Spring 2019|volume 12|Issue 3

    Raise Your Spirits

    Spirits – noun. An alcoholic beverage that is distilled rather than fermented; the liquid containing ethanol and water that is distilled from an alcoholic liquid or mash—often used in plural.

    Max Miller

    Max Miller

    This is the third of a four-part series on the personalities and skills that are a part of the Spirits Industry Ecosystem.

    When Raise Your Spirits was in its infancy, I remember regularly attending one of the largest hospitality conventions in Las Vegas. It is called the Nightclub & Bar Show. Everything from bar stools and napkin suppliers to all the top beer and spirits suppliers are there to show their wares to other industry partners. It was here that I met a group of folks from a company called Fortune Brands. If you Google this company now, you will see that Fortune Brands is now focused on home and security brands and not spirits. But, back then, they owned Foot Joy, Moen fixtures, and Jim Beam Brands. That’s right … golf attire, bathroom fixtures, and whiskey, all owned by one global conglomerate.

    As I continued to walk the floor of the convention hall, the pieces of the global puzzle started to come together as I spoke to many spirits companies and learned about the most popular brands we know today. It was my first glimpse into the global scale of the spirits industry. It turns out that the most recognized brands are made at distilleries around the world, and yet one of five major global conglomerates owns most of those distilleries. This quarter we explore the global suppliers of the spirits ecosystem, and the global economic currents on which our tastes are flowing. (Note: I will devote another column to the local smaller craft-spirits suppliers that are growing around the world.)

    What if I told you that Wild Turkey is Italian? Or that Jim Beam is Japanese? Or that Glenlivet is French? You might think that I am being facetious, but here is a quick view of who owns some of the most recognized spirits brands:

    • Wild Turkey Bourbon (Groupo Campari—Italy)

    • Grey Goose Vodka (Bacardi—Bermuda)

    • Jim Beam Bourbon (Suntory Holdings—Japan)

    • Smirnoff Vodka (Diageo—London)

    • Herradura Tequila (Brown-Forman—USA)

    • Glenlivet Scotch (Pernod Ricard—France)

    So why are Italian and Japanese companies interested in uniquely American spirits? Why is a Caribbean company that is known for rum interested in a French Vodka?

    The simple and fundamental truth is that the spirits industry is highly competitive. You may recall from last issue’s article that consumers’ tastes are expanding, the popularity of spirits is growing, and consumers are looking to learn more about spirits. One of the key elements of survival in the consumer-products world is giving consumers choice and/or variety. For example, many of us know Campari as the key element to a great Negroni cocktail. While the Negroni has gained global stature (as has sipping Campari on its own), Groupo Campari must offer other choices in order to reach more consumers. (Campari not only owns Wild Turkey, but also Skyy Vodka, Appleton Estates Rum, and Grand Marnier.) As we look across the range of popular brands above, we see that all the major players want to drive growth through expanding their portfolios of spirits.

    Another dimension of the quest for expansion by these suppliers is their need to manage fluctuations in global demand. As an example, for whiskey (especially bourbon), demand is skyrocketing. If a supplier has a whiskey in their portfolio, the demand for that whiskey can offset decreased demand for other spirits in their portfolio, or complement increases in demand for other products in their portfolio. In other words, spirits preferences around the world are always shifting. Companies that have diverse portfolios of spirits are better able to manage through, and benefit from, these shifts.

    Last, but certainly not least, suppliers that rely heavily upon aged spirits (e.g., Scotch, bourbon, Irish whiskey) face the internal complexity of predicting demand for their aged spirits before it is ready to be bottled and sold. For example, if a supplier wants to offer a 12-year-old Scotch, then the youngest product in that expression must be 12 years old. If they are distilling and aging their own Scotch, how does that company predict what demand for their whiskey will be in 12 years? This is the dilemma of demand planning for aged whiskey. Some suppliers are able to hedge against the risk of soft demand for their aged products by having unaged products, such as vodka and gin, in their portfolio that can be sold immediately to offset the revenue that is being deferred on aging product.

    As consumers are being provided with an ever-widening array of spirits offerings, the spirits- supplier ecosystem continues to consolidate and jostle for positioning on the global stage to stay competitive and stay relevant to us. The next time you sip on your Wild Turkey, the skilled distillers of Kentucky are certainly grateful, but someone from afar is also saying “Grazie!”

    Max Miller is the president and chief tasting officer of Raise Your Spirits (raiseyourspirits.net). A former corporate attorney turned entrepreneur and college professor, Max has a hearty thirst for knowledge and for fine spirits. He is well versed in the differentiation of the complex flavors found in craft and luxury spirits and he enjoys reading about the history of the brands, the science behind production, and the often whimsical anecdotes that are unique to each spirit. His vision is simple: Make every experience memorable, exceptional, and uniquely yours.

    On a separate note, Max has launched a new company called TheStillLife (stilllifetaste.com), which hosted its first tasting at the end of January. Please come out for future tastings and also spread the word to those who may want to join; memberships available via the website.