Bulleit Bourbon: The Birth of a Brand

The True Story of How the Brand Got its Start

I’ve known Tom Bulleit since the 1990s and it was under my watch at Seagram that Bulleit Bourbon was developed and launched. Tom is a terrific guy, a real gentleman, and a smart businessman.

I saw some Impact Databank sales information the other day and among the top 10 super-premium bourbon brands, Bulleit is second only to Maker’s Mark in case sales at 1.2 million 9-liter cases (Maker’s is at 1.5 million), but Bulleit’s growth from 2016 to 2017 was 12.7% compared to maker’s 4.7%.

What’s even more impressive is that in 2000 Bulleit sold 180,000 cases while Maker’s Mark sold 1.4 million. At this rate of growth, it is likely that Bulleit Bourbon will surpass Maker’s as the leading selling brand.

So, the brand’s remarkable achievement has been the result of Diageo’s and Tom Bulleit’s efforts. Its launch and positioning in the bourbon market was due to the folks at Seagram.

Its start has always been an enigma to me and I set out recently to get the full story and to refresh my memory.

Let’s go Down Seagram Memory Lane

If you’ve read my book (forgive the shameless self-promotion), you know that Seagram was a whisk(e)y company in a world of vodka, tequila and other non-whiskey products. Starting in the early to mid 90s, the company acquired the distribution rights to Absolut, and at the same time, Captain Morgan and Crown Royal were growing by double digits each month. By the mid to late 1990s Seagram had consolidated its whisk(e)y portfolio to Canadian Whiskies (Crown Royal, VO and its line extension), Seagram 7 Crown, and Scotch brands (Chivas Regal, The Glenlivet, and other single malt whiskies).

All other whiskey brands were sold or let out to pasture. This Included such terrific brands as Weller, Benchmark and my current favorite, Eagle Rare. The sole exception that comes to mind is Four Roses, which was doing very well as a bourbon brand in Japan but languished as a blended American whiskey in the US.

The puzzle to me as I look back on it is, with the portfolio changing and growing and many whiskies being sold, why did Seagram want a fledgling bourbon with a pretty awful package (at the time)?

The old Bulleit bottle

There’s another piece of the equation that may partially shed some light on this.

In 1995, Seagram bought 80 percent of the shares in entertainment conglomerate MCA Inc. for $8 billion. The company was now in a new business and Edgar Bronfman Jr. focused his attention there. As a result, the owner “overwatch” returned to Edgar M. Bronfman (the Chairman) assisted by John Bernbach, a long time Edgar Jr. friend, an advertising and media executive, and a Bronfman/Seagram advisor.

How Bulleit Came to Seagram

John played a crucial role. At dinner one night with an attorney friend from a prominent NYC law firm, John was told about Tom and the brand. He naturally assumed that since Seagram did not have a bourbon, Bulleit would make a strong addition to the overall portfolio. He brought the idea to both Edgar Jr. and the Chairman.

Both Bronfmans were said to have some reservations. The younger Bronfman was not happy with the packaging (see photo) while the Chairman had some reservations about the taste. But, both liked the idea of a bourbon in the House of Seagram.

But why? Bourbons had been removed from the fold, Crown Royal was on fire, Glenlivet and other single malts were doing nicely, and the company’s focus was on Absolut and the commitments to the Swedish owners.

There are lots of conjectures as to the answer. Perhaps Edgar Jr. was prescient and saw bourbon’s return as an opportunity. Maybe he wanted to show investors and the company that, despite the entertainment industry involvement, the spirits business was still top of mind. Conceivably the Chairman, now returned to the forefront of the booze business, was excited by the idea of a bourbon product that was outstanding.

My guess is that when John brought in his team (copywriter and art director), he showed the Bronfmans what the brand could become. Edgar Jr. in particular loved the work of these two gents.

Bulleit 10 year old bourbon

Chuck Cowdery—writer, blogger, historian, marketer, and arguably the most knowledgeable bourbon maven on the planet—has written more than anyone about Bulleit. So, I’ll let him provide a brief history as reported on his blog:

Bulleit bourbon was launched in 1995, the brainchild of Tom Bulleit, a Kentucky lawyer who, through his legal work, learned a lot about the growing international market for American whiskey. He contracted with the Buffalo Trace Distillery in Frankfort, Kentucky, to make it. A few years later, he moved his operation over to Seagram. They created the current bottle and reformulated the product, moving its production to the Four Roses Distillery in Lawrenceburg, Kentucky.

