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Tennessee Whiskey wars! Diageo attacks Brown-Forman ‘sleight of hand’

18-Mar-2014
Last updated the 18-Mar-2014 at 12:03 GMT

Photo: Graeme Maclean
Photo: Graeme Maclean

Diageo has hit back at Brown-Forman in an acrimonious dispute over the designation of ‘Tennessee Whiskey’ claiming its ‘Jack Daniel’s recipe law’ stifles innovation.

Last Friday Brown-Forman claimed Diageo’s support for changes to the ‘Tennessee Whiskey’ was an attempt to weaken the category and will jeopardize product quality.

In May 2013 Tennessee governor Bill Haslam signed a designation that, in short, defined Tennessee whiskey as a fermented mash of corn (at least 51%) aged in new oak barrels, filtered through charcoal prior to aging then stored in state.

Any manufacturer who violates these rules faces suspension or revocation of their license for a year.

But a statement last Friday saw Brown-Forman denounce legislation pending in the Tennessee General Assembly allowing for the re-use of barrels.

Legislators are keen to relax the rules again to allow craft distillers scope to experiment, given supply shortages of new wooden barrels and strong growth for Tennessee whiskey.

2013 a 'banner year' for Tennessee Whiskey exports

DISCUS called 2013 a “banner year” for US whiskey exports – Tennessee Whiskey and Bourbon sales broke the $1bn dollar mark for the first time with sales of $1.005bn (5% growth).

The picture was brighter in the US itself – 6.8% volume growth pushed revenues up 10.2% in 2013 to $2.4bn.

Jack Daniel’s is Brown-Forman’s flag brand, and master distiller Jeff Arnett said: “What we have here is nothing more than an effort to allow manufacturers to deviate from that [2013 legal] standard, produce a product that’s inferior to bourbon and label it ‘Tennessee Whiskey’.”

Arnett added that this result would undermine a process Brown-Forman spent 150 years perfecting: Jack Daniel’s is the top-selling US whiskey brand and corners 90% of sales in its home state.

“This is not about the interests of micro distillers in our state. We support micro distillers. This is about Diageo – a large foreign company with more interest in Scotch and Bourbon, trying to weaken what Tennessee Whiskey is and we shouldn’t allow it,” Arnett said.

'Jack Daniel's recipe law' stifles innovation - Diageo

But Diageo has significant political support in its opposition to last year’s legislation – bill HB 1084 signed by Haslam on May 13 2013 – which sets out the rules governing the designation.

And far from backing down, the ‘large foreign company’ (we’re a little surprised that a firm the size of Brown-Forman can say that with a straight face) is fighting back.

Guy Smith, executive VP of Diageo North America, said: “Brown-Forman’s sleight of hand legislation they managed to get passed last year, which may refer to as simply ‘The Jack Daniel’s recipe law’, creates an anti-competitive situation that will stifle innovation from skilled Tennessean distillers…”

Diageo does use new barrels to age its George Dickel Tennessee Whiskey, and argues that removing the law would mark a return to the situation extant for 125 years until 2013; the alcoholic drinks giant also contests Brown-Forman’s assertion that ‘rejuvenated barrels’ result in a lower quality product, pointing to scotch and other whiskeys.

Diageo also points to Brown-Forman whiskey Early Times – aged in ‘used oak barrels’.

“By its own logic, Brown-Forman has deemed its own product inferior,” Diageo said. However, it fails to point out that Early Times is a mainstream (i.e. budget) offering and is described as a ‘Kentucky Whiskey’.

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