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Thursday
Sep122013

Drinking Diageo โ€“ Part IV: A Life in Letters

Remember when people would write each other letters? Like in old history books where we learned about important figures of the past through their correspondence with other famous names? This is definitely not one of those conversations, but I do appreciate that type of format as a means to educate, so I've decided to post a series of emails from earlier today between myself and Nathan Keeney, writer of the blog Scotch Noob, and a dedicated whisky enthusiast. Nathan shops frequently at K&L, but also overseas where he seeks to increase his exposure to the vast selection of malts unavailable stateside. I like hearing from Nathan because he's a very good writer, makes inquisitive points, and he always keeps me honest, but with a wink and a smile, rather than a sarcastic quip. Here's a snippet from our email conversation today concerning Diageo and NAS whiskies:

David -

You know whenever you mention the age vs quality issue on the blog, you're going to get a bunch of emails like this, right? ;)

I think the oft-discussed NAS issue comes down to this simple fact: When you remove the age statement (whether to cheapen the blend and satisfy your shareholders, or to make a blending masterpiece (like Beal's wilted flower perked up by water), you remove the last vestige of factual credibility that you have with your (generally jaded) informed customers. (The uninformed customers don't matter to the discussion, most of them probably didn't know JW Gold was 18 years old, or that Maker's is supposed to be 45% ABV))

My frustration with the "but I can make it better by blending in younger components" argument is that you can solve your credibility issue by providing MORE information on the label, but nobody does it. My guess is that if you tell people that your new blend contains 66% 18 year-old Clynelish, 25% 18 year-old Cameronbridge, 5% 4 year-old Caol Ila, and 4% other stuff, then informed customers will buy it in droves, especially if you tell them WHY you chose that blend. As you always say - tell a story and your customers will connect with the product... as long as they feel they can trust you.

However, if you just drop the age statement (especially in the current market climate), nobody is going to believe your claims that it's to improve the whisky's quality. Nobody. Until people can walk into a liquor store and slap down $5 for a few sample pours, the whole "quality vs age statement" debate isn't going to end. In lieu of first-hand experience, information is the key, but these bureaucrats and the small distillery execs who are trying to emulate them think that giving customers information is like giving them the key to your front door.

-Nathan

To which I replied:

Hi Nathan

I agree with you 100%. But what if they were transparent and told you that they did use younger whisky? Would you really approach that whisky with an open mind, even if it did indeed taste better? That's what I think the larger companies are afraid of and their jobs are on the line.

The more I work in this business, the more I realize that many customers care only about age statements and not about flavor. It’s really, really frustrating sometimes. I can see why some bigger companies just don’t want to risk it. When the majority of people use a number to frame their purchasing decisions, it come sometimes be the safer bet to not include one -- regardless of the goodwill it might generate.

-David

To which Nathan replied:

David,

I can't say whether I would be objectively open to a product that disclosed its proportion of younger whisky, but I can say this: I would rather buy a product that disclosed its proportions (young and old) than an equivalent product that simply *dropped* a previously-declared age statement. Macallan, for example: I might be willing to go for "Amber" (or whatever) if I knew what was in it. Without that knowledge, I have to fall back on my assumption that they're doing it to stretch stock. Without buying something, I know what a $50 12 year-old sherry-finished scotch should taste like (quality-wise). I don't know what "Amber" should taste like, or if it will be worth $50.

There are so many people that get caught up in this whisky frenzy and lose their sense of proportion. If Pappy had never been allocated, it probably never would have become so popular (or at least not to this degree).

People *should* take personal taste above anything, but I can count on two hands the number of bottles I've bought because I tasted it (somewhere) first and enjoyed it. The vast majority of (my) purchases come via recommendation. When your average customer doesn't have a trusted source for recommendations, and doesn't have a reliable and well-stocked tasting avenue, he must fall back on age, points, or word of mouth, none of which are particularly reliable. Take age statements out of that equation and what do you have?

-Nathan

To which I replied:

Hi Nathan,

You wrote:

Take age statements out of that equation and what do you have?

But what do you have with an age statement? You know that it’s old. But maybe it’s old and it doesn’t taste good and you just paid $150 because it was old (i.e. some newer Bourbon releases). What’s happening now is that some producers are using age statements against consumers – putting mediocre whiskey in a bottle with a "21" on it and adding $100 to the price.

 I think no matter what happens – points, reviews, age statements – you’re always going to fall back on a recommendation. That’s all you can do, as you say.

You also wrote:

However, if you just drop the age statement (especially in the current market climate), nobody is going to believe your claims that it's to improve the whisky's quality. Nobody.

I don’t think anyone is pretending anymore that they’re dropping the age statement to improve quality. We all know why it's happening now. The problem is that the insider crowd feels this is exploitative when it’s really just a business necessity – no one has the supply anymore to keep up with current demand. The only reason we have older whiskies in the first place is because supply was far greater than demand, so it all just sat there. Now that whisky’s popular again people are outraged. Why can’t you just keep making more whisky at the same age for the same price? Because people are buying it too quickly, that's why. Therefore, the whisky companies are trying to adapt and come up with a new solution that works for them, but some people are so hung up on their age statements that they won’t listen (and maybe sometimes it is bullshit). They want their old booze back at the old price and they feel like anything less than that is unacceptable. But those days are over. Long gone. And they’re not coming back. I think it’s important to taste each NAS whisky on its own merit now and see what it’s really bringing to the party. We can’t lump everything into the same pile, even if they reveal the blend components or not.