Tom Bulleit

From the moment Tom walked through the door, and up to the closing of the Seagram door, Tom was a key player in the development of the brand. He worked with the production folks on the recipe, with the agency on the brand’s positioning, and with marketing/packaging on the look and message of Bulleit.

To me, this was a bit unusual. While Seagram often welcomed brand acquisitions, with the exception of Absolut, the attitude was often (to paraphrase) “thanks, we love your brand, here’s your check, we’ll take it from here, and here’s the door…” But, all of us from the Bronfman’s on down, welcomed Tom’s involvement.

There’s probably a couple of reasons for that, mainly due to Tom’s personality and approach—he’s smart, has the brand in his DNA, a team player, and overall terrific person to work with. Neil Gallo, who ran the day-to-day development of the brand, told to me recently that Tom would often say to Seagram folks something like, “here’s my suggestion, use it or not as you see fit.” His ideas were almost always accepted.

From my standpoint, I loved Tom’s “outsider” views and the way he interacted with our people.

Tom Bulleit

The Bulleit Product

Whether there was a Bulleit Bourbon product on the market or otherwise available to be bought in the 19th Century, was irrelevant to us. Tom’s proposition was 1) the brand traced its origin to Augustus Bulleit (great-great-grandfather of Tom) and 2) with strong brand credentials, the brand could be a winner. We totally agreed.

The production folks were energized by the fact that they would be working on a new whiskey (a bourbon no less) and would be able to use the outstanding bourbon stocks they had. According to Art Peterson, who was VP of Quality Assurance and Technical Services, the team presented samples from mingling bond stocks from inventory. These went to Tom and the master distiller for approval. Ultimately, as was the case with all Seagram products, the final approval of the liquid came from the Chairman.

Tom, for his part, had his ancestors recipe in mind—a high rye content bourbon. What was produced was two-thirds corn and one-third rye. (The bourbon corn requirement is 51%). Today the brand’s recipe is very similar—68% corn, 28% rye, and 4% malted barley.

Here’s how the Bulleit website describes the product:

Inspired by his great-great-grandfather Augustus Bulleit, who made a high-rye whiskey between 1830-1860…

The Concept and the Packaging

John’s Bernbach’s team (with Tom and Neil’s involvement), came up with a simple yet powerful message. This isn’t just a bourbon, this is a Frontier Whiskey. A powerful slogan followed— “When men were men and whiskey was bourbon.” I loved it, approved it immediately then brought it to Edgar Jr. for his final okay.

The slogan is gone but the Frontier Whiskey is still prominent in the current Bulleit packaging.

To me, the Bulleit packaging that was developed by Sandstrom Partners in Portland Oregon captured the concept perfectly. All the elements were there—a flask shaped, apothecary-like bottle, embossed branding, cork closure and, a minimal wraparound label that is slightly askew as though it was hand applied.

About that label… It was put on deliberately misaligned because it fit the imagery and positioning of the brand. It is part of the brand’s personality. However, in almost all operating committee meetings someone from production would invariably say something like this: “Great news Arthur, we fixed the label. It’s now perfectly straight.” This “great news” was always met with a groan and a request to leave it alone.

The Reactions

Not everyone in the organization loved or cared about Bulleit. Most of those in sales welcomed the brand since it had the backing of the owners or because they saw an opportunity in the bourbon business. At the same time, there were many who felt that Bulleit detracted focus and attention from the phenomenal growth of Crown Royal—a known winner vs. an upstart. Besides, there were other brands in need of focus such as Absolut and Captain Morgan, both recognized winners.

The brand limped along from the mid-1990s until the end of the decade. Then the lights went out as Seagram was sold to Pernod-Ricard and Diageo. The brands were split up and Diageo acquired Bulleit Bourbon.

The situation for the brand changed appreciably. According to data I’ve seen, the returning growth of bourbon began in the mid-2000s. Unlike Seagram, Diageo, while strong in scotch, did not have much going for it in American whiskies, particularly bourbon. Dickel and Rebel Yell hardly fit the bill to compete with the rapidly growing brands. As a result, Diageo had nothing to lose and much to gain by pushing Bulleit and its unique package and positioning. I’m told that Diageo’s sales folks loved the brand and strongly focused on it.

Today

In 2017, to meet the demand of Bulleit, Diageo built a distillery in Shelbyville, Kentucky which will produce 1.8 million proof gallons annually, with the opportunity to expand further over time. It’s on a 300-acre campus with barrel houses at a cost $115 million.

At the current rate of growth of the brand, I wouldn’t be surprised if the expansion were to happen very soon.

