IS IT WHISKEY?

[Ralph at Tuthilltown]

BEAM BRANDS has applied for three COLA approvals for: PM DELUXE, EIGHT STAR and SUNNY BROOK whiskeys. The use of the word "whiskey" is questionable. The CFR allows for the use of "neutral spirits" in "blended whiskey", without specifying "grain neutral spirits". But the definition of "whiskey" specifies it is the distilled spirit of a fermented mash of grain. The use of cane neutral spirits derived from cane and molasses from the Virgin Islands under the COVER OVER program that has resulted in a very sweet deal for rum makers who move their operations to the Virgin Islands (read more about this issue in the thread about DIAGEO and CHARLES RANGEL). And the savings has not gone unnoticed by the big whiskey makers. BEAM is taking advantage of the ambiguity in the CFR by the use of the phrase "neutral spirits" which is not specific to grain.

My question is, do the micro distillers see this as a subversion of the Standards of Identity? You who are grinding grains and making fine whiskeys, you whose feet have been held to the COLA fire more than once over the minutia of the regulations, you who will have to compete with BEAM's cheaply produced, so-called "whiskey, a blend"; how do you feel about this development. By the way, BEAM is not the only major manufacturer who is aggressively pursuing this line of business.

The real point: If the COLA is approved, BEAM will have redefined whiskey as not specific to grains.

Ralph

[Joe Pawelski]

The timing on this is ironic- I spent a few hours in the liquor store reading labels this past weekend while my car was being worked and was not pleased with what I found.

1)There are a number of so called "craft" or "artisan" distilled liquors that I would assume must (due to price and spirit type) begin with GNS yet make no mention of it on the label.

2)Several labels say in bold letters "MADE IN _(someplace local)___" and then on the back say produced and bottled by some major distiller someplace entirely different.

Obviously those of us hand making spirits from our own quality mashes the traditional way are going to have a heck of a time competing with a company that starts with GNS and gets away with making the same label claims as the craft distiller.

What is the solution?

1) Label law- there might be enough resources via the forum to dispute the recent cola submissions but with Diageo and Rangel behind it... its hard to say if any effort on our part would be much more than a tiny speed bump. (Just a guess though- please someone say there is a way- or that one of you is a high powered attorney with lots of friends on capital hill)

2) Marketing- Sam Adams might be a good case study. They had the wildly successful "better beer" campaign and won out against giants like Bud and Coors paving the way for the craft brew Gold rush. Perhaps we can join together via ADI or similar to start some sort of "Better Spirit" campaign. Quite simply it could be a standard sticker, medallion, or some sort of logo that would indicate a Genuine Craft spirit. In order to have it on your label your distillery would have to go through a basic certification process and be approved by an elected board or something of that nature.

Has anyone on this forum been in a label dispute or aided in the determination of TTB labeling requirements?

[Ralph at Tuthilltown]

This would be a good topic to be raised by the CRAFT DISTILLERS COUNCIL at DISCUS. See what that yields, and what DISCUS position on this might be.

To Joe's comment above, the definition of a MICRO SPIRITS PRODUCER and the use of those terms "artisan" or "craft" is a topic which must be addressed by your Federal Legislators as part of the effort to distinguish between the big alcohol and small alcohol producers as it relates to the payment of a discounted Excise Tax by small producers. This topic is well covered in another thread so I won't go into it, but your comments reiterate the need for a Federally defined term that makes the distinction.

It is possible to protest the applications by BEAM. We have done so. The TTB ID numbers of the applications in question are:

EIGHT STAR - 10208001000309

SUNNY BROOK - 10202001000022

PM DELUXE - 10202001000039

The following is the text of our comments to the TTB ALFD, you are welcome to borrow from them if you wish to file a protest against these label applications:

To Whom It May Concern At the Alcohol Formula and Labeling Division:

I have just been made aware of BEAM’s three (3) COLA applications for so-called “whiskey” made with cane neutral spirits. The application numbers for these COLA applications are:

EIGHT STAR - 10208001000309

SUNNY BROOK - 10202001000022

PM DELUXE - 10202001000039

I present my comments for consideration when reviewing these applications:

The CFR defines “whiskey” as “the distilled spirit of a fermented mash of grain”.

It allows for “blended whiskey” or “whiskey, a blend” to be combined with “neutral spirits” without specifying “grain neutral spirits” which is the traditional material used. This is an ambiguity in the composition of the law, the absence of the qualifier “grain neutral spirits”.

