhut, but after Progressive Era legislation like the 1906 Pure Food and Drug Act, the path was cleared for distillers like Beam and the other well-known names of today to build their reputations. Then, after Prohibition, when Congress rebuilt the shattered whiskey industry in a way that favored larger producers, Beam reentered the industry by pairing with that trio of Chicago financiers who knew nothing about making whiskey but understood that the heritage and knowledge of old names was an important asset. That’s when the James B. Beam Distilling Company, in the form we recognize it today, was born.

More than any of the ancients filling the Beam family tree, it is twentieth-century Beams like Booker Noe, Fred’s father, who are arguably the real reason why the Beam legacy today is so strong. The company’s highest-end bourbon is named after Booker, and it is bottled at cask strength straight from the barrel, meaning no water is added to lower a
high-octane kick that runs between 120 and 130 proof and will knock the wind out of you if drunk straight. The bourbon is brisk and complex, loaded on the front end with spices and leather that eventually give way to a dry lingering finish reminiscent of sweet tea.

Booker was stern but caring, and Fred’s voice cracks a little when he talks about his dad. As a youth, Fred was a hellraiser and a late bloomer who had failed out of numerous colleges, as he explains to me one evening over dinner. Booker finally convinced Fred to join the family business so he could begin the Sisyphean task of breaking in his wayward son. Fred is self-deprecating and acknowledges the role luck played in his incredible fortune, straying from the bootstrapping narrative commonly heard about most bourbon legends. He instead tells the story of a prodigal son given a second chance. Bourbon is Fred’s life now, and he is in a way a living embodiment of the industry.

But even though the sentiments that Fred expressed during that dinner were honest and real, that doesn’t mean they weren’t also part of the brand’s salesmanship. On the way back to my hotel after dinner, I passed through the Beam gift shop and picked up a copy of
Beam, Straight Up,
an autobiography that Fred wrote with the assistance of one of the company’s public relations representatives. Almost verbatim, for all the world to see, the book contained the same heartfelt details about Fred’s upbringing as I had learned them during our dinner. Here was a reminder that success in the whiskey industry is the prize for whoever most convincingly creates a mythology and sense of intimacy around ideas of heritage and authenticity. And in the bourbon business, victory goes to whoever tells the story best.

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Angus MacDonald is a man who once distilled a wedding cake. He mashed it up, fermented it, ran the gloopy mess through a still, and bottled what was essentially cake moonshine to serve at a friend’s wedding. On another occasion, he distilled a pile of Cap’n Crunch cereal. The verdicts on each spirit? For the wedding cake: “Acceptable,” Angus tells me in a tone suggesting that the wedding guests might not have
taken a charitable view of the effort. The Cap’n Crunch: “Unreal,” he whispers in a hushed manner suggesting that distilled junk food cereals could overtake the whiskey market if people would just give them a chance. “It’s all basically refined corn products anyway,” he explains.