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The kings of bourbon

Popular and profitable, small batch bourbons have revolutionized America's whiskey. By Nick Passmore,
At 107 proof and with the predominant rye flavors leading the charge, Baker's is a supremely macho whiskey.
At 107 proof and with the predominant rye flavors leading the charge, Baker's is a supremely macho
/ Source: Forbes

"Nobody in their right mind would have decided, in 1953, to reinvent bourbon when God had already decided that it needed to die."

But according to Bill Samuels Jr., president of Loretto, Ky.-based bourbon distiller Maker's Mark, this is exactly what his father, Bill Sr., did do. And from a commercial point of view, it was a disaster, at least for the first 25 years.

But it's a good thing he stuck with it. If he hadn't, the whole small batch bourbon revolution of the last two decades wouldn't have happened, and such wonderful whiskies as Booker's, Knob Creek, Basil Hayden's, Woodford Reserve and the single barrel bottlings from Wild Turkey and Jack Daniels wouldn't be crowding the shelves of trendy bars and restaurants across America and the world.

How successful is this revolution? In 2003, sales of bourbon and Tennessee whiskey grew to 13.4 million nine-liter cases, up 2% from 2002, according to the Distilled Spirits Council of the United States. The strongest category is among high-end and super-premium brands, such as the small batch bourbons like Maker's Mark, growing 4.4% and 7.5%, respectively.

In terms of revenue, overall bourbon sales for 2003 were $1.3 billion. While sales and revenue for value bourbons were flat, high-end bourbons generated the most revenue, $767.5 million, and super premiums, which only did $62.7 million, saw the greatest sales growth, at 6.2% over 2002 sales.

In light of such numbers, it's almost hard to believe what rough shape the bourbon industry was back in the 1950s. When repeal of Prohibition came in 1933, people could start drinking again (legally), and the distillers could start making whiskey again (legally). But it takes a long time to make good whiskey. In the interim, imported Scotch, imported gin and imported Canadian whiskey all came flooding in, and imbibers soon developed a taste for them.

As its customer base deserted it, bourbon struggled. Instead of trying to refine it, distillers were forced push their whiskey out the door as quickly and as cheaply as possible. And pretty awful whiskey it was too. According to David Pickerell, master distiller at Maker's Mark, "The lowest, bottom-shelf stuff being made today is better than the best whiskey made in 1947."

So this was the situation in the early 1950s when Bill Samuels Sr., retired from the Navy and at loose ends, started experimenting with a new kind of whiskey. He had the background. His great-great-great grandfather T.W. Samuels opened a distillery in 1844. Having weathered Prohibition and the Depression, Bill Sr. sold the business in 1943 (T.W. Samuels is now owned by Bardstown, Ky.-based Heaven Hill Distilleries) when President Franklin D. Roosevelt converted the distilleries into making industrial alcohol for the war effort.

He wasn't an entrepreneur--business didn't interest him--but a hobbyist and a tinkerer who was fed up with bourbon's down-market image and rough taste. He had this idea of making a new kind of bourbon, bourbon that actually tasted good. He achieved this by eliminating the traditional rye and substituting the milder-tasting wheat--think of the difference between wheat and rye bread--and set to work.

According to Bill Jr., "It was the fall of 1959 that it went on the market, and it was a resounding flop, commercially. Dad sent out a press release, and it was not picked up by anybody, not even the trade press, even the ones in Kentucky. But Dad was tickled to death--he loved it, he was happy with the product."

Apparently what distinguished Maker's Mark from other whiskeys at the time was "if my grandfather and great-grandfather were to come back and take a sip of Maker's, they'd call it sissy whisky. It's too easy, it's too soft, it's not bland, but it's definitely a lot more refined than anything they ever did."

It didn't have those qualities that David Kinney, writer, editor and whiskey lover from North Carolina, ascribes to this most American of spirits: sin and penance. You can drink traditional whiskey, but you aren't supposed to actually enjoy it. It's meant to hurt.

But apparently the world wasn't ready for "sissy" whiskey, and business was slow. The Samuels struggled on, finally breaking even in 1979. And then The Wall Street Journal came to the rescue. In 1980, in their first front page article on a family-owned company, they highlighted Maker's Mark's against-the-trend practice of producing small quantities of handcrafted, premium-priced bourbon using traditional methods, and in the process they changed the world of American whiskey.

Sales took off, previously hard-to-find distributors were knocking at their door and competitors rushed to introduce their own small batch brands. More important, it was clear that consumers would be willing to pay more for a smoother bourbon. For years the company's advertising slogan was: "It tastes expensive...and is."

Today American whiskey is really two quite distinct businesses: the low-end, so-called "value" bourbons and the more expensive stuff. Unsurprisingly, the demographics are different too. The "new" whiskies are drunk by educated, affluent, urban consumers with discriminating tastes and the wherewithal to indulge them, while the traditional, cheaper brands are largely confined to the American South and drunk by older, less-educated consumers who, as Samuels puts it, "spend a lot of time going to funerals."

Samuels adds, "If you take all the bourbon brands that have been introduced after that [Wall Street Journal] article that have a retail price that's equal to or higher than MM, that equals the new, fine bourbon category. Those brands collectively are experiencing double-digit growth and have for each of the last 15 years. The volume is still small, 700,000 cases. It's an elite business, appealing to top demographic groups."

Yuppie whiskey, if you like.

But a big enough business to attract the interest of the largest players in the booze business. Today, Maker's Mark is owned by distillery giant Allied-Domecq, and Jim Beam Brands, a subsidiary of Fortune Brands, owns the small batch quartet of Baker's, Basil Hayden's, Booker's and Knob Creek. Brown-Forman produces Jack Daniels and Woodford Reserve. Privately held Heaven Hill makes Elijah Craig and Old Fitzgerald, and Pernod-Ricard does Wild Turkey.

Bill Samuels Sr. never set out to create a whiskey revolution. As Bill Jr. told me, his father "really didn't even care whether people were going to want to buy this stuff--there was an audience of one. When it started to be successful, he conjured up this concept that he anticipated the market, but uh-uh. Wrong. It was, for him, a hobby thing. It was about him being able to go to that great distillery in the sky with his head up. That's what it was all about."

Whatever his true intentions, Bill Sr., who died in 1989, must be smiling now in that celestial distillery as he looks down on the plethora of fine, small batch bourbons that were spawned by his tinkering 50 years ago. To see a review of my favorites, click here for the slide show.