The brands which are being introduced by BEAM are blended, whiskey with CANE neutral spirits, an eventuality of the deal between Diageo and the VI which was unforeseen by the Fed when the regulation was written; and the presumption all these years, as the result of common practice, was that the reference is to GRAIN neutral spirits, thereby in keeping with the definition of “whiskey” which is a grain spirit.

The exploitation of this ambiguity by the big spirits producers was made possible by the recent Diageo/VI deal and the neglect of the Ways and Means Committee to bring HR 2122 to debate (which bill would have placed a 10% cap on the amount of subsidies Territories could offer corporations such as Diageo as enticements to locate in those territories). But that is a political problem. The availability of cheap cane neutral spirits will, if its use is permitted in the blending of whiskey, undermine American whiskey reputation worldwide.

Approval of the BEAM applications for COLA approval will undermine the nature and character of what we know as traditional American Whiskey; it is a GRAIN based spirit.

Approval of the COLA applications for these non-whiskey products and permitting the use of the term “whiskey” for a product containing cane based spirits would cause confusion among consumers and effectively negate the definition of “whiskey” as a grain based spirit. The consumer believes whiskey to be grain based.

It would also call into question the credibility of all American whiskeys on the international level at a time when the export of small batch American whiskey is growing and the economy is in need of increased export.

Please take these into consideration. What the applications describe is NOT American Whiskey.

Ralph Erenzo, Founder/Partner

Tuthilltown Spirits

Gardiner, NY

DSP NY 15001

[/b]

Thanks Collin. The email for the ALFD is: alfd@ttb.treas.gov

[Collin]

Ralph, can you post the address/e-mail that you sent it to? I will send one on behalf of Harvest Spirits. Though we are not grain distillers, we still understand what abuses like this could lead too...

[delaware_phoenix]

About to send my own email on this as well. You may want to also cc: IndustryAnalyst.spirits@ttb.gov (not that they've ever responded to me, but supposedly that's what they're there for).

I do believe our Discus Craft Distiller members should be up in arms over this.

And I find it frustrating (at a minimum) that if you want to make a white dog whiskey using a rye or wheat or bourbon whiskey mash bill, you have to get a formula. There goes two months of your life. (I may be proven wrong on the time, but we'll see.)

Thanks for bringing this to our attention Ralph.

Here's my email

To Whom It May Concern At the Alcohol Formula and Labeling Division:

I have just been made aware of BEAM’s three (3) COLA applications for so-called “whiskey” made with cane neutral spirits. The application numbers for these COLA applications are:

EIGHT STAR - 10208001000309

SUNNY BROOK - 10202001000022

PM DELUXE - 10202001000039

I present my comments for consideration when reviewing these applications:

The CFR defines “whiskey” as “the distilled spirit of a fermented mash of grain”. Even though the definition of blended whiskey/"whiskey, a blend" allows "neutral spirits" until now, no one would consider using anything but grain neutral spirits.

However, given the corrupt deal the US Congress has given Diageo courtesy of the US Virgin Islands and the American taxpayer, the use of CANE neutral spirits has become possible (since the US taxpayer will be paying Diageo to make it).

Even without this, the use of cane neutral spirits is counter to the identity of WHISKEY as it has been produced in America since before the revolution. These products are IMITATION WHISKEY, and should be labeled appropriately so the citizenry is not misled by false claims regarding the authenticity of a whiskey product.

It is the responsibility of TTB to defend the standards of identity from corruption, wherever it may originate. Otherwise we might as well return to the days before the Pure Food & Drug Act of 1906, before the Bottled-in-Bond Act of 1897, before the Taft Decision of 1909 and various post-Prohibition acts meant to specify and delineate the different spirits.

Thank you for your consideration in this matter.

Sincerely yours,

Cheryl Lins, Proprietor

Delaware Phoenix Distillery

DSP-NY-15019

Edited October 11, 2010 by delaware_phoenix

[grehorst]

Thanks for bringing this to our attention Ralph. This is very bad on many levels.

I think the root of the problem is that according to the government (and even some members of this forum) the term "neutral spirits" is just that- neutral, meaning devoid of any characteristic of the source material. In other words, according to the gov't definition (perhaps inference is a better word) grain and cane based distillate is the same once you get above 190.

That's great in theory, but anyone who has actually distilled or even sourced the two distillates and compared them will be able to tell you this is not the case.

Whiskey should be grain based- even blended whiskey should be grain only. Perhaps Beam should re-apply for these colas as a Distilled Spirit Specialty.

