Artisan Distilleries And Bottled-in-Bond Whiskey

There has been a growth in the number of whiskeys that are being Bottled-in-Bond in the last few years. Most of these whiskeys have come from the smaller artisan distilleries. The category almost died out after the Reagan administration deregulated much of the American whiskey industry in 1984. There were very few whiskey producers at that time, and the surviving companies saw bonded whiskey as “old fashioned” and “behind the times”. They saw no need to produce bonded whiskey as most consumers wanted cheaper, lighter, 80 proof whiskey to mix with their soft drinks. So the question is, why is there growth in the category now? To answer that question, we must first look at the Bottled-in-Bond Act of 1897 and why it was passed and why it became popular for the first half of the 20^th century.

The Bottled-in-Bond Act of 1897 was passed because straight whiskey producers wanted a category that helped consumers understand why straight whiskey cost more than rectified whiskey being produced at the time. Most rectified whiskey was what we would call today “blended whiskey” using neutral spirits and artificial coloring and flavor additives mixed with some aged whiskey. This was much cheaper to produce and the cost savings meant they could sell it at a lower price than straight whiskey and still make profit. Bonded whiskey is always a straight whiskey. Consumers came to understand the differences and began to purchase bonded whiskey because it was considered more “pure” and of a better quality.

Bonded whiskey is:

whiskey from a single distillery,
made in the same season (there are two seasons, “spring” and fall” with spring being from January 1 to June 30 and fall being from July 1 to December 31),
aged at least four years,
and bottled at 100 proof with nothing but pure water added to adjust the proof.

This became the quality standard for whiskey for over 60 years in the 20^th century. The consumer knew where the whiskey came from because the tax stamp and labels had to state the DSP number of the producing distillery. The consumer knew how old the whiskey was because the tax stamp had the year and season in which the whiskey was produced and bottled. Consumers trusted the bonded whiskey because of these regulations.

When Bourbon sales started to increase once again at the end of the 20^th century, many people started getting back in the business using rectifier’s licenses to buy barrels and bottle the whiskey under their own label. Others started up small distilleries and created their brands with barrels purchased from the established distilleries. Most of these companies were open with what they were doing, but a few were not. This created a consumer mistrust of rectifiers and products from small distilleries. There were some legal cases and the problem diminished, but the mistrust is still in the market.

When an artisan distillery produces a bonded whiskey, they are telling the consumer that they made this whiskey and it is a straight whiskey. They are building trust in their products in the market. This trust is then carried to their other products. If an artisan distillery produces a bonded whiskey and then has expressions that are other proof such as a 90 and a barrel strength, the consumer is more likely to trust that distiller made those products themselves.

Bottled-in-Bond whiskey is 125 years old in the year 2022. The reasons for its existence is still relevant in today’s marketplace and that is why there is a growth in the number of bonded whiskeys being produced today. The regulation has been weakened by deregulation, but many distilleries are going back to the original standard and placing not just the DSP number of their distillery as required, but also the season information that was lost when the tax stamp was eliminated. It is all about building consumer trust in their product. I applaud this growth and hope that it continues.