Back in the day they were dumping older stocks of Lagavulin into the standard 16, but they didn’t tell you that either.

-David

To which Nathan replied:

David,

I've made this argument before, so I apologize for the repetition. I think the situation we're in is a factor of the type of product we're talking about. If Coke puts out a new product that's made from cheap ingredients and tastes like ass, everyone can buy it for $1.99, discover it tastes like ass, and the product fails. Conversely, a whisky producer can put crap back-of-the-warehouse leftover "old" whisky in a bottle and sell it for a premium OR dump barely-legal young malt from a fifth-fill cask into the vatting of "Macallan Marigold" and sell it for 20% more than the 12 year-old to cover "branding costs". The first product will sell because it's rare (and probably most of it won't even be opened), and the second product will either be dumped over ice in Holiday Inn hotel bars, or sold to people who heard somewhere that Macallan is good. Whereas "Coke Cheap" will fail in a matter of weeks, enough people will be duped into buying "Macallan Marigold" that it will never fail, even if nobody becomes a repeat customer -- all because whisky is booming and most people can't taste before they buy. It's as if everyone had to buy a car without test-driving it and lacked the ability to return or resell it. Sure, you could read reviews, maybe find a friend who has one you can try, but in the end of a lot of crap cars are going to get sold, because people can't "vote with their wallets" until it's too late.

Corryvreckan convinced me that NAS whisky can be (really) good, even with very young stock in it, but only because I had an opportunity to try it first. I think everyone (including me) would love to taste each NAS on the market and determine for themselves whether the price justifies the quality... but nobody has that opportunity. You lay down your $50 (soon $75?) and you take what you get. Or if you're like me, you order a giant box of Master of Malt 30ml miniatures from the UK and pray they get through customs. ;)

-Nathan

To which I replied:

I think those are all fair and valid points. I think what I’m looking for is a certain open-mindedness regarding the situation rather than a knee-jerk opposition that searches for outrage when there may not be any needed. I don’t think there’s anything wrong with tasting something first. That’s what you should do. If you miss out on something by waiting, then so be it -- there's always something else! I don’t think anyone is asking consumers to take the risk on their product outright, but just to listen to what they have to say. If you don’t like it, then you don’t like it. The majority of whiskies I've tasted that are taking “back of the warehouse” crap whiskey and putting it into bottles are either from independent bottlers (who ironically do tell you exactly what’s in the bottle), or a handful of smaller craft producers who are trying to sell you their story over their quality. The guys who are being the most secretive and the most closed-door about their cepage are usually the guys bringing decent whisky to the table. At least from my tasting experience. That’s why I feel the need to share that.

We always suspect the quiet ones first, but it's usually the loudest people you have to watch out for. Like me. :)

To which Nathan replied:

Agreed. Closed-mindedness goes hand-in-hand with the trend-following and one-upsmanship endemic of some whisky consumers today. I guess I believe a lot of the under-handed producer behavior would be harder to get away with if tasting were more feasible. With most independent bottlers, most special releases, ALL limited or allocated releases, and most everything over the age of 21 (or so), it is downright impossible for a consumer to try before buying. Since the laws aren't likely to change, I think we're stuck with the situation we're in. The best most of us can hope for is to find someone who knows what they're talking about (like you), and learn to trust their recommendations. It's certainly worked out well for me, but not everyone has a K&L within driving distance. ;)

I'll let you get back to work.

Cheers!

-Nathan

I doubt this conversation will go down in the history books, but I thought there were some interesting things to think about in that correspondence -- both for myself, other customers, and the producers, too.

-David Driscoll

Thursday
Sep122013

Drinking Diageo โ€“ Part III: From Gold into Platinum

I think the first whisky that comes to mind when people think of Johnnie Walker is the Black Label, simply because it's so ubiquitous. Every liquor store has the Black Label, right? (according to Christopher Hitchens, every dictator too). It could be the Blue Label, however, that pops into your head – that lofty, top-shelf bottle that adorns the back bar of every steakhouse from here to Atlantic City. That's what some people immediately think of. Maybe you cut your whisky-drinking teeth on the Red Label, or maybe you even went the "pure malt" route and sought out the Walker Green. Maybe you're one of the few who went further than Black and Blue, and stepped up to the King George. Walker's Gold Label, however, – the color that seems to be forgotten here, yet represents the finest possible achievement in the Olympic games and most other sporting contests – is the crown jewel of Johnnie Walker's colored rainbow, in my opinion. Yet, personally, I only know one other whisky fan besides myself who loves the Johnnie Walker Gold. You never hear anyone talk about it. It's not something we focus on here at K&L because we're not a store that puts much effort into the blended market. We're not the lowest price nationally, which is usually what people look for with Walker products, but we have it in the back room just in case someone wants it. That's as far as we go.