[Charles@AEppelTreow]

I have the same irritation with the idea of 'blended applejack' - except in that case, blending brandy with neutral grain spirits (rather than neutral fruit spirits) seems to be long standing practice. If it's okay to corrupt the meaning of 'brandy' with that kind of product, why not 'whiskey'?

Spirits used to fortify wine have tighter specifications - fruit vs. grain is distinguished. Neutral whatever isn't usually allowed, anyway.

[Ralph at Tuthilltown]

Time to take this to DISCUS and inquire the position of the major members, and the Craft members, thus this letter to Fritz Maytag who chairs the Craft group at DISCUS:

Fritz

Writing to express my concern over the applications by BEAM BRANDS for so-called “whiskey, a blend”. BEAM has filed three COLA applications for three products which are blended with CANE NEUTRAL SPIRITS.

The STANDARDS OF IDENTITY are ambiguous, leaving open the notion that any “neutral spirits” may be blended. But it is my understanding, and I’m sure that of all the whiskey makers I know, whiskey is a grain spirit.

The pertinent portions of the STANDARDS OF IDENTITY are quoted below (my underlines added):

(4) “Blended whisky” (whisky—a blend) is a mixture which contains straight whisky or a blend of straight whiskies at not less than 20 percent on a proof gallon basis, excluding alcohol derived from added harmless coloring, flavoring or blending materials, and, separately, or in combination, whisky or neutral spirits. A blended whisky containing not less than 51 percent on a proof gallon basis of one of the types of straight whisky shall be further designated by that specific type of straight whisky; for example, “blended rye whisky” (rye whisky—a blend).

Note the ambiguity, directly contradicting the definition of "whiskey".

Class 2; whisky. “Whisky” is an alcoholic distillate from a fermented mash of grain produced at less than 190° proof in such manner that the distillate possesses the taste, aroma, and characteristics generally attributed to whisky, stored in oak containers (except that corn whisky need not be so stored), and bottled at not less than 80° proof, and also includes mixtures of such distillates for which no specific standards of identity are prescribed.

Considering the membership of DISCUS (not the micros/craft group), I wonder if DISCUS will take a stand on the protection of the integrity of American whiskey. As a member of the Craft Distilling group at DISCUS, I would like the group to address this issue with DISCUS and get a position statement from the general membership.

A thread has been posted on the ADI site for discussion of this topic. I’d love to hear your take on it, given your relationship with traditional American whiskey.

TUTHILLTOWN SPIRITS has filed a protest against the applications for permission to use the term “whiskey” in the product unless it is specified as “imitation whiskey”. Others have also filed protests. It is time for the industry at large to file its opinion.

Should the ALFD permit BEAM to label their cane blend a “whiskey”, the integrity of American whiskey will be put at risk. I note the struggle between the Scotch Whisky Association/EU and India on the topic of what the Indians call whiskey made with non grain base materials.

This issue is directly tied to the issue of HR 5034, which would open the door for Kentucky to declare that “Kentucky Whiskey” can be made with cane neutral spirits, thereby skirting the CFR defining whiskey; and be immune from challenge under 5034. There is no Type of whiskey in the STANDARDS OF IDENTITY for “Kentucky Whiskey”.

R

[Ralph at Tuthilltown]

Here are a couple of basic questions for all you distillers who are making whiskey.

Comparing neutral spirits, do you believe that "neutral spirits" made from grain is the equal in flavor and character to neutral spirits made from fruit, or cane?

Do you believe that simply raising proof to 190 totally neutralizes the spirit so that all differences disappear and it is truly "neutral", "characterless"? (In spite of the CFR definition.) Keep in mind that "neutral spirits" and "vodka" are not the same in the CFR.

R

[Charles@AEppelTreow]

Ralph, you do great things for our budding industry, and I mean no disrespect, but I'm going to play devil's advocate for a moment.

The regs are pretty specific in lots of places. They distinguish between neutral spirits and grain spirits, for instance. What if the use of 'neutral spirits' in the definition of blended whiskey is intentional. Because it reflects long established (if rarely discussed) practice? Have you looked for older COLAs revealing the same practice? Your understanding of the meaning of 'blended whiskey' might be a minority opinion - at least in terms of proof gallons.

I don't think that a reading of the CFR implies that 'neutral' means 'without character'. Redistillers are required to keep them all segregated by source, for instance. (Unless changing the designation). Vodka mandates extra treatment beyond distillation to 190 to render it characterless - so there's implicit understanding that distillation to 190pf might make something substantially bland - but not entirely so.

