Consumers Fascinated with “Sleepy” Distillery Industry

In 2003, only three Tennessee counties allowed the production of distilled spirits, and within those three counties of Moore, Coffee, and Lincoln, there were only three distilleries: Jack Daniel’s Tennessee Whiskey, George Dickel Whisky, and Prichards’ Rum. Then, in 2009, the state passed a new law allowing for the legal production of distilled spirits in any county in which both retail package and by-the-drink sales were allowed. Then in May, the law underwent further revision with the successful passage of the “whiskey bill” allowing distilleries in any city in which package and drink sales are allowed, as well as in the unincorporated areas in the county in which the city exists. This opened up production options for about 75 of Tennessee’s 95 counties.

What has this meant to Jack Daniels—the oldest registered distillery in the U.S.? “It was a sleepy industry over the last ten years, now it is a new hot industry,” said Master Distiller Jeff Arnett (at right). “Everyone wants to open a new microdistillery or microbrewery now it seems.”

But, all in all, it has had positive effects on Jack Daniel’s, as it has increased consumer interest in the making of distilled beverages. “There is a fascination with distilleries. We had record tours in the last 12 months with some of the largest and most frequent tour groups that I’ve ever seen,” Arnett said. Normally the distillery tours about 200,000 guests in a year, but it is now up to 230,000. “It’s the highest we’ve seen in the modern era.” Arnett said the tours help increase not only sales but also industry transparency. “The more open and honest you can be, the more trust people have in your product.”

As an industry veteran, Arnett does provide a bit of caution to the new distillers. “There are a lot of people who are having to learn the ins and outs of being audited for food safety,” he said. Jack Daniels is ISO certified, which has become a universally accepted seal of quality for the distilling industry. Even countries that require other standards will generally accept ISO certification.” A lot of countries into which we sell Jack Daniels accept the ISO certificate as verification of product safety,” he said, adding, “A lot of ISO is saying what you do and doing what you say.”

In the year and a half since QA published the Cover Profile on Jack Daniels Old No. 7 (January/February 2012), key improvements at the distillery have been in technology, Arnett said. “We have taken advantage of technology that has been around for a while, using it in new ways.” Previously it measured all sugars together at the start and end of fermentation. Now it uses HPLC analysis to separate and measure the individual components of the sugars, using that to make slight process changes to increase quality and efficiency. Through this, the distillery can distinguish the types of sugars that the yeast can’t access, and enables more efficiency in getting the most out of the grains being processed, he said.

Although Jack Daniels is still trying to sort through what FSMA means for the distilling industry, Arnett expects that there will be a requirement for increased sampling of incoming grains and the outgoing byproducts that are sold as animal feed. The local cattle farmers are very reliant on the feed that Jack Daniels provides, he said, but “we may have to do more sampling and to a greater degree or frequency because it is being fed to animals intended to be eaten by humans.” But the distillery is not waiting to be told to do so, instead, Arnett said, “We have stepped up our grain sampling on our own, in both frequency and type.”

At the time of the profile, Jack Daniels had also recently introduced its Tennessee Honey brand, which, Arnett said was highly successful in that it was well received without “cannibalization” of the company’s other products. Another more recent addition is Jack Daniel’s Sinatra Select. Frank Sinatra was one of Jack Daniel’s first unpaid celebrity ambassadors, and the product is the most expensive bottle the company has produced … “and it’s moving,” Arnett said. Although most who bought the 90-proof whiskey have kept it sealed to increase in value, “those who did open it, said it was worth it,” he said.

The Future.
Despite the new fascination with distilling, increased microdistilleries, and changing state and federal regulations, Arnett said, “We are still a fairly sleepy industry. We’ve been around a long time. We’ve grown over the years, but we still live by Jack Daniel’s decree: ‘Every day you make it, make it the best you can.’ Some things about Jack Daniel’s are sacred cows and cannot be changed, but if we can make it a better product, we do right by ourselves to do that.”