*          *          *

Lessons Learned

1. The role of focus

Seagram had strong and rapidly growing brands requiring concerted and sustained effort. Bulleit would have had to push itself to the forefront of the portfolio at the company. Even if Seagram had survived, I have my doubts as to whether Bulleit would be where it is today.

2. Managing a portfolio of brands

Diageo, seeing the emergence of a return to bourbon, had the good sense to back Bulleit at the expense of George Dickel (a Tennessee whiskey) and Rebel Yell (which was ultimately sold to Luxco in 1999). In short, Seagram’s roster of brands had no real room for Bulleit while Diageo did.

3. Hey marketing folks—don’t overthink it

I think there is a temptation among marketers to show relevance and authenticity by claiming a brand’s recipe dates back to 1830. It was smart to go a different route—just being inspired by Augustus Bulleit is sufficient. As a consumer, I care less about a brand’s history and background and more about what it is today.

*          *          *

I’d like to thank the following people who helped refresh my memory or otherwise corrected my recollection in writing this article. These included Neil Gallo, Rob Warren, John Bernbach, Greg Leonard, Sam Ellias, Art Peterson, and, of course, Tom Bulleit.

The Bulleit portfolio of brands
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Marijuana: A Store Visit

A Trip to a Retail Store in the LA Area

At the end of January, I visited some folks in LA and, since the sale of recreational marijuana is legal in that state, I thought I would visit one of the stores and check it out.

A friend who lives there and had purchased medical marijuana in the past, agreed to go with me and serve as a guide—a ganja guide.

Before I get into the fascinating and (dare I say) fun shopping spree, let’s take a look at the current marijuana situation in the US.

MedMen Venice store. Courtesy of MedMen

Some Facts and Figures

As of 2018 there will be eight states that have legalized marijuana for recreational use. Over twenty other states allow marijuana for medical use. And, both lists keep growing.

It shouldn’t come as a surprise considering the following polling results on the subject from the Gallup people:

  • 64% of Americans support legalization and this represents the highest number recorded since Gallup started asking the question in 1969. (Jan 4, 2018)
  • 45% report having tried marijuana, also the highest since 1969, and 12% claim to currently use it. (July 19, 2017)

In a study on its use by DIG Insights (a global research firm) few people are concerned about harmful effects (16%) and a majority believe consumption can be beneficial (51%). (April 14, 2017)

What About the Effect on Alcohol Sales?

Well, here the data is currently less clear, but signs point to more impact on beer than wine and spirits.

But it seems to me that just as there is “share of stomach” that beer, wine and spirits compete for, the advent of widespread availability of marijuana has to create a fight for “share of buzz.”

A Cowen Insight report (via Mark Brown’s Industry News Update on Jan 15, 2018) indicated that a study using scanner data showed, “that counties located in states that legalized medical marijuana saw a reduction in alcohol sales of 13%.” Further, the Cannabiz Consumer Group (C2G) predicted in March, 2017: “Legal marijuana will take away 7.1% of revenues from the existing retail beer industry.

With this information in mind, I set out with my friend to visit a store, see what the shopping experience was like, get an understanding of who the customers are, and learn first-hand about this product and its future.

MedMen Enterprises

The store we went to is owned by MedMen Enterprises, who currently own 18 facilities in 3 states and has over 700 employees. Unlike other retailers/dispensaries, MedMen is vertically integrated and has licenses to own cultivation facilities, retail stores, and distribution. (In the cannabis industry, distribution involves a “watch dog” and oversight function whereby quality, record keeping, compliance, and related matters are scrutinized.)

The company both owns and manages various aspects of the marijuana trade. It will be listed on the Canadian Securities Exchange in the second quarter of this year. (By the way, here is the list of marijuana companies on the CSE—around 60. You might also find this of interest.)

This is how MedMen describes themselves:

MedMen is writing the book on the modern cannabis industry, from how facilities are designed and constructed to setting the bar on quality and excellence. We are also helping shape the laws that make this industry viable.

These are true professionals with a serious set of business criteria and mission:

MedMen operates scalable, highly-efficient growing facilities using the latest in agronomic technology and sustainable techniques, and our manufacturing facilities use standards comparable to those in the biotech and pharmaceutical industries.

They are not the first company to enter this emerging business, but from what I witnessed by talking to their management and visiting a store, I think they’re top of the game and will grow.

Sun Valley cultivation workers
Courtesy of MedMen
Plants
Courtesy of MedMen

 

The Shopping Spree

We went to their Venice store on Lincoln Blvd. It was at 1:00 on a weekday and the place was mobbed. I was told that it’s always busy and fairly common to see people waiting to come in. The Venice store is small (perhaps 700 square feet of selling space) with shelves of products and showcases on the floor.

