Liquor giants battle over marketing, types of barrels
In Tennessee, a battle is breaking out between two of the world's largest liquor companies over whiskey barrels. And more importantly, what can be called Tennessee whiskey.
At stake is the lucrative and fast-growing market for one of the state's signature products.
Last year, the state legislature created a legal designation of Tennessee whiskey with specific guidelines for when a product can be marketed and sold using that description. Under the state law passed in 2013, the whiskey must be made from fermented mash of at least 51 percent corn, aged in new oak barrels, charcoal mellowed and stored in Tennessee.
Other types of whiskey can be produced in the state, but can't be marketed as Tennessee whiskey. The legislation was promoted last year by Jack Daniel Distillery as a way to protect the whiskey giant's growing market share.
Fast forward to this year's legislative session, and state lawmakers are attempting to tweak the law. The proposed legislation, House Bill 2330 and Senate Bill 2441, would make one key change to the law. It would allow distillers to store the whiskey in reused barrels.
It may not sound like a big change, but for whiskey distillers like Jeff Arnett, Jack Daniel's master distiller, using fresh oak barrels, charred on the inside, is essential to making high-quality whiskey.
"What we have here is nothing more than an effort to allow manufacturers to deviate from that standard, produce a product that's inferior to bourbon and label it Tennessee whiskey — while undermining the process we've worked for nearly 150 years to protect," he said.
In pushing to codify Tennessee whiskey into law last year, Jack Daniel said it was following a precedent set by landmark beverages across the globe. Scotch whisky makers in Scotland and Champagne producers in France have committees that strictly regulate the use of those names. In Kentucky, legislation defines what can be sold as Kentucky bourbon.
Arnett said London-based Diageo, which owns Tennessee-based George Dickel, is behind the push to change the law.
"We support efforts to protect the best interest of all large and small Tennessee whiskey distillers, said Guy L. Smith IV, an executive vice president with Diageo and a former Knoxville resident.
Diageo and Jack Daniel's parent company, Louisville, Ky.-based Brown Forman, are neck-and-neck for overall whiskey market share in North America. Both have about a quarter of the market share in North America.
Opponents of the original whiskey legislation say the original law too closely resembles Jack Daniel's recipe, and may force up-and-coming microdistillers to compete with one of the industry's biggest names with a nearly identical product.
"This would be similar to Anheuser-Busch saying, 'You have to use this recipe to call yourselves an American beer,' " said state Rep. Ryan Haynes, R-Knoxville, chairman of the House State Government Committee. "I don't think it's right that we put something in our law that is basically protectionism."
Haynes voted for the initial legislation last year, but now says he should have been more vocal about his concerns.
Other Tennessee distillers are not as strongly opposed to rejuvenated barrels. Some feel the original measure serves only to stifle creativity in a burgeoning market of craft distilleries.
"If I wanted my whiskey to taste like Jack Daniel's, I'd make it like Jack Daniel's," said Phil Prichard, owner and master distiller of Prichard's Distillery in Kelso, Tenn.
Prichard dislikes the charcoal mellowing process, and testified against the 2013 bill. He got his distillery exempted from the law passed in 2013.
"The only corn we grew in Tennessee in the 18th century was white corn, and we only used pot stills," said Prichard. "If I had the power and influence Jack has in this state, and I told everyone that Tennessee whiskey was made with white corn in pot stills, how would distillers feel about that?"