Still, I'm totally obsessed with this whisky (as I wrote yesterday: industry people are often captivated by what it is they're not exposed to). I drink it regularly at home, but I don't push it on K&L customers because I know it's not what they're looking for. Most of our clientele are interested in single malts, single casks, and rare collectables – that type of thing. If I walk out with a bottle of Walker Gold and say, "Try this," they'll look at me like I'm crazy. "I can get that anywhere!" Therefore, I don't often bring it up. But, secretly, in the privacy of my own home, shrouded in camouflage, hiding underneath a blanket in a dark room, this is a bottle of whisky that I really look forward to enjoying most nights. I'm on my second bottle in the past three months because I simply dump this into a glass, hit the couch, and relax after a long day at work. The warm, rich, fruity, vanilla-laden Walker Gold tastes so fucking good. And there's a reason: it's loaded with 18 year old Clynelish – perhaps my favorite whisky in the vast Diageo canon of superstars. I love Clynelish whisky, so it makes sense that I like the Gold too.

Trends tend to go in waves, and the trends of the booze world are no different. First we like to lambaste boring old booze for being run-of-the-mill, stressing the need to improve quality and education, and bring back the serious craft mentality. But eventually we start to get annoyed with the pretension – the fact that people are constantly talking about how we need to appreciate everything to the finest and avoid the mass-produced in favor of the boutique. This cycle happens because there are always those guys (rarely gals) who take these trends to extremes – people who try so hard to epitomize a certain aptitude for the rules that they annoy everyone else around them. "I don't drink vodka." "I hate merlot." "I only drink single malts, not blends." That type of stuff. Eventually this type of behavior becomes so ridiculous that people start doing the opposite, simply not to be lumped in with this crowd – like drinking Pabst out of a can, or wine in a box, just to show that you're not as uptight as these other clowns. And a new trend starts – one focused on not taking things so seriously and having fun (I think that was called the 1980s, which was of course met with the backlash of the 1990s – where everything was so serious and melodramatic we got depressed).

In between the flux of cherry Jello shooters and pre-Prohibition potions, the cheap bottom-shelf blends and esoteric single casks, lies Johnnie Walker – whisky for people who care enough to like good whisky, but not necessarily enough to focus on where it comes from. Yes, there was a time when whisky wasn't taken all that seriously. Yes, there was a time when you didn't have the opportunity to drink the whisky of a single distillery. Yes, today we have more single malt options than ever before, with all kinds of creative cask enhancements and cutting-edge technology. But all of that comes with a price because the more seriously we begin to take our whisky, the more people we create who seek only to understand it, not necessarily enjoy it. The more seriously we begin to take our whisky, the more people we create who decide to follow popular culture's mindset that blends are somehow inferior, and choose not to waste their time with more than a century of tradition.

In reality, people who tell you they don't drink blends as a rule are like people who tell you they only read books and never watch TV. They feel like it's one or the other, like a line needs to be drawn in the sand that distinguishes them from this other type of creature. But you can read books and watch TV! Both are enjoyable. I do both almost every day! You can also drink both blends and single malts (I do both almost every day!). Johnnie Walker Gold is going out of commission this year (being replaced by another delicious blend that I recently got to try – the Platinum) and I couldn't be more upset about it. As my friend told me last year, "Walker Gold is what made me want to try Clynelish, it's what started my love affair with the distillery." What a pity. Unfortunately, 18 year old Clynelish is in high demand right now within the Johnnie Walker empire and there's simply not enough to go around. But then again, no Johnnie Walker expression is ever set in stone – Diageo is always looking to expand on what works and what the public responds to.

I know what you're thinking. It's probably the same thing that I was thinking when I first heard that Diageo was turning their Gold into Platinum: "It's probably an excuse for them to drop the 18 year age statement." But, lo and behold, the Platinum will also carry the 18 year old banner, so that's not the case. Unlike the Macallans of the world, Walker's golden glow will not be muted by a younger platinum sheen. I talked for a while with Steve Beal this morning, Diageo's malt master and brand ambassador, and we shared our views on the semantics of blending. I told him, "It's probably a good thing that Platinum keeps the age statement, simply because of the rather skeptical views out there concerning whisky right now." Beal's response was, "That's true, but we're talking about blended whisky here. While we're keeping a certain credibility, age statements can also handicap us because we're preventing ourselves from using our full arsenal of casks. It's like having a set of encyclopedias, but limiting yourself to only a few volumes."

Sure, when you're getting short on aged whisky – as every producer in the industry is right now – it's easy to start stressing the importance of flavor over maturity. But let me share this with you: when I had to blend our Fuenteseca tequila for K&L, I really wanted to keep all of the juice over 18 years old because I wanted that age statement on the bottle. I tried, and tried, and tried to find a combination of old casks that tasted like a top-quality tequila should – but I couldn't! I needed that four year old tequila, the one that was brimming with butterscotch and fat fruit, to make the Fuenteseca taste the way I wanted it to. The minute I added that younger spirit into the mix, everything came into balance. As Beal told me, "Sometimes adding a bit of young Caol Ila or grain whisky, like Cameronbridge, makes everything perk up, like a wilted flower does after getting a bit of water." While we'll never know for sure whether a producer is simply stating this fact out of truth or out of convenience, rest assured that it is indeed true. When you're blending, you're really limiting yourself by leaving out the younger options.