If it's okay for a defined type of brandy to have a 'blended' variation that allows any type of neutral spirit (and to 80% by proof gallon, to boot) why is it a problem for 'blended whiskey'? Does 'blended applejack' diminish the meaning of apple brandy? Or brandy in general? Is whiskey more sacred, somehow, than brandy?

I ask the questions because I think the answers will help sharpen your arguments. And personally, the notion of blended applejack using up to 80% of ingredients that cost less than one third of honest apples do makes me grind my teeth. So you have my sympathies, but I think it's a tough battle.

[Ralph at Tuthilltown]

I agree it is an uphill battle since the law is well established and unchallenged till now. But I can find no record of any American whiskey maker using any neutral spirits other than grain prior to the BEAM applications. I guess the strongest argument is not that the practice is wrong or illegal; but that the law itself is flawed in that it defines "whiskey" as from grain but then permits a brand to be identified as "whiskey, a blend" (which for any consumer implies that it is whiskey blended with other whiskey or at least a material that keeps whiskey in the grain spirits category), when it is a blend with non-grain materials.

I agree that the same should apply to fruit spirits. If it's identified as a "apple" product, any blend should be with (at least) another fruit based spirit. Zeroing in on Applejack is perhaps not analogous, in that Applejack is a nebulous term to begin with. Better I think to use Brandy as the comparison. And to be called Brandy it must be from fruit, no neutral spirits added. Brandy is a fruit based spirit. Frankly the use of the term "applejack" in the traditional sense is not what the Fed defines as Applejack. "Jacking" is freeze distillation as the first step in the process, certainly the applejacks produced now are not freeze-distilled.

Whiskey is a grain based spirit. Nowhere in the definition of "whiskey" is there any provision for mixture with neutral spirits, regardless the source material. Vodka calls for use of filtering or treatment to make it neutral. Neutral spirits are not so required.

The code is ambiguous in this case3 and no criticism of anyone taking advantage of the inconsistencies to make money. But the distillers themselves know the difference. For our part, if it ain't grain, it ain't whiskey.....

I appreciate your note and encourage more members to comment either way.

R

[Charles@AEppelTreow]

I use the applejack example because I think it's analogous. Class 2 is whiskey, with section 2.5 being blended whiskey. Class 4 is brandy. Applejack is a synonym (rightly or wrongly) for apple brandy and the blend is sub section...hmmm...<insert pause and page flipping noises> that's interesting. Blended applejack is its own class - class 5.

Not that it makes it any better - but it is interesting that it's divided out like that.

I think I need a sip of something before I ponder the quagmire called the CFR any more today.

[Denver Distiller]

I like to look at our industry from a historical perspective. You could argue that Blended Whiskey saved many a Whiskey distillery from the dustbins of history. Many say the same about blended Whisky, back when vodka was kicking the schnikees out of US and UK Whisk(e)y....but it kept the lights on at more than a few distilleries.

Blended whiskey was around looooong before us Micro guys (I'd peg G-R, Clear Creek, and Anchor as the start) showed up. It lightens the whiskey flavor. Most of us would consider this sacrilegious, but we're only serving a tiny, tiny fraction of the American population....who cares what we think? If this is what our larger brothers want to do, more power to them. Reading the regs, I can't see how the COLA specialists would do anything more than tell what is in the Blend on the back label somewhere.

Personally, I see no difference between GNS, GrapeNS, or CaneNS when it's used to make blended whiskey. I understand the outrage that Ralph has for the crooked Diegeo deal, but that's only a part of the equation. I think that Charles analogy is spot on. The cat is already out of the bag when it comes to diluting with GS.

The only question that i have is: how did you find out what was in their formula, Ralph? I've never heard of being able to read other's Formula Applications.

All just my opinion.

[Ralph at Tuthilltown]

It's on their COLA applications for the three new brands.

EIGHT STAR - 10208001000309

SUNNY BROOK - 10202001000022

PM DELUXE - 10202001000039

But for me, on the political/legal side, this is a confluence of three issues: HR 5034, the Diageo deal, and the integrity of the word "whiskey" (which goes to our struggle to gain distinction for legal "American Whiskey" which in EU may not be called whiskey if it is less than three years old; the EU argument is the three year minimum protects the integrity of the term "whiskey" or "whisky"). For the small producer trying to find a market for his (legal American) whiskey, this situation contributes to the EU argument. Likely the blended whiskey will not be permitted in EU.

