Bourbon Empire (25 page)

Regardless of the realities between scotches and bourbons of different ages, Rosenstiel’s older bourbons were better able to compete with scotch, and the overseas markets would give him a place to dump any overaged bourbons, passing them off to customers who believed they were good simply because they were old. This strategy was a godsend during huge surpluses that would again occur a couple of decades later, when a few bourbon companies were able to dump overaged bourbon on a Japanese market that based its understanding of whiskey entirely around the rules of scotch.

As for luxury appeal in overseas markets, scotch also held the advantage. When bourbon and scotch were getting their starts during the late 1700s and early 1800s, both Kentucky and Scotland were considered remote and rather isolated backwaters, manned by fierce independents who drew uncomfortable stares from polite society. Scotch’s image, however, would evolve into something more urbane during the middle of the nineteenth century. Before then, wine and brandy were the tipples of European high society, just as they had been in America. But starting around 1860, the
Phylloxera
aphid decimated the European vineyards that wine and brandy both rely on, a tragedy that required years of rebuilding and replanting. Shortages of wine and brandy thus forced Europeans to look for alternatives.

Scotch was the obvious choice, moving into society’s spotlight just as Scotland began riding a wave of voguish popularity. A few decades earlier, Sir Walter Scott had romantically depicted the misty crags of Scotland’s landscape in his novels. Then he arranged for King George IV to visit the Scottish countryside and wear a tartan while doing so, glorifying public perceptions of Scottish tradition and heritage while making the region a popular tourist destination. In 1852, Prince Albert and Queen Victoria purchased Balmoral Castle in the Scottish Highlands, lending even more respectability. By 1870, the whisky made by Scottish distillers such as John Walker and Tommy Dewar had grown increasingly prominent, bolstered by advertising that relied heavily on tartans and bagpipes. By the 1890s, whisky and soda was the
preferred tipple of English gentlemen, turning Dewar and Walker into millionaires. Tommy Dewar entered the House of Lords and was the third British man to own an automobile (the first was tea baron Thomas Lipton, the second the Prince of Wales). Scotland had become a classy place, and so had its whisky.

Bourbon country had never enjoyed a similar makeover, which might have allowed American distillers to take advantage of consumers’ class perceptions. Even though Kentucky’s charms are many, and it has had some contemporary success attracting the kind of tourism enjoyed by Napa Valley’s wine industry, it still occasionally suffers the prejudices of people who consider it one of those “flyover” states where the cornfields simply blend into the horizon. Of course, with American customers, anyway, this disadvantage is spun in bourbon’s favor when the spirit’s humble roots become part
of its appeal—even if it’s a premium brand, bourbon retains its status as a blue-collar choice of the workingman. Drinking it sends a signal that you’re not pretentious.

But that message doesn’t always translate to foreign countries. As export markets became bourbon’s new frontier in the 1950s and ’60s, advertising would need adjusting. Clever marketing would be used to reimagine bourbon’s image in places where scotch—the literal drink of kings—had written the rules of the game. Beam turned out to be so good at shapeshifting that in 1965 it received special accolades from none other than the
Wall Street Journal
for catering to “snob appeal.” Its “ads overseas feature tuxedo clad men in posh surroundings” and helped “bourbon [develop] the same kind of status overseas that scotch has in this country.” To this day the brand enjoys enhanced status in Germany and Australia, places where import duties boost its price—which customers almost always interpret as a sign of higher quality—and where the company has modified its advertising appropriately. The same goes for other humble American whiskey brands utilizing similar overseas marketing strategies—Four Roses Yellow Label sits on the top shelves of Spanish and Eastern European bars, as does Jack Daniel’s, which flies off shelves at the Dubai Airport duty-free shop. It’s yet another
reminder that we taste and judge as much with our minds—susceptible as they are to outside signals of quality and value—as with our senses.

 • • • 

In May 1964, the U.S. Congress passed a resolution declaring that bourbon was “a distinctive product of the United States.” The announcement came with little fanfare, making only a slight blip in the press. It was an inauspicious beginning to a resolution that, through sentimental nostalgia, has since become famous.

But the resolution was in fact another one of Lewis Rosenstiel’s brainchildren, and an important part of his strategy to successfully market bourbon overseas. In 1958, Schenley sent a case of bourbon to every American embassy in the world and then began devising a way to “seek through international law and treaty to confine the name ‘bourbon’ to bourbon whisky produced in the United States,” according to the
New York Times.

