Posted on Jul 3, 2018

A Toast To Life, Liberty, And The Pursuit Of Actionable Insights
Actionable Insights. Served Neat.
Here’s what you need to know…

With America celebrating its 242nd birthday this week, many of our readers will be relaxing with family and friends, watching fireworks, reflecting on the blessings of living in this diverse, aspirational, and exceptional nation, and feeling gratitude to those who have and continue to serve in defense of freedom around the world. To celebrate, some may even raise a glass of America’s native spirit, bourbon.

Bourbon was declared as “a distinctive product of the United States” in a 1964 piece of legislation codifying industry production standards. However, recent inquiries into misleading claims raise questions as to whether that “small batch,” “hand-crafted” bourbon is actually what the label says it is. So, because Delve’s analysts are trained to distill information into actionable insights served neat, regardless of industry, here is a special holiday edition of TL;DR delving into the uncertainty surrounding this distinctly-American spirit.

  • What Distinguishes Bourbon From Other Whiskey? First things first: while all bourbon is whiskey, not all whiskey is bourbon. Among the federal qualifications required for whiskey to be considered bourbon include it being distilled from a grain mash consisting of at least 51 percent corn, aged in a new, charred oak container for at least two years, and made in the United States. Kentucky is often considered the “World’s Bourbon Capital,” producing and aging around 95 percent of the world’s supply and adding $8.5 billion to the state’s economy. Yet, any whiskey meeting the rules and produced in the U.S. qualifies, which is why craft distilleries have proliferated across the country from 100 to more than 1,400 over the past decade.
  • Why Is There Uncertainty Surrounding What Is In The Bottle? It is a common practice in the industry for brands to buy whiskey from large producers and sell it under their own name, a practice also known as sourcing. This whiskey can then be either blended or bottled by these brands and brought to market. The biggest sourcing company producing aged spirits is MGP Ingredients in Lawrenceburg, Indiana, which sells its spirits to both craft labels that are leaning on the supply to market their product while making their own stock, as well as big distilleries needing additional spirits to bridge demand. While the practice is common and some brands are comfortable disclosing they source from MGP, non-disclosure agreements prevent a full list of brands who source from MGP from saying so. While at first this seems misleading, brands that source from MGP and others select different mash bills (the proportion and types of grains used to make the whiskey) and blend it in different ways with varying ages to match their unique taste profile.
  • Is This Uncertainty Going To Lead To New Regulations? There is nothing wrong with sourcing whiskey, though as in politics, it may not be the crime, but the cover-up. A number of whiskey brands have been targeted by lawsuits alleging deceptive marketing, with the most well-known case being the 2015 settlement with Templeton Rye Whiskey for marketing itself as an Iowa product when it was actually bottling Canadian rye in Indiana. There are also other suits targeting large brands producing everything from bourbon to vodka over the brands’ claims that their spirits are “handcrafted” and “handmade.” In the U.S., the Alcohol and Tobacco Tax and Trade Bureau, or TTB, is responsible for alcohol product labelling. Yet unlike its counterpart in the regulation-friendly European Union, further regulation clarifying the product in the bottle seems unlikely for now. Therefore, drink what you like, and if you are looking for a true local spirit this holiday, choose a bottle with “Distilled In” on the back label.

Should you have a thirst for more holiday reading, might we suggest this experiment on whether whiskey tasted better in the 1800s, the latest developments in the “Pappygate” scandal involving stolen bourbon, and how tariffs may impact bourbon around the world. From all of us here at Delve, wishing you and your family a happy and safe Fourth of July!

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