A guide to the local booze battle with international ramifications
Jack Daniel’s and George Dickel, the two best known makers of Tennessee Whiskey, are locked in a heated clash over the definition of a seemingly settled matter: What, exactly, constitutes the Volunteer State’s signature hooch? As the Tennessee legislature debates the terms, TIME offers this guide to the booze battle that will have consequences for whiskey drinkers around the world.
So, what’s the fight all about?
Last year, Tennessee lawmakers passed a bill that for the first time codified the process of making Tennessee Whiskey. Among other mandates, it required that anything labeled as such be filtered through maple charcoal and aged in new charred oak barrels. Not coincidentally, that’s the way Jack Daniel’s — by far the biggest producer of Tennessee Whiskey — has been making its spirit since the 1870s.
Unsurprisingly, Brown-Forman, the Louisville-based company that produces Jack Daniel’s, was a fan of the law. Phil Lynch, a Brown-Forman spokesman, says the company pushed the legislature to define the whiskey-making process after seeing a number of new distilleries open across the state in the last few years.
U.K.-based Diageo, which owns George Dickel— the distant second best-selling Tennessee Whiskey — didn’t share Brown-Forman’s enthusiasm and it lobbied the legislature to repeal the state requirements. According to the Associated Press, State Rep. Bill Sanderson introduced the measure to change the law after prodding from Diageo.
But that doesn’t make sense. Isn’t Dickel produced similarly to Jack?
Yes, Dickel is every bit a Tennessee Whiskey as state law currently defines it.
Then why do they want the law overturned?
Depends whom you ask. Diageo says the regulations are unreasonable because they force distillers to conform to a single style, limiting creativity and protecting Jack Daniel’s hold on the market.
“We think that’s unfair to George Dickel and unfair to the distilling industry,” says Barry Becton, Diageo’s senior director of state government relations. “People have made Tennessee Whiskey a certain way but without strict standards for years. Jack Daniel’s just wanted to change the rules to prevent competition.”
Becton argues that the government shouldn’t be in the business of telling distillers how to make their whiskey and says his company, an international liquor behemoth, is waging the fight on behalf of smaller Tennessee distilleries.
That’s mighty generous of them. Is that the only reason?
Not quite. Brown-Forman has been doing very well in the last few years. Its third-quarter profits increased 12% year-over-year, largely due to Jack’s brand recognition and new offerings capitalizing on it like Tennessee Honey and Winter Jack. The Jack Daniel’s brand has seen 10% net sales growth over the last fiscal year as American whiskies have exploded globally and cut into other segments of the spirits market, including Scotch. Diageo, which owns Johnnie Walker Scotch but does not have a large portfolio of American whiskey, is keen to limit Jack’s growth.
“Diminishing Jack Daniel’s overseas strengthens Diageo’s position over there,” says Jeremy Edwards, the lead analyst for IBIS World and an expert in the spirit industry.
What does Jack Daniel’s think of Diageo’s move?
About what you’d expect. “They’re full of crap when they say they’re doing this for the craft distillers,” says Brown-Forman’s Lynch. “Either they have plans with George Dickel to use used barrels or they’re concerned about the explosive growth of American whiskey infringing upon their scotch whiskey around the world, which is making serious inroads.”
What about Tennessee’s growing number of micro-distillers?
They’re divided on the law. Some support the regulations on the grounds that they help maintain a uniform style and identifiable profile for Tennessee Whiskey.
“I want Tennessee to be synonymous with quality, like champagne with France,” says Billy Kaufman, president and CEO of Short Mountain Distillery, which makes moonshine and bourbon. “But that happens only if we all agree to certain ways of making whiskey. We should be building on that tradition.”
Kaufman argues that with so many new distilleries entering the marketplace, there’s the potential for quality to diminish and tarnish the state’s brand in the eyes of whiskey drinkers. The board of the Tennessee Distillers Guild, a group of 11 small distilleries headed by Kaufman, voted on Tuesday to support the current regulations.
But not every booze maker agrees. “It’s a matter of rights,” says Prichard’s Distillery owner Phil Prichard. “Anytime somebody creates a regulation, that takes away a certain amount of freedom.”
Unlike the big Tennessee producers, Prichard doesn’t use charcoal mellowing, and when the regulations were put in place last year, state legislators exempted Prichard’s from the new mandates and allowed him to continue making Tennessee Whiskey the way he’d been distilling it since 1997.
“I should be able to make it the way I believe it should be made,” Prichard says. “Controlling the quality of Tennessee Whiskey by legislation is a fool’s folly. The state legislature isn’t the final arbiter of quality whiskey. The marketplace is.”
What does this all mean for the regulations?
On Tuesday, the Tennessee House State Government Committee heard from distillers on both sides of the issue. Republican State Rep. Bill Sanderson introduced an amendment that would repeal those mandates. The committee adopted the changes with a voice vote but pushed a final vote to next week. The Senate committee is expected to take up the issue next week.
So is this really a fight about big government?
It’s less about politics and more about what people like to drink. The American whiskey market has exploded because it’s been able to experiment with different barrel combinations and various flavors like cinnamon, honey and maple. Stricter regulations about what constitutes Tennessee Whiskey could hamper that innovation.
If passed, the new law would likely define Tennessee Whiskey as any whiskey manufactured, distilled and stored in Tennessee and do away with regulations requiring new charred oak barrels and charcoal mellowing. That could make it easier for new distilleries to get their product to market, branded as Tennessee Whiskey, while allowing for greater experimentation. And those new micro-distilleries could eventually be smart acquisitions for a company like Diageo.
“Bourbon’s adaptability when compared with Scotch [which has its own rigid production laws] is what’s provided the edge in terms of innovation in the last few years and put it in the place to spearhead the growth of the category,” says Spiros Malandrakis, senior alcoholic drinks analyst for Euromonitor. “I think Diageo is very worried. They want a piece of the pie, and innovation plays a role in this. Diageo is probably interested in buying some local distilleries because Scotch has been sitting on its laurels.”