The resolution was meant to give bourbon the same kind of trade and labeling protection afforded scotch and cognac in export markets. Much of the “bourbon” sold overseas was counterfeit. “Spurious bourbons,” according to the
Times,
were particularly bad coming out of Canada and Panama. “A rose by any other name may smell as sweet, but members of the Bourbon Institute are taking a sour view of use of the name ‘bourbon’ for any whiskey not made in the United States.” Senator Thruston B. Morton and Representative John C. Watts, both of Kentucky, introduced the bipartisan bill before it landed with the colorful chairman of the House Ways and Means Committee, Arkansas representative Wilbur Mills.

Throughout Mills’s illustrious career, bourbon had occasionally surfaced. He is sometimes, although erroneously, credited with spearheading the legislation mandating that whiskey must be aged in charred new oak barrels for at least two years in order to be labeled “straight” bourbon or rye. The truth is that Mills entered office in 1939, shortly after cooper and timber unions had successfully lobbied for that mandate. The use of new barrels was already widespread, and was
considered a best practice in the industry, but the New Deal legislation made it official and helped safeguard jobs. The unions had a powerful presence in Mills’s home state of Arkansas, where almost three million acres of national forest sit at an elevation ensuring that trees grow at a rate giving them a density that’s ideal for bourbon—the wood is soft enough that the spirit can penetrate deeply, but dense enough to prevent excessive evaporation and leakage. Missouri and West Virginia, other states with an abundance of timber companies and cooperage mills, also pushed for the legislation.

When the 1964 resolution originally landed in the House with Mills’s committee, nobody was quite sure what to do with it. Mills moved it to the Interstate and Foreign Commerce Committee, a “catchall” committee handling legislation ranging from weather-related issues to oceanography. The committee assigned the bill to a staffer who was an expert on the merchant marines, not liquor. The reason? The committee simply thought it would be funny, given that his name was August Bourbon.

August Bourbon did his namesake proud, and “after sober consideration,” the
Washington Post
cleverly reported, the resolution quickly made its way through Congress and was passed. The name was protected and bourbon had “got its visa” to move overseas, as another wag put it. Bourbon would be given the same protection that scotch, cognac, and champagne enjoyed.

 • • • 

It seems cynical and contrarian to reflect on this period, a time defined by consolidation, big business, lobbying, and cutthroat marketing. The reality of bourbon was the exact opposite of how it usually appeared in advertisements, an era that was arguably influenced more by men like Lewis Rosenstiel than by any of the master distillers who at the time were roaming their rickhouses searching for honey barrels (and who would eventually get their names and pictures on bottles).

Rosenstiel, however, soon became a victim of the kind of industry he helped create. In 1968, he was ousted from Schenley by Meshulam
Riklis, a man described as a “merger magician” in the press. Riklis, who controlled a conglomerate of various unrelated companies, made a tender offer to Schenley stockholders and quickly seized 88 percent of the company. Shortly after he fired Rosenstiel, Riklis purchased the former executive’s six-story Manhattan town house, literally buying the man’s home out from underneath him in every way imaginable. Rosenstiel retired to Miami Beach and spent the remainder of his life—he died in 1976—donating more than $100 million to various charitable and philanthropic institutions. A few Schenley executives objected that Riklis simply wanted to raid Schenley’s massive treasury, to which Riklis replied, “They are just afraid they will be fired.” In 1987, Riklis sold the remnants of Schenley to Guinness, which was eventually absorbed into Diageo, the outfit that by 2015 would be the largest spirits producer in the world.

Bourbon lost many things during these decades of upheaval, but consumers also got more choices, better-aged bourbon, and a spirit that was now enshrined as a national treasure. Rosenstiel had no master plan, but he was a force of will, scrambling to convert a near disaster into success. The industry had changed in ways that don’t often pull at the heartstrings, but this wasn’t because bourbon was abandoning America. In fact, as the 1960s began to heat up, America was actually on the verge of abandoning bourbon.