It is politics (and of course "profit") more than anything, certainly not logic.

And you're right, so long as it's on the label the consumer has the ability to make himself aware, if they choose to do so.

All opinions welcome. That's why I asked.

[Collin]

I sent in an e-mail today. Not sure how effective it will all be, but it is necessary. In too many industries are short cuts being taken at the expense of quality or tradition. It needs to stop somewhere -- and this happens to be the industry I'm in, so why not voice my opinion to "the man".

[Ralph at Tuthilltown]

The NEW YORK TIMES reported in yesterday's BUSINESS section the COLA applications filed by BEAM had been approved. The following article is mainly about the COVER OVER program but also relates that issue to the fact of BEAM's applications and other producers shifting their neutral spirits to CANE:

http://www.nytimes.com/2010/10/16/business/16rum.html

[cowdery]

I know all of you are very busy. This isn't worth your time. There is no ambiguity in the regulations. The abomination is that U.S. regs allow whiskey-flavored vodka to be called blended whiskey. What does it matter if the vodka is made from grain, cane, grapes, apples or dandilions?

[Ralph at Tuthilltown]

Have to disagree with you here Chuck. Ask any craft distiller if there's a difference between vodka or "neutral" spirits made from grain and vodka made from fruit. The two are not the same. I stand by a previous post, laws are not "made to be broken", they're made to evolve and change with the times, they're made to be "fixed". And this particular regulation, based on the both the technical definition of neutral spirits and the actuality of the difference between grain and fruit or cane neutral spirits is real. To quote the oft heard phrase "the law is an ass". The Fed definition for "neutral spirits" defines nearly neutral spirits, if we take the word "neutral" to be devoid of all character, this is decernable coming off the still. It is not the definition of neutral spirits needs fixing, it's the definition of "blended whiskey" which, as a result of the lack of specificity in the definition (leaving out the word "grain" when specifying "neutral spirits)is a contradiction in terms. Yes it may be unfixable, given the money behind questionable products. But it is not a waste of time to question the status quo, particularly in cases, as we go forward, where the regulation turns out to present such contradictions. I posed a question earlier, what if we make "neutral spirits" from algae and blend it with whiskey? How far afield can this go? But those may be rhetorical questions.

R

[cowdery]

The regulations address this by requiring that the material from which the neutral sprits are made must be identified, so in that sense at least the regs acknowledge that neutral spirits are not all created equal, and hence the need for Beam to apply for label approval. This clearly is not a violation of the rules but it represents a paradox, in that the rules say whiskey must be produced from grain, but they also say blended whiskey may contain neutral spirits and neutral spirits may be made from sources other than grain, hence whiskey does not have be be produced entirely or even primarily from grain. Maybe it's a paradox, maybe it's merely an exception, such as the rule that all whiskey must be aged in oak, except corn whiskey need not be.

I would favor the addition of the word "grain" before the words "neutral spirits" in the definition of blended whiskey and that would be a proposal worth making. It would be interesting to see who would argue against it and on what basis.

I have noticed several recent incidents where the TTB seems unable or unwilling to follow its own rules. For example, I know of a product labeled "rye whiskey" that was not aged in new charred barrels and which does not bear any age statement, even though it was not aged for four or more years. I know of another "rye whiskey" that was distilled at above 160 proof. I know of cases in which TTB has allowed the designation "grain spirits" for non-neutral, unaged spirits made from grain, which is not how "grain spirits" is defined in the SOI.

Ralph, I see from the 'COLA consistency' thread that you have experienced this yourself.

So, yes, I agree that this kind of discussion and the pursuit of clarity with the regulators is worthwhile. It's the sort of thing a trade association might do if you had one.

[delaware_phoenix]

For the standard whiskies, there is no need for a formula, nor for a statement from the DSP that the whiskey was aged in oak. They don't ask for a picture of the whiskey itself, just the label(s). So a lot is left on the producer to know what it is that they are making.

Any DSP (regardless of size) that puts "rye whiskey" as in Chuck's example, and DOES NOT put that whiskey in a new charred oak barrel for a few seconds or more risks being fined by TTB or having their product pulled from the market. If they are aging the whiskey in used cooperage, there is a specific class and type for that: whiskey distilled from rye mash.

On distillation proof, again not something TTB asks for on the COLA. But it is information you must record on your production gauge. Again, if you are ever audited and TTB picks up on this, the DSP in question could be fined, as well as have their product pulled from the market.