So why exactly is Diageo toying with the future of American whiskey? After, all, the use of virgin oak barrels has always been a unique selling point for the category.
And, more significantly, scotch whisky relies heavily on the regular supply of ex-bourbon barrels and there would be a huge negative impact on the drinks giant should it dry up. What if George Dickel gets its way and then the bourbon industry follows suit?
There are two immediate answers. Firstly. Diageo is gambling – quite safely – on the fact that the bourbon industry would never go down that route. The benefits of taking the moral high ground when it comes to standards would far outweigh the benefits of cost cutting.
And then there’s the other option: that Diageo doesn’t really care. George Dickel is tiny compared with Jack Daniel’s, and Diageo has only a token presence in the world of bourbon through Bulleit, which is little more than a brand name and is distilled at Four Roses Distillery in Kentucky.
So what’s the motivation? Simple, say critics. The end of the compulsory use of virgin oak barrels would seriously undermine the quality argument of Tennessee whiskey and cause massive damage to Jack Daniel’s.
Looking out for number one
Chuck Cowdery is a writer and one of the leading experts on American whiskey. He believes that with Johnnie Walker stalling (it receded at 4% for the year ending June 2014) and American whiskey in a purple patch, Jack Daniel’s could be a long-term threat to Diageo’s number-one world status.
“The number one ranking is not trivial,” he says. “It’s not just about bragging rights.
“When newly affluent people gain access to luxury imported goods they immediately want to know what’s the best. They’ll inevitably start by looking at what’s number one.
“Most people today, including most people in developing markets, know brands. They don’t know [whiskey] types. They don’t know Jack Daniel’s and Johnnie Walker represent two very different styles of whisky. The hallmark of the American style is the unique flavour profile you can only get with new, charred oak barrels. If the Chinese try Jack Daniel’s and like it, that will naturally align them with the American style.”
He continues: “The tide could turn. In the world today, scotch outsells bourbon five to one, but China and India don’t know that. India knows scotch because of the Raj, China doesn’t have an inherent favourite. If American whiskey, not scotch, becomes China’s choice, that could change everything.
“Ultimately, this fight will be between big scotch and big bourbon. This is just the opening round.”
Drinks International repeatedly asked to speak to a Diageo spokesperson for this feature but no one was available.
It should be said that any changing of the whiskey order is likely to be in the long term, if ever.
But what is clear is that Tennessee has gone from being sleeping backwater to the frontline of an international brands battle. And with the fight set to return to the courts as early as this month, life may never be quite the same for those good ol’ boys drinking whiskey and rye.
Watch this space.