I
n August 1959, Soviet leader Nikita Khrushchev sat in the cabin of U.S. vice president Richard Nixon’s Boeing 707 and prepared to taste his first bourbon. As the plane rested on the tarmac of Moscow’s Vnukovo Airport, jazz drifted from the cabin’s high-fidelity sound system and Khrushchev was given the whiskey as a peace offering following a vicious argument he’d had with Nixon a week earlier. Khrushchev sniffed the glass and would soon give his opinion.

The argument between Khrushchev and Nixon had erupted during a cultural exchange intended to promote peace between the United States and the Soviet Union at the height of the Cold War. The two superpowers built exhibitions in each other’s countries, and Nixon had flown out to give Khrushchev a tour of the American display, which resembled a modern-day IKEA: a walkway snaking through models of perfect American living rooms and kitchens, each fully loaded with high-tech gadgetry. As Nixon showed Khrushchev a color television, the Soviet premier launched into a tirade about U.S. policies, and the two men began arguing. The debate continued as the two men drifted into a model of an American kitchen, where the leaders stood like a married couple on the verge of divorce fighting during breakfast, stabbing their fingers at each other and shouting. Khrushchev kept interrupting, and Nixon yelled that the Soviet premier should “not be afraid
of ideas. After all, you don’t know everything,” according to the press corps accompanying the diplomatic mission.

A week later, as Nixon was about to depart for America and the men’s tempers had cooled, Khrushchev visited Nixon on his airplane for a tour. Khrushchev started picking through the plane’s wet bar, sniffing at an American-made vodka and asking who had made it. Not even bothering to wait for an answer, he picked up a second bottle. “What’s this?” he asked, and was told it was bourbon whiskey. Later, after Khrushchev sat down, he was offered a drink.

“You propose vodka or whiskey?” he asked before answering his own question: “We are on your territory. We will take whiskey.”

Khrushchev was served a highball: bourbon poured over ice and mixed with seltzer. He took a sip and proposed a toast to the United States and his guests. “This is very good whiskey,” he told the group through his interpreter, “but you Americans spoil it. You put in more ice than whiskey.”

Khrushchev had no idea how prescient his words would be in the decade that would follow. Bourbon sales in the United States were relatively strong up until the middle of the 1960s, then began to plummet as consumer tastes changed. Full-bodied straight bourbons were hit particularly hard, and panicked distillers began scrambling to lighten their recipes and to lobby Congress for changes in the official production standards. Just a few years earlier, bourbon had thrived, but now it was folding like a bad musical as sales hurtled toward a historic low point. Of the many causes, the main one came straight from Khrushchev’s homeland: vodka.

 • • • 

It took vodka about fourteen years to establish a beachhead from which it could launch an attack on bourbon. In 1933, the same year as Repeal, the United States officially recognized the Soviet Union, which technically cleared the way for vodka imports. But hardly any came, save for the odd case that arrived alongside Polish or Latvian vodkas, ending up behind grocery counters in ethnic neighborhoods like New York’s
Brighton Beach or Chicago’s Stock Yard district. Then, in 1934, a Russian immigrant named Rudolph Kunnet (shortened from Kunetchansky) contacted the sons of Russian distiller Pierre Smirnoff and bought the rights to his name. Kunnet’s distillery in Bethel, Connecticut, was producing about twenty cases a day when it was purchased for $14,000 by Heublein (the same Heublein that would later try to buy Stitzel-Weller).

After that, very little happened. Vodka was a sleeper cell, hiding on American soil until receiving its orders. Most Americans had been unaware of its existence as a drink until the Tehran and Yalta conferences held during World War II between Franklin Roosevelt, Winston Churchill, and Joseph Stalin. FDR insisted on making dirty martinis for everyone, using a personal recipe that required a copious amount of olive brine. The non-Americans were confused and wary of what many historians have described as the worst martinis ever, and the Russians chose to toast with vodka instead, hoisting glasses of it into the air as if they were tiny trophies. Americans looked and wondered.

Distilled from grain at an eye-popping proof of around 190, much vodka is basically grain neutral spirits, intentionally stripped of all oils, compounds, and impurities, leaving it bracingly antiseptic and by definition “a neutral spirit without distinctive character,” according to the U.S. Code of Federal Regulations. It’s the opposite of bourbon, whose character is created when the same compounds that are stripped from vodka interact with a wood barrel. Vodka’s qualities, or rather its lack of qualities, were quickly appreciated by alcoholics who noticed that the spirit didn’t dirty their breath. Smirnoff later capitalized on this feature by launching its “Smirnoff Leaves You Breathless” campaign.