But, of course, by adding the younger whisky you lose the right to call your whisky "18 years old." So then you have to ask yourself: "What's more important? Age or flavor?" One thing that rather amuses me about the new age of NAS (non-age statement) whiskies is that it forces people to make up their own mind about a spirit – do you like it or not? "Well tell me how old it is!" No! You have to make up your own mind without the comfort of knowing the maturity. God forbid you come out in favor of a young whisky. Anything but that. You'll look like a stupid amateur! While we're going to see more age statements dropping within the whisky industry, as stocks continue to deplete faster than they can be replenished, we won't see it happen with the Platinum. We won't see much of a price increase either, as the cost should be about the same (obviously margins will differ from store to store).

By losing one 18 year old, $80-ish, delicious blended whisky, we're gaining another – perhaps more dominated by Dailuaine and Caol Ila, rather than the lovely Clynelish, but still rich and delicious, nonetheless. When I look at the field of 18 year old whiskies right now – Macallan 18 at $200, Yamazaki 18 at $155, Bunnahabhain 18 at $110 – I can't help but think how much more I enjoy the Walker Gold 18 year old for $75 than any of these other comparable single malts. I don't necessarily think the Gold is a better whisky, just one that I personally enjoy drinking more. That's if we're simply comparing age statements. Using the blend versus single malt argument to justify pricing doesn't work anymore either because even the grain whisky in an age statement blend has to comply. While it's easy to point out that the Walker Gold is loaded with 18 year old Cameronbridge grain whisky as well, my answer to that would be: "Find me a bottle of 18 year old Cameronbridge for less than $80."

While I told Steve that I was planning to buy a few bottles for the bunker, his reply was, "Yes, the Gold Label is going to disappear for a while and the let the Platinum take center stage, but I wouldn't be surprised if it comes out for one final bow later on down the line."

I hope so. It's a fine whisky for a reasonable price.

-David Driscoll

Wednesday
Sep112013

Drinking Diageo โ€“ Part II: Tanqueray Malacca

As a spirits retailer who is friendly with people in the spirits industry, I end up ringing up purchases for many of my vendor appointments once we're through meeting. The people who spend their day selling booze usually spend their nights drinking it, but they rarely come to K&L to buy back their own products. The K&L liquor shelf is where they let loose. It's where craft distillers can indulge in all the big market booze they've been hearing about and where corporate sales guys can grab that micro-gin they read about in the Chronicle. That's always the way it works, too -- everyone wants to buy the polar opposite of whatever it is they sell! "I thought you weren't interested in all that Diageo stuff?" I'll say. "Are you crazy?" they'll reply. "If it weren't for Lagavulin I'd never have wanted to be in the booze business!" Despite what fronts people like to put up about craft booze versus corporate booze, in the end people like to drink what tastes good.

Gin production is one of the easier spirits to launch into the spirits industry -- mainly because you can purchase grain neutral spirit, source your own botanicals, and redistil that into something unique. There's no aging involved, there's plenty of room for experimentation, and gin is something that people drink in volume (meaning you can sell enough to stay afloat while you work on other things). Much like with craft beer, there has been an explosion of new craft gins over the past five years and there's no end in sight. Yet, even with all of the nuance, the creativity, and the fun new flavors we've seen over the past year, there's no doubt in my mind what the best gin of 2013 is for me: the Tanqueray Malacca. Judging by what I've seen in the store with the purchasing habits of industry professionals, bartenders, brand ambassadors, and local distillers, I'm not alone in this summation. Everyone I've talked to within the booze business is crazy about that gin -- even the crafty people who swore off corporate booze forever.

Tanqueray gin has been around since 1830 when it was initially distilled by Charles Tanqueray in London's Bloomsbury District. The brand was continued on after his death by his son Charles, who operated it until the distillery was severely damaged during WWII. Today, Tanqueray is produced in Cameron Bridge, Scotland and is owned by Diageo, who have launched several spinoffs during their ownership -- the most recent being the relaunch of Malacca. Diageo was so far ahead of their time with Malacca that they had to pull the brand off the market in 2001, only a few years after creating it. Originally introduced as "a wetter, fruitier" version of Tanqueray, the public had no idea what to do with it. Serious bartenders at the time loved it, however, and lamented its loss by stashing cases away for their own private consumption. Eight years later, Old Tom gin and other rounder, sweeter versions of gin would come back into fashion, making it the perfect time to bring Malacca back for a second round. Yet, with more serious competition and high-quality alternatives on the market, does the Malacca stand up next to other options?

First off, the price is very competitive. With most "craft" gins clocking in at $30+, the Malacca will run you $32.99 at K&L, but that's for a liter-sized bottle. Were it a standard 750ml, you'd be looking at about $25 -- very reasonable. When I nose the Malacca straight in a glass, I pick up the botanicals, but also a decent amount of fruit. It smells like it's already been mixed into a cocktail, but it's never pungent or intense. There's nothing that strikes me as new-wave or radical about the Malacca. There's nothing pronounced or extreme in either the aromas or the flavors. It's just simply delicious, in the same way that Campari is just delicious. I know there's nothing special or artisanal about what they did to flavor the liquor, they didn't travel to remote regions of Africa for a special plant or desert flower, I just know that I love it and I want to drink more. The Malacca makes a killer Tom Collins, a luscious Martinez, and fruitier Negroni, and, perhaps more surprising of all, a floral and quite lovely gin and tonic. I've personally gone through more bottles of Malacca gin this year than any other spirit in my home bar. I've repurchased four separate times, which is not something I usually do with any spirit.

