There are many parallels between what was happening to the Bourbon industry in the 1890s and what is happening in the industry today. I thought I would take a look at the industry then and now.
First during the 1890s, there was a huge growth in the industry. Distilleries were being built and expanded at a rapid rate. There were many distilleries being built for Bourbon production, in Kentucky and in other states. There was more whiskey being produced at record rates. The problem then was overproduction out-stripping the needs of the consumers. That does not seem to be a problem today, but it could become a concern if the market trends change. If the tastes of the consumers change, another spirit could take a greater share of spirits sales and lead to overproduction of Bourbon. That is not a major concern today, but it is always in the backs of the minds of distillers. It happened in the 1970s and could happen today.
The next thing that was happening in the 1890s was the conflict with rectifiers. Bourbon was being imitated by many rectifiers and driving down the price of Bourbon, making it hard to make a profit off of straight whiskey. This led the distilleries to asking for government regulation and the Bottled-in-Bond Act of 1897. This law gave straight whiskey producers government protection of their product. It also helped educate the consumer as to what was straight whiskey. Bonded whiskey became the industry standard in the twentieth century.
Today, there does seem to be a weakening of the straight whiskey regulations as more and more producers are making flavored whiskey and calling it “Bourbon”. There is also finished whiskey that is being called “Bourbon”. Finished whiskey is just that – a whiskey finished in other barrels. It should not be called “straight whiskey” because it does not meet the requirements of being whiskey that is distilled from grain and aged for at least two years in new oak barrels, with nothing added but pure water to adjust the proof. The legal gymnastics being used is that the whiskey was “straight whiskey” before it was finished in the secondary barrel. Finishing in a used barrel is adding the flavor of the spirit previously stored in the barrel.
The rectifiers of the 1890s were doing many of these same things to the whiskey they were selling. Some of them were making very good whiskey, but it was not straight whiskey. Many were making what became known as “blended whiskey” by using neutral spirits and blending them with straight whiskey and adding coloring and flavoring agents to the product. Other rectifiers were not using any whiskey at all in their products and calling it whiskey. This is what Sazerac is accused of doing with their Fireball product that is labeled as a whiskey-flavored malt beverage.
Finally, the 1890s saw a growing Prohibition movement. They were dealing with radical people who were attacking the use of alcohol in any form. Carrie Nation was smashing up saloons with her hatchet. The Anti-Saloon League was promoting the passage of restrictive laws in states. It was becoming more difficult for distilleries to do business. This is one area where the comparison is not happening today. In fact, many of the restrictions passed in the 1890s are being modernized or even repealed. There are still many dry areas of the country, but they are becoming fewer. More places are seeing the benefit of Bourbon tourism and the additional tax dollars that come with distilling. The industry itself, unlike in the 1890s, sees the benefit of encouraging moderation in drinking and is promoting it. This is the opposite of what was happening in the 1890s.
There are many parallels and contrasts to what was happening in the 1890s in the whiskey industry and what is happening today. It will be interesting to see what the future brings. Will there be a renewed interest in straight whiskey regulations or will the regulations be watered down? Will there be overproduction problems or will the market continue to grow? These are exciting times in the whiskey industry.
Photos from the archives of Michael Veach