Vodka’s main assault on bourbon began in 1946. Sales of the white spirit remained weak, and a Heublein executive named John Martin was wondering how to boost them when he ran into a bartender friend who was trying, unsuccessfully, to push imported ginger beer at his bar in Los Angeles. His creation: the Moscow Mule, a cocktail composed of ginger beer, vodka, and half a lime, served in a copper mug. Like all cocktail origin myths, there are alternative explanations for the drink’s creation, but
this one seems most likely. “The Moscow Mule was a Trojan horse,” the adman in charge of the Smirnoff campaign around the drink later quipped. “It introduced vodka to the American people.”

The Moscow Mule was vodka’s insertion team, infiltrating the American countryside and rallying hearts and minds. It had a beachhead in Los Angeles, but where next? What place in America might be susceptible to its message? It turned out to be right where the House Un-American Affairs Committee thought that every other communist threat from Mother Russia seemed to find safe harbor: Hollywood.

According to cocktail lore, vodka’s October Revolution occurred a year later, in 1947, at actress Joan Crawford’s house. The screen legend and tastemaker threw a party where she commanded that only vodka and champagne would be served. Her guests, a collection of stars responsible for setting the nation’s trends, got a taste of the spirit and began serving it at their own parties.

Vodka spread faster than a dance craze. Sales went from 40,000 cases in 1950 to 4.4 million in 1955. Bourbon still far outsold the clear spirit, but some straight bourbon producers began to take notice, particularly because the uptick in vodka sales was accompanied by increased sales of lighter blended whiskey. National Distillers assessed that the increased popularity of less punchy liquor was a harbinger. Between 1954 and 1958, the company offered 86-proof versions of Old Taylor, Old Grand-Dad, and Old Crow alongside the standard 100-proof offering, a move that also allowed it to cut excise taxes and lower retail prices. The brands were some of the oldest and most storied names in bourbon, and the proof drops were a little akin to suddenly transferring three of your finest Navy SEALs to desk jobs. Brands at other companies—I.W. Harper at Schenley, Brown-Forman with Old Forester, and many others—took the same precaution. By 1963, some of the lower-proof versions were outselling the heavier versions, and distillers were “seeing the light,”
Time
quipped.

Vodka marched on. By 1967, as the Cold War escalated in Vietnam, vodka sales surpassed gin, the popular white spirit that capitalists used in power lunch martinis and that FDR had served at Yalta. With gin
defeated, vodka now had bourbon in its sights, although the brown spirit was still a formidable presence. Jim Beam in particular had strong sales, partly a result of its shrewd overseas marketing and ability to get itself firmly ensconced on military bases. As the Vietnam War gathered momentum, newspaper reporters regularly added color to stories by depicting the field offices of colonels, making sure to describe what liquor they saw. The descriptions followed a format: tents, folding tables, ammo cases, and the ubiquitous bottle of Jim Beam. Rarely did they mention other brands.

As Vietnam erupted, Jim Beam fought fire with fire. In 1967, the James Bond movie
You Only Live Twice—
the one where Sean Connery plays Bond as he battles SPECTRE—was released, and Jim Beam hired Connery as a spokesman. Off camera, Connery was a Scotsman who presumably would have preferred scotch, but he also understood the larger implications the West faced as it fought communism and bourbon battled vodka, and put aside any conflicting principles to appear in the ads. It was a brilliant maneuver on Beam’s part, recruiting the Cold War’s most potent weapon.

But there was just one catch—Bond isn’t normally a bourbon drinker,
he’s a vodka drinker.
Bond’s famous martinis replaced the traditional gin with vodka and were aggressively shaken rather than stirred. Bond’s violent bending of the rules established his maverick personality—as a government man, he was the ultimate insider, but he wasn’t constrained by the ultimate Establishment cocktail. By drinking vodka, Bond was building immunity against his Soviet adversaries, but with a glass of Beam in his hand he was something different. It was a masterstroke of psychological warfare to confuse his enemy. Because really, who truly understands James Bond?