When I wrote yesterday that, rather than buying out the competition, Diageo was retooling and remodeling its already stellar portfolio of products, this is perhaps the best example of that process. Rather than create a new gin, or attempt to be "crafty," Diageo reached back into the past, pulled out its trump card and said, "Yeah, we already did that, but we'll do it again if you want." And, boy, do I want it. The Malacca is a prime example of what Diageo can offer spirits consumers -- a multi-nation release, available to drinkers around the world, not allocated or impossible to find, that tastes good, provides quality for the price, and offers serious spirits fans an exciting alternative to the regular old thing. It pretty much does what other craft gins do, it's just more available (saving customers from serious frustration) and offers a better price point.

We've still got plenty, but I definitely plan on squirrelling away a case before all is said and done.

-David Driscoll

Tuesday
Sep102013

Drinking Diageo: Part I

When people ask me for my take on the current state of the boutique spirits industry, I usually give them the Star Wars analogy. If the past few years have been like Star Wars, with rebel craft distilleries popping up all over the place, uniting in their front to take on the Diageo Death Star, we're definitely entering the Empire Strikes Back phase of this story -- the part where Diageo flexes its muscle, regroups, and builds a bigger, badder, smarter version of the same thing. It's no secret that the spirits giant (and other spirits giants, too, like Pernod-Ricard, Campari, etc.) have taken a hit in the sales department as consumers have begun drinking outside the corporate box. However, rather than simply co-opt the movement by buying it out, likely ending up with a bunch of extra weight it can't support, Diageo is simply retooling its lineup, using the size and scale of its production to offer value where the market is lacking it. Whereas two years ago I was using this blog as a pulpit to vent my frustrations about Diageo's price increases and margin-squeezing tactics, today I find myself in a completely different mindset. Today I'm more upset by exploitative pricing and overvalued quality than I am by marketplace adjustments. I've become both older and wiser and I understand a bit more of the story now that it has progressed farther along.

While we all groaned at the $5 price hikes on things like Caol Ila, Lagavulin, or Talisker, these increases were only a tremor compared to the price-shattering earthquake that was to follow. As other companies realized that they could no longer keep up with the demand for their products, prices began to skyrocket. Diageo had simply been one of the first to respond. Laphroaig 10 went from $29.99 to $42.99. The Yamazaki 12 year went from $29.99 to $49.99, while its older brother, the 18 year, went from $99.99 to $154.99. Macallan 18 went from $139.99 to $199.99. Like many of us here at K&L have come to understand: when you're the first person to raise your price on the market, you usually bring most of the anger along with it. As we raised our prices in response to the new costs, customers were livid. People began hoarding, buying cases against other possible increases. The fear was spreading, but it wasn't limited to just single malt whisky.

All of sudden, independent releases of rye whiskey started coming in at the $60 price point, while 10 year Bourbons like Michter's began releasing at $99.99 (and selling out in minutes!). Longtime consumers were incredulous, connoisseurs were incorrigible, and the venom was prolific among internet bloggers and message-boarders. What had happened to old-fashioned, easy-to-find, drinkable whiskey? The market was adjusting itself to the demands of new consumers and no one was quite sure how high the ceiling would go. Many predicted a bubble, but it never seemed to really burst, and prices started to settle into a new normal -- one that has not slowed sales down one bit (we're actually selling more whiskey today at these new prices than we were last year at the old ones). People began to search for a new hope, a company that could harness the force and provide consumers with a new, exciting, affordable, and dependable whiskey that would help deflate the inflated market and bring prices back to where they once were. Could the craft whiskey industry play Luke Skywalker?

After three years of Craft Wars I think consumers are finally understanding just how difficult it is to make good whiskey. Perhaps even more important, however, is how long it takes to make good whiskey. With producers looking to rush their products to the market and capitalize on the momentum, consumers were left with underwhelming, unpolished, and expensive versions that only slightly resembled the products they loved. While they wanted to (and still want to) support the movement, it was difficult for many to get on board because the whiskey was neither cheaper, nor better! That's when a number of people realized that maybe Diageo wasn't as terrible as they once believed. In fact, when the core of Diageo's products are compared to general market pricing today, they're downright affordable. To take it even further, I'd venture to say that Diageo might be in the unique position to offer relief to the inflated market many people blame them for creating!

