Today’s Giants Are Small Fry Compared To Those Of The Past
By Richard Thomas
Whiskey enthusiasts sometimes strike me as a wary and suspicious lot, especially when news breaks of a company getting bought up. Leaving out the ugly racial tinge that attended the response to Suntory buying Beam Global, each instance in the wave of big liquor companies buying up craft distilleries and independent bottlers has been met with at least some concern that the new owners will change some beloved product for the worst.
Boom Times Are Not Bad Times
A little wariness is understandable, but it’s hard to see what is sustaining that wariness beyond sheer skepticism of big business. Although it is true that corporate titans have ruined successful and beloved brands before, in the whiskey business those choices have been associated with major downturns. It’s bad business to downgrade success, and such moves are usually tied to bad sales.
Right now we are in the midst of a world whiskey boom, and in modern times not a single buy out has been demonstrably tied to deteriorating product quality. Although some croaking (once again, with an ugly racial tinge) blames Knob Creek going No Age Statement (NAS), the price hike of Booker’s and even Booker’s Rye being priced at $300 on the new Japanese ownership, the suggestion is poppycock. The same logic has driven similar choices across the industry, and the new ownership had little or nothing to do with it.
Routinely overlooked is how a buy-out (by a Japanese company no less) resulted in the great modern brand revival of Kentucky bourbon, namely Kirin’s acquisition of Four Roses. The company was stuck in a moribund hole before Kirin bought it, but the care and investment of the new ownership resurrected Four Roses into a fan favorite. The facts don’t bear out the pessimism, and in most instances your favorite small whiskey producer getting access to more resources should be seen as a good thing.
Big Bad Business
Yet people are skeptical of corporate giants for good reason, since they what is good for a given brand is not always perceived as best for the larger company, giving rise to friction that leads to some peculiar calls. One only needs to look at the track record of Diageo, the current super heavyweight of the drinks world, to see how that plays out in practice.
That track record (thus far) shows an interesting pattern. Diageo has made puzzling choices in terms of acquiring and selling companies, and has certainly introduced some products that fell far short of the hype placed on them. Yet the one thing Diageo hasn’t done is acquire a company, gutted it and left its brand sharply degraded.
But an even better example of a big corporation degrading their own properties is the case of the company that made the call to turn the once popular Four Roses into rotgut whiskey, the mega-conglomerate Seagram’s. Once upon a time, Seagram’s was the biggest distiller of spirits in the world, leaving aside its extensive entertainment, food and non-alcoholic beverage assets. The turn of the century saw the break up of the company, with the majority of its distilled spirits portfolio going to Diageo and Pernod Ricard, creating two of the world’s biggest drinks companies in the process.
Readers of Reid Mitenbuler’s book Bourbon Empire know all about how consolidated the whiskey industry was once upon a time, with giants like Schenley Industries and National Distillers dominating the industry along with Seagram’s. Suspicion of the big players might be more justified if it were bringing multiple competing brands together in a consolidation, but it’s not. The recent acquisitions around the world have been mostly in the form of a player with little or no presence in a particular market seeking entry, not a big corporation already in command of large market share seeking to control more of it.
Why So Worried?
If you are concerned about the acquisitions trend of these last few years being bad for what appears on your shelves, don’t be. Nobody buys a proven, prosperous brand at great expense (attendant with all the acquisitions is a budding bidding war for the best of the small whiskey companies) only to turn around and ruin it. If High West stops producing those interesting sourced and blended expressions they became so esteemed for, it will be because they ran low on good, affordable stock to work with, and not because Constellation Brands bought them.