Despite the Bond recruitment, vodka was able to overcome. By this point it had won the hearts and minds of America’s impressionable youth. The baby boomers were reaching drinking age but also turning against the old ways of their parents. Bourbon became a symbol of the patriarchy and the Establishment. Vodka, on the other hand, hailed from a country that was America’s mysterious enemy—drinking it was
an act of subversive defiance. With its absence of any distinctive character, vodka was also a blank canvas the young generation could use to reimagine itself. The drink could be mixed with whatever flavor (orange juice, Kool-Aid) suited the moment. As Vietnam fell apart, boomers protested the war that was being led by all those old colonels with bottles of Jim Beam on their desks. The drinks of the older generation,
Esquire
wrote at the time, stood “for everything from phony bourgeois values and social snobbery to jaded alcoholism and latent masochism.”

The generational standoff was awkward—the grayhairs sat across the table from the longhairs, blinking hard. Bourbon—so old-fashioned, so addicted to the past—struggled to find appropriate words, and sometimes embarrassed itself. In the 1960s, Beam created an advertising strategy geared toward women, but instead of breaking down whiskey’s traditionally masculine image, it made the rift worse. Beam didn’t promote
to
women; instead, it told women they should buy more bourbon for their husbands. “Pretty Nice Wife, Wouldn’t You Say?” one ad read. In 1963, Seagram vice president Edgar Miles Bronfman, son of Samuel Bronfman, had a similar misstep. He claimed that the switch to lightness was because of women, “who prefer drinks without a lingering taste, and of young people, who find the ‘lights’ easier to learn on,” according to
Time
. It was awkward, it was tone-deaf, and it came out during the same decade that Bob Dylan released a record titled
The Times They Are a-Changin’.

By 1969, bourbon connoisseurs only could have felt a sense of impending doom. For his part, Lewis Rosenstiel, recently ousted from Schenley, even donated $1 million to the J. Edgar Hoover Foundation “to combat Communism or any other ideology or doctrine which shall be opposed to the principles set forth in the Constitution.” Rosenstiel, a fervent anticommunist, was commonly described as a “father figure” to Roy Cohn, the organization’s founder and the onetime controversial chief counsel to Senator Joseph McCarthy. The Hoover Foundation was chartered “to safeguard the heritage and freedom of the United States of America and to promote good citizenship through and appreciation of its form of government and to perpetuate the ideals and
purposes to which the honorable J. Edgar Hoover has dedicated his life.” After Rosenstiel’s donation, the foundation’s presidency was taken over by former Schenley executive vice president Louis Nichols, who had been the number two man under Hoover at the FBI until 1957, when he had left to work for the liquor giant.

Bourbon and vodka fought their most pitched, epic battles in the 1970s, as vodka slowly gained on bourbon’s lead. By now, bourbon makers were running scared, abandoning thoughtful strategy. They started lobbing Hail Mary passes. In 1971, the big liquor companies lobbied Congress to change labeling and production regulations, saying that such revisions were needed for their survival. The U.S. government, which still got more federal tax revenue from liquor sales than any other source aside from the income tax, quickly complied. The resulting fallout emerged in the form of a product called “light whiskey.” Whereas straight bourbon has to leave the still at less than 160 proof, preserving richer flavors, light whiskey could come from distillate leaving the still at between 160 and 190 proof. It could also be aged in used barrels, instead of the new barrels that the law dictated for other whiskies. It had to be aged for four years, but the result was still something that “resembles whisky-flavored vodka,”
Time
reported.

The resulting headlines and advertisements stemming from the light whiskey campaign were far better than the whiskey was: “Let There Be Light,” “Lighten Up,” and “Major U.S. Distillers Are Now Following the Light.” Four Roses ran a campaign with the theme “Prepare to Be Underwhelmed,” for something called Four Roses Premium, a light whiskey that actually cost fifteen cents more per bottle than the brand line’s heavier offerings.

Unsurprisingly, the light whiskey campaign was a failure, and by 1975 most companies had quietly stopped promoting it. Whiskey sales were still losing ground to vodka, however, pushing whiskey makers to dilute their old stalwart brands even more. Between 1973 and 1975, more than a hundred brands, including Seagram’s 7 Crown, Four Roses, Hiram Walker’s Imperial American, and Jim Beam, had reduced the
proof from 86 to 80. Alongside the drops in proof, the return on investment for whiskey in general dropped to around 7 percent, well below the 12 percent that many investors consider a breakeven point.