Now I know what you're thinking -- why would I buy Don Julio tequila when I can buy ArteNOM or Siembra Azul for about the same price? Why would I buy Bulleit 10 year old when I can buy Weller 12 or Eagle Rare 10 for less? There are plenty of Diageo products out there that simply can't compete with certain artisinal producers. We know this. But that analogy can work both ways. Why buy Templeton Rye when you can get the same Bulleit or Dickel whiskey for more than $10 less per bottle? Why buy Hangar One when you can get Ketel One? While it's true that Diageo's size and scale often prevents it from creating the nuance found in small-production spirits, it's larger capacity also provides more affordable options for those who can't always afford to splurge. What other company could afford to sell Dickel #8 for $14.99 a bottle? What other company could keep Lagavulin 16 under $70, while other 15 year olds are clocking in well over $100?

When was the last time you even tasted through Diageo's portfolio? If it's been a while, you might want to revisit some of these selections. Ever since the rebels began chipping away at Diageo's empire, there's been an increased push for increased quality within the consortium. Do these changes offer enough to those consumers skeptical of recent NAS releases? Do they justify giving in to the dark side when perusing the liquor shelf, or could it be that the craft spirits industry is becoming the real Senator Palpatine? This week's theme on the blog will tackle these questions as I begin revisiting some of Diageo's highest profile brands and attempt to put them into context along side some of their craftier competitors. We may find a few surprises along the way. And we may find that, like Vader himself, many of Diageo's producers were once young Jedi knights themselves.

-David Driscoll

Monday
Sep092013

Tequila CC Part VI: An Interview with Carlos Camarena

Often times customers will peruse the tequila shelf at K&L and eye the various brands, with labels adorning bottles of various shapes and sizes, not knowing that numerous tequilas are often made at the same place – even when they're owned by different companies. Carlos Camarena's family has been distilling Tequila Tapatio since 1937 when his grandfather founded the brand, but it wasn't available in the U.S. until nearly seventy-five years later. Most American customers are much more familiar with his father's creation for the U.S. market, El Tesoro de Don Felipe. Our hardcore tequila enthusiasts are probably more excited about Tequila Ocho – the single estate-distilled, vintage-dated portfolio that helped bring terroir to the forefront of your tequila bottle, spearheaded by industry veteran Tomas Estes. In talking with Carlos today, I learned not only about the history behind some of tequila's most recognized brands, I learned about how important tradition is to one of Mexico's most traditional distillers. Here's what he had to say:

David: The first question I have for you, just quickly, is concerning the NOM system in Mexico – you produce both Tapatio Tequila under NOM 1139 and Tequila Ocho under NOM 1474, yet they're both made at your La Altaña distillery. How does that work?

Carlos: The NOM is like the official permit number that the Mexican government grants to a distillery or producer to create their own tequila, so it's kind of like the fingerprint – it's your identifcation on the market. Each number belongs to an official producer. We have two different NOM numbers because we run two different companies. One of those companies is Tequila Tapatio which produces Tapatio, El Tesoro de Don Felipe, and Excellia. Then we have another company which is Compania Tequileros Alambiques with a different NOM number with which we produce Ocho Tequila. Both of them are produced at the same distillery. When we acquired that company, however, the company was distilling at some place in the Lowlands. Then my brother was leasing a distillery here in the area and we began producing tequila there under 1474, but then we decided to just do everything in one place. So basically when Tapatio isn't using La Altaña distillery we lease it to this other company, which we also own, but with a different permit and NOM number. Originally they were actually two companies at two different distilleries.

David: Your Tapatio label says "desde 1937". Has La Altaña been in operation since 1937 or was that just when the brand was started?

Carlos: It's actually when my grandfather established the distillery and Tapatio is the brand he started with.

David: Has everything stayed the same since then? Have you been able to continue on in his tradition?

Carlos: We are a very traditional distillery. We just got electricity here for the first time about fifteen years ago and that was mainly for the lights. My grandfather started doing everything by hand and we remain one of the most, if the the most, traditional distilleries in Mexico. We still use the tajona for El Tesoro, everything is fermented only in wood, we don't use stainless steel, we use only natural fermentation, we've been using the same strain of yeast for the past 76 years. All of our distillation is done in small copper stills. It's a very hands-on distillery. We're not very big, but we don't want to be big. We want to do things the best we can, but in order to do that we have to use our hands and our hearts.

David: This is the first time that Tapatio has been sold in the U.S., is that correct? Now that Marko is bringing it in here in Northern California? It wasn't exported before right?

Carlos: That is correct. It was never exported to the U.S. until now. Small amounts of Tapatio were exported to Europe, Asia, and into Japan, but never to the U.S. It's very recently just launched. Why is that, you ask? The main reason is that, being a very small and traditional distillery, we couldn't keep up with production to supply the U.S. market – being the second largest tequila market in the world. For us it was impossible. We couldn't even keep up with our orders here in Mexico. We grew our facility over the years, but only using the same traditional techniques. Only recently we finally said, 'OK, we have enough to maybe supply a few states now.' We didn't want to fail with any follow up orders, so we didn't do it at all.

David: Robert Denton came down in the mid-80s to import tequila from you, but he decided to pass on Tapatio, something about the label being too rustic or traditional, and instead created El Tesoro with your father. Is that right?

