Tuesday, March 18, 2014

Diageo Says It Supports "Return to Flexibility, Innovation and Entrepreneurship in American Whiskey"


Since I reproduced Brown-Forman's press release last Friday, verbatim and without (much) comment, I'll give Diageo the same courtesy and refrain from commenting until a later date.
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Claiming the integrity of Tennessee whiskey is “under attack” Brown-Forman’s Jack Daniel's asserts the only way for Tennessee whiskey to be a “premium product representing a world-class standard and utmost quality” is for it to be aged in new oak barrels.  Interestingly, according to the website of Brown-Forman owned Early Times whiskey, the brand is aged and barreled in “used oak barrels”.  Therefore, by their logic, Brown-Forman has deemed its own product inferior.

Despite being a competitor to Early Times, Diageo has rushed to Early Times’ defense. George Dickel Master Distiller John Lunn provided perspective on the issue. “At George Dickel we use new oak barrels, but that is because we choose to make whiskey that way. We don’t think there should be a law that says this is how we, or anyone else, have to make whiskey,” explained Lunn.

Diageo firmly believes a single company should not be able to unilaterally determine the definition of an entire category. At its base, it is anti-competitive and protectionist. Diageo supports a return to the flexibility that Tennessee whiskey distillers have had for the past 125 years, up until last year when Brown-Forman convinced the Tennessee legislature to define Tennessee whiskey as the Jack Daniel’s recipe. 

Guy L. Smith, IV, Executive Vice President, Diageo North America, and a former resident of Tennessee said, “Brown-Forman’s sleight of hand legislation they managed to get passed last year, which many refer to as simply ‘The Jack Daniel's recipe law,’ creates an anti-competitive situation that will stifle innovation from skilled Tennessean distillers, both large and small.”

Brown-Forman’s assertion that rejuvenated barrels produce a lower quality product is false and the billions of dollars that consumers spend across the world on scotch and other whiskeys that are commonly aged in rejuvenated barrels is a testament to that. The process of rejuvenating barrels is a technical and sophisticated practice and years of wood industry science have shown the maturation of whiskey in rejuvenated barrels produces the highest quality liquid. 

Continued Smith, “We feel that allowing distillers flexibility within a general set of guidelines helps create a thriving and competitive Tennessee whiskey industry. And that is in the best interest of all distillers, large and small, as well as the state of Tennessee.”

9 comments:

Justin said...

Semantics. But there is no doubt Diageo is up to something. Otherwise, why would they care?

danz said...

As usual, Diageo is just looking out for the little guy, like when they jack up their Scotch prices in the "war on flippers." Two thoughts: (1) maybe they "found" some reused barrel old whiskey they want to sell as Tennessee whiskey, or they want to introduce Johnnie Walker Red Tennessee Whiskey aged at Stitzel Weller; (2) now I sort of want to go buy some Jack Daniels.

Dg Blackburn said...

Red coats red label the British are coming to tell us what...
more a statement than a comment

Dan Shaffer said...

No one is stifling jack. If you want to make whiskey with rejuvenated barrels, do it--just don't call it Tennessee whiskey. Bait, switch, two points!

stilldaddy said...

Danz: "Johnnie Walker Red Tennessee Whiskey aged at Stitzel Weller." My family wondered why I suddenly burst out laughing. Nice one.

Diageo has to have something in mind, otherwise why all the argument over the ability to use the title? They can obviously make whiskey with used barrels, they just can't call it Tennessee Whiskey. So...what's the deal?

Jason said...

It's cost cutting, plain and simple. Diageo wants to lower their costs and improve margins. That said, if they can produce a quality product with used barrels, let them! The market will decide.

ESJ said...

Phrase of the day: "wood industry science."

Anonymous said...

Life's too short to give money to Diageo. Buy whiskey and anything else, frankly, from people who behave with honesty and integrity. That obviously leaves Diageo out. Just say "no". Too much good stuff out there.

Iakov Alenchik said...

I agree with Chuck's comments on this. It all boils down to business and marketing. Watering down the meaning of "Tennessee Whiskey" via a legislative lobbying action is a marketing tactic. In the bigger scheme of things it's part of a business strategy for the Asian market and elsewhere. It's the "great game" from history reincarnated in the business template - in this case booze. Why do you think we conjured up a war with Spain to wind up with the Philippines, Guam etc.? - these were naval coaling stations for sea routes to China - the big Asian/Chinese market that we were eager to get into and beat the Brits, Dutch, Spanish, Portuguese and Czarist Russians (not to mention the sugar industry in Cuba where the thing started with the USS Maine blowing up which provided a good excuse to declare war). It's business. Why did we abet strife in Colombia which lead to the creation of Panama and then the building of the canal? Naval strategy and merchant shipping efficiencies - business! I worked in Africa many moons ago, and back then the better hotel bars carried Jack and Johnnie Walker, so that could be an angle also. With today's market more global than before, all of this shouldn't come as a shock.