To enter, you must stop at a registration area and show proof of age (driver’s license or passport) and register, which allows you to buy. They sell cannabis in different formats including—cannabis buds, of course (various strains and potencies), edibles such as gummies and other sweets (chocolate, cookies, etc.). There is even medicated cannabis rubs (salves) meant to help with aching joints, uh, body joints.

There is a limit to the amount of product you can buy on any one visit.

What really struck me was the caliber and knowledgeability of the sales people. My friend described them as akin to the sales people at the Apple store and Daniel Yi, the Medmen spokesperson, told me that many customers come to the same analogy. These folks were friendly, happy to answer questions and serve as a cannabis escort—what you might be interested in, how much to use, etc.

I learned, for example, the difference between THC and CBD and their role in health matters as well as in “mood change.” Also, the difference between Sativa, Indica and Hybrid strains. I was kind of envious of their retail skills and how the booze business might benefit from similar selling approaches—low key on sales persuasion and primarily focused on educating and guiding the customer.

What about the customers? Good question. It was everyone—young and old; men and women; from all walks of life; all socioeconomic levels. I couldn’t help but ask some of the shoppers about the comparison between alcohol and marijuana. One person said they were just looking for something different from alcohol. Another told me that sometimes they like a drink and sometimes a joint. Still another told me that they preferred cannabis because alcohol was chemical and marijuana was botanical. Ouch.

Here’s the interesting kicker that can serve as a predictor of marijuana legalization and potential growth—taxes.

The Tax Situation

My friend spent $517 that day. Of that amount, $411 was for various products and $62 was for state excise tax (15%) and $45 was for local sales tax (11%). That’s over 25% in taxes. The tax revenue from marijuana sales are attractive to State governments and taxpayers as well, for that matter.

Here’s an interesting article on the California tax situation. It points out that the sales tax on alcohol and marijuana are fairly similar (7.5 to 9.5 percent) but the state excise tax for cannabis is 15%, while wine is 0.25% on average and beer is 1.5%.

But it’s not totally a rosy picture. From my understanding, people in California are skeptical as to how these taxes will be used and whether they will go to where it was intended. A few states can’t seem to figure out how to proceed despite the vote for legalization. And, of course, the federal government repealed an Obama-era policy of leaving law-abiding marijuana businesses alone in those states that have legalized it.

Those of us in the booze business know firsthand that prohibition doesn’t work and that the single most important reason for the end of the “noble experiment” was the absence of taxes from booze.

Further Thoughts and the Future

As to what the alcohol industry should be doing, I found it very interesting that Constellation Brands made a play in the marijuana business last year, investing $191 million in a Canadian company. At the recent Wine and Spirits Daily Annual Summit at which COO Bill Newlands spoke, he said they believe marijuana is an emerging trend that they need to tap into because it’s going to be a big business.

A recent article from Rolling Stone had some interesting predictions for 2018 and what to expect from the marijuana situation in the US.

Let’s start with this quote: “State-legal pot markets seem poised to match or exceed the value of black market pot by 2020.” The friendly, neighborhood dealer could soon be looking for work.

They also predict that there will be legal marijuana lounges in some places, probably Las Vegas for starters and Canada will continue to benefit financially and otherwise from their role in the business.

But the most interesting of all is that the possibility of legalization of recreational marijuana in New Jersey will mean increased pressure on New York—where medical marijuana is legal—to do the same. You can get to Jersey City from Manhattan in 15 minutes or less. Also, let’s not forget that much of New England has approved medical and/or recreational sales already.

*          *          *

My takeaway is that the marijuana industry will have growing pains but, in the long run, it is here to stay and will flourish. The question for us, dear readers, is how the alcohol industry can or will adapt.

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Move over, Tequila and Mezcal

100% Agave Spirits Made in India

Back in 2014, I wrote a number of articles about Desmond Nazareth and his Agave India products, as well as how agave made its way to India. (See articles here and here.) Recently, I learned that Desmond has joined forces with Martin Grassl, the founder of Porfidio tequila.

Here is how their joint venture is described on Old Town Liquor’s website.

The joint venture was created out of the mutual respect of two entrepreneurs of disparate backgrounds but with similar creative minds. They shared a profound admiration for a botanical wonder, the “tree of marvels” as the Spanish Conquistadors called the agave when they encountered it in Mexico.

