The liquor business is always interesting, but lately some of the best stories have come out of Tennessee. Consider what happened recently at the George Dickel distillery, which has been making fine whiskey and rye for 130 years in Tullahoma, Tenn.
On March 20, the distillery received an e-mail from Keith Bell, director of the Tennessee Alcoholic Beverage Commission, which regulates the wine, beer, and spirit industry in the state. The subject: “Storage of Product.” Bell proceeded to inform the distillery that it was in violation of a 74-year-old state law because it was keeping some of its products in a warehouse in Louisville, Ky.
The people at Dickel found this curious. Eight days later, the George A. Dickel Co. sued Bell in federal court, saying “on information and belief, the state of Tennessee has never before sought to enforce the geographic limitations of the Storage Statute against any other” licensed distillery. The attorneys for George Dickel said the U.S. Constitution’s Commerce Clause permitted the distillery to store booze in a neighboring state, and that if the archaic stricture were enforced, it might have to curtail its whiskey production, which, in turn, would likely result in layoffs at its Tennessee operation.
The lawsuit became national news. After all, Bell e-mailed Dickel shortly after the distillery mounted a closely watched campaign to challenge another state law, one that limits the use of the term “Tennessee whiskey.” Last year, at the urging of the Jack Daniel Distillery (BF/B), George Dickel’s chief competitor, the Tennessee legislature passed the law saying that distilleries couldn’t use the term unless they fermented their whiskey with a special corn-filled mash, aged it in previously unused oak barrels, and charcoal-filtered it just as Jack Daniel’s does.
Naturally, Jack Daniel’s in-state competitors find these rules too narrow. Guy L. Smith IV, executive vice president of Diageo (DEO), the corporate parent of George Dickel, protested to Fox News: “This isn’t about Diageo, as all of our Tennessee whiskey is made with new oak. This is about Brown-Forman (owner of Jack Daniel’s) trying to stifle competition and the entrepreneurial spirit of micro distillers.”
Jack Daniel’s felt differently, of course. “I don’t think Tennessee should be bashful about being protective of Tennessee whiskey over, say, bourbon or Scotch or any other of the products we compete with,” Jeff Arnett, Jack Daniel’s master distiller, responded to Fox News.
Some writers suggest that the Tennessee Alcoholic Beverage Commission’s recent action against George Dickel may be payback for the distillery’s lobbying campaign in Nashville, the state’s capital. Time’s Denver Nicks writes that the Dickel lawsuit is “in effect, a proxy battle in the ongoing fight between the two top whiskey producers in Tennessee, Jack Daniel’s and George Dickel, over what liquor is allowed to carry the label ‘Tennessee Whiskey.’”
But there’s a simpler explanation for the commission’s e-mail to Dickel. Bell, its director, has a reputation for being overzealous. The Chattanooga Times Free Press took him to task last year for going after bars and restaurants that made their own fruit-flavored vodka:
“Watch out, Tennesseans, the fun police are back, and this time they have their sights set on making sure that you won’t be able to sit back and enjoy a house-infused liquor at your favorite restaurant or neighborhood bar. Keith Bell, the newly minted director of the Tennessee Alcoholic Beverage Commission, has misconstrued an esoteric 2006 law that requires a manufacturer’s license to blend ‘nonalcoholic products with alcoholic beverages on premises,’ and decided to enforce it—or, at least, what he thinks it means.”
Bell backed down on his anti-infusion crusade. Now it looks like he may have to do the same with the Storage Statute. Time reports that the Tennessee Alcoholic Beverage Commission and George Dickel may be close to a settlement.