Carlos: Yes, Robert Denton used to be the importer in the U.S. for Chinaco tequila from Tamaulipas, but then that distillery closed and they didn't have tequila to import. They came to Jalisco looking for tequila of a high quality and they found us because other tequila producers told them my father was the only one who could create something of that quality. So they came here and at the beginning they wanted us to supply tequila for the Chinaco brand and my father said, 'No way, we won't sell any tequila that's not under our own brand or name.' For them, Tapatio as a brand, it wasn't attractive. Tapatio has no meaning in the U.S. The people will mispronounce it and it has no translation so they didn't want to use that name. So my father said he could create a brand for the U.S. if they weren't happy with Tapatio, so they proposed El Tesoro de Don Felipe, thinking of him, but actually my father liked that name because that was his father's name – my grandfather. He was known as Don Felipe in those days in this area, while my father was known as the "Camarena Engineer." Therefore, my father said OK because it reminded him of the heritage of the distillery.

Robert Denton and his partner, Marilyn Smith, only found out recently that back then I was kind of their worst enemy. Why is that? Because when my father was first deciding to export I told him exactly what I said to you just a few minutes ago, 'Why do you want to supply the U.S. market when we can't even supply our own regional demand here in Mexico?' The U.S. is a huge market, I thought. My father told me, 'I have my reasons and I want to do it, and I will do it with or without your approval.' So I said, 'OK, of course, sir, you're the boss,' but at first I thought it was crazy. He told me that Denton's was a very small company, a two person company, so the volume they wanted was very small – only a few cases every now and then – so that's how we started with El Tesoro Don Felipe in 1988 as an export brand only.

David: And then it took off. Then eventually it was sold to Jim Beam, right?

Carlos: Yes, it started growing and then Robert Denton got a distribution contract with Jim Beam. Denton was the importer still, but Beam did all the distribution. Beam eventually decided to buy Denton's contract, so they became both the importer and the distributor. When Bob and my dad did the original contract, however, so they were co-owners, and Bob sold his ownership as well when he sold his contract. We then became partners with Jim Beam. They would eventually become the global distributor as well.

David: And it's still co-owned today?

Carlos: No, when Beam acquired Sauza they were focusing on that tequila brand more. At that time my father had already passed away, so I made the decision to tell Beam that I wasn't happy with their marketing. I said I wanted to finish out our contract with them and move on. However, since we were partners they said that we either had to sell our half of El Tesoro or buy them out of their share. To make a long story short, we set up a price to buy or sell, but after talking with my family we realized even if we owned the brand we wouldn't have any distribution. We didn't have a global trademark and there were already other brands using that name in China, etc, so we realized it couldn't be global. We therefore decided to sell Beam the brand, but with a long-term contract that said we are the sole producers.

David: How is El Tesoro different than Tapatio?

Carlos: For El Tesoro we use the tajona to crush the agave – by the way all of the agave at La Altaña are cooked in brick ovens, not cooked in stainless steel, and it's very slowly cooked. For El Tesoro we squeeze the juice of the agave using the tajona – which is the round stone pit with the stone wheel on top – we crush the agave and we end up with a mash of agave, which is wet with its own juice. We collect the liquid and the honey as well, but we also take the pulp and ferment them both together. After fermentation, we don't separate the pulp and fiber, but rather distill it with the agave. That's what gives El Tesoro it's unique flavor: a lot of agave because in the end it's cooked with the piña itself. With Tapatio we cook it exactly the same, but we use machinary to squeeze out just the juice and we distill only the juice. We add nothing to the juice, no enzymes, all natural. So we press the juice, ferment the juice, and distill only the juice.

David: Where do you source your agave from? Do you buy from other farmers or do you own your own land?

Carlos: All the tequila we have ever produced has come from our own agave fields. My grandfather actually started as an agave grower and his grandfather had a distillery, my family's original distillery that was built five generations back, that was abandoned and destroyed during the Mexican Revolution, and right after that, in this area, we had kind of a civil war due to religious purposes, the Cristero War, so with those two events the distillery my great-great-grandfather made from adobe was destroyed. But my grandfather kept on growing agave, selling to big brands in Tequila Valley, but as you know agave take seven to eight years to grow, so there are cycles. Some years there is a lot of agave and prices begin to drop and some years there is not enough agave and the prices go up. It was during one of these gluts that my grandfather was unable to sell his tequila to one of his contractors, and that is when he made the decision to build a distillery. He knew the agave wouldn't hold in the fields, it would spoil, so that's when he decided to follow in his grandfathers's footsteps and build La Altaña in 1937. From that point up until today we have been self-sufficient in agave.

David: Part of what we've been talking about this week on the blog with other producers is the idea of terroir with agave. How much of Tapatio's flavor do you think comes from the specific flavors of the agave itself?

Carlos: Actually I am happy to see that other tequila producers are beginning to discover terroir – to think about it and talk about it. For years I was telling the people at Beam that if I see a bottle of El Tesoro on the shelf, I can look at the lot number and the date it was bottled and I can tell you everything about the agave used to make it: from which specific field, the average weight, how much sugar the agave had, the acidity level, from which location, and why that imparted this particular flavor. For our 70th anniversary, six years ago, we released a seven year old tequila from a very special agave field – the best location that my family has ever produced from. That was distilled in the year 2000, so even thirteen years ago we already knew about terroir and its effect on tequila. I told Beam we could use this for the bottles, put the location and the harvesting date on the bottle. But thirteen years ago this was a crazy idea. People said, 'Come on, this isn't wine! There's no terroir with distilled spirits.'