The product is called SINGLE AGAVE® 100% AGAVE AMERICANA EDITION (Code Name: S3xA). It’s not made in Mexico but in southern India— the Deccan Plateau, a geographical area where the agaves grow. As the story goes… the agave was transplanted from Mexico to India by Queen Victoria for fencing off the railways of the Raj to stop Holy Cows from being crushed by trains. The Agave Americana is the producer’s way of celebrating that 100-year-old event by distilling the wild plants.

I spoke with Desmond Nazareth or DesmondJi, as his brand is called, and here are excerpts from the interview.

BB: How did your relationship with Martin Grassl and Porfidio come about? How did you and he meet?

DN: The relationship was born out of respect for each other’s achievements and each other’s product quality. Martin noticed articles about Indian agave spirits appearing around 2012 in the Mexican press and contacted me.

It was both Martin’s and my opinion that agave spirits— be it tequila, mezcal or other— are unique precisely because of the botanical uniqueness of the agave plant (“the inulin factor”), the true and only star of the equation, not because they are Mexican-made.

The idea, of course, is not new, as it simply mimics what Baron Rothschild did for the world of wines 50 years ago by creating the first non-French wines in Chile and Napa.  It was revolutionary idea at the time.

Both Martin and I strongly feel that Indian agave spirits, made in our craft distillery (India’s first), should be viewed in the same league as Mexican agave spirits like mezcal, by nature of being made from naturally grown and foraged agave plants, as opposed to plantation-grown agave plants. The fact that my products are made from 100% Agave Americana, rather than 100% Blue Agave, takes our premium products intentionally beyond tequila, along the lines of Mexico’s finest mezcals.

BB: This is a special edition product, how is it different from your other Agave brands?

DN: It differs in terms of product formulation from our other agave spirits products. Certain adjustments were made to the hydrolysis, fermentation and distillation process to create a product which is more attuned towards international taste profile preferences, rather than India’s domestic preferences. For this first special edition, a traditional process of heat hydrolysis has been used, the oven cooking method.

BB: Can you discuss the nature of the business relationship between the two companies?

DN: Single-Agave 100% Agave Americana is a joint venture product between DesmondJi and Porfidio. It forms part of Martin Grassl’s brainchild “world series” of non-Mexican made agave spirits, such as agave spirits made from Agave Cocuy (Venezuela), Agave Australis (Australia) and Agave Karoo (Africa). Agave spirits can be made wherever agave is grown, same as high quality wine can be made wherever appropriate grapes are grown. France certainly never liked the idea of the coming into existence of wines from Napa Valley, Barossa Valley and Mendoza, I guess it could not be helped, as it is the natural progression of things.

Agave India is essentially the ‘field-to-bottle’ producer of Indian craft spirits and Porfidio is a premium global co-branding and marketing partner We jointly decide what is an appropriate craft offering for the global market.

BB: Where do you see this joint venture going in the future?

The idea is to expand quickly into super-premium barrel aged expressions Indian Agave spirits, similar to Mexican Reposados and Añejos.  Ours is a step-by-step approach, with the Blanco-style expression simply a starting point.

BB: Tell us more about the story behind the idea— “the agave was transplanted from Mexico to India by Queen Victoria for fencing off the railways of the Raj to stop Holy Cows from being crushed by trains.”

DN: There are two happenstances which brought about the existence of Indian agave spirits. For one, the general nature of the so-called Colombian Exchange, by which the agave, among many other plants and animals, “went international.” In addition, the Agave Americana arrived in India as a cost-effective means of fencing off the British rails to protect its trains from killing or maiming animals.

While the British probably single-mindedly aimed at protecting their financial assets— their trains—the concept of this fencing idea was equally a culturally-sensitive decision by the British Crown in protecting India’s free-roaming Holy Cows, one of our spiritual and cultural assets.

So, the “agave solution” was embraced by the colonizers and the colonized, as benefiting both. Neither “them” nor “us” grasped the true dimension of this pivotal fencing decision as the Mesoamerica-sourced Agave Americana proliferated beyond anyone’s wildest expectations on Southern India’s fertile soils, the Deccan Plateau Highlands. Why the Empire chose the Agave Americana towards such purpose—used in Mexico to produce some of the finest Mezcal—rather than any other variety, is a mystery still to be fully uncovered by botanical historians. Whatever the reason for the choice, it unquestionably benefited us.

BB: Other than in the US are there other countries where you’re working together?

DN: The US is the world’s biggest market for agave spirits. So, we thought it a good idea to do the initial special edition product launch in the US. Our next target market is Japan and China, based on Porfidio’s existing distribution platforms in these countries.

Thank you, Desmond.

Indian Agave Americana
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