That's why we started the second company and partnered with Tomas Estes. We created Ocho because we shared the same ideals and he said, 'Let's do it! Let's bring a tequila to the market that can express what terroir is for a distilled product.' Ocho is all about terroir. The only change on the production is the source of the agave. Where was it grown, the altitude, all of these things will impart different sugar levels and acidity into the agave and into the tequila. With Ocho now we already have blanco tequilas produced from eight different fields, so people can actually try them side by side. When people do this they are shocked and say, 'Man what a big difference!' and we say, 'Hey, that's what we were trying to express to you!' With the larger brands everything is about homogenizing the flavor and standardizing it so that the tequila always tastes the same over and over. With us, after more than 70 years of making tequila by hand, we knew that the tequila from different fields would always taste different, so we always had to blend to keep the flavor as consistent as possible. That's what was always done with Tapatio and El Tesoro – blends – to keep the same profile. The consumer wouldn't notice the difference unless they compared the lots side by side and we didn't want them to notice. Now it's becoming more common, the idea of terroir, but ten years, twelve years ago, it was a crazy idea. Terroir was only for wine. We were one of the pioneers in this case, I believe.

David: How important do you think vintages are to agave harvesting? Every wine has a vintage so that you know it will be different from year to year. How important is that to agave?

Carlos: It's even more complex with agave. Again, as every field will behave differently, the other part of the puzzle is that we can only harvest the same field every eight to ten years – as it usually takes about seven or eight years to grow an agave and it's common to practice crop rotation for two years, planting corn or beans or other organic materials to revitalize the soil, before planting agave again. So we're looking at ten years average. Our main idea was to use the first ten years to express the differences between each field, so that after that we could go back and finally distill a second tequila from each location. Then people can compare two tequilas coming from the same field, and how ten years of weather made a difference. The plant spent a decade opening its leaves to the sunlight and transferred that energy into its flavors.

The weather in each microclimate will never be the same over a ten year period – especially with global warming and climate change – so we don't expect the flavors to be the same for the second harvest either. We'll know that it's not just about the soil and the location of the field, but how those ten years of climate affected it. Right now it's still an assumption, but we're getting closer to ten years now. We launched our first single field in 2007. But it makes a difference for Tapatio and Tesoro as well. For each batch I might be harvesting from two or three fields. But for those products we need to keep it consistent, so we have to blend it rather than express those specific flavors. With Ocho, however, each label has the name of the ranch and you can even go online and search it on Google maps and see the location, with the altitude and soil type in each place. For us, it's very important.

David: You're also doing something new and exciting with the new high-proof Tapatio. First you were making tequila for wine drinkers, now you're catering to the cocktail crowd. I'm surprised no one did this sooner because this is long overdue.

Carlos: Let me tell you something – there are people in this area who refer to us as 'the crazy guys' because we always have some crazy thinking in mind and are trying to do new things. I used to say that we have two faces: one of them is always looking to the past, remaining traditional in what we do and how we do it, but the other is always looking to the future, saying 'what if we did this instead of that?' People say 'This is crazy because no one has ever done it!' but that doesn't mean it can't be done. It means that all you need are some crazy people who are willing to do it and see what happens. That's us.

With the Tapatio 110 proof, a distilled spirit is comprised only of ethanol, water, and flavor. The higher the proof, the more alcohol but also the more flavor. When you add more water you're diluting the alcohol, but you're also diluting the flavors. Cocktails are becoming more and more the trend, so now we need to give the cocktails something strong with flavor, not only strong with alcohol. We wanted it to be high in proof, but at the same time quite smooth in flavor – a tequila that can offer agave flavor to a cocktail, but one you can still sip and savor without burning your mouth. For most spirits, 110 proof is a challenge because the alcohol will dominate. What did we need to do to help mask the alcohol? Flavor. That helps to cover the burn.

When Marko Karakasevic was here a few years back and was tasting tequila off the still he said, 'Hey, this is so rich in flavor, why don't we bottle it this way?' I said, 'I don't think there's a market for that. People will think this is just a faster way to get drunk!' Later on I was convinced, however, because the cocktail movement is really asking for a tequila like this. The more we are lowering the proof, the more we are diluting flavor. Cocktails should help to enhance the agave flavor and that's what this is for. For years we have been distilling at this high proof and then adding water so that it's acceptable in the general market. We see it now as the purest expression of agave – in plain sight of distillers for years and years, yet no one was doing it.

David: Thanks for doing this, Carlos. I need to get down and visit your distillery soon.

Carlos: Yes, I think this is important for you to do. Sometimes I believe people think, 'This guy isn't really doing things traditionally. This is just marketing or some bullshit, I don't believe it's all fermented naturally and all that. This isn't true.' But when people come here and see what we're doing they leave completely convinced. I am excited for you to come here because I know that after you come you won't be drinking other tequilas. It will be your job to taste and compare other tequilas, but I know what will be at home in your private liquor cabinet!

David: Tapatio already is in my liquor cabinet! I'm drinking it now!

-David Driscoll