Billion-Dollar Gamble in Whisky

AMERICAN distillers operate within so dense a thicket of state and federal laws that many a seasoned drinker might think that the ghost of Carry Nation continues to haunt the industry. But the real reason behind all the regulations is not a spirit of Prohibition, which is in retreat almost everywhere, but the fact that liquor is the second largest source of revenue for the Federal Government (after the income tax). It is almost as important for hard-pressed state governments. Officials are understandably eager to keep close control over such a rich source of cash. Whisky makers complain that rigid, archaic regulations have blocked them from following the changing attitudes and tastes of the nation's 93 million liquor drinkers. Now, some of the rules are being relaxed, partly to enable domestic distillers to meet growing foreign competition. As a result of decisions by the Alcohol, Tobacco and Firearms Division of the Internal Revenue Service, the American liquor business is in its greatest period of ferment since repeal.

Lately distillers have won federal approval to experiment with plastic bottles. Though they cost more than glass bottles and have less sparkle, lightweight plastic containers are cheaper to ship, offer vast possibilities for imaginative shapes, and are easier for consumers to carry, particularly in the half-gallon size. For convenience some bottles are made with handles. In another major move, designed to create more competition and lower prices in the vodka market, the Government has gradually relaxed its regulations over the manufacture of the drink; for example, Washington no longer stipulates that vodka has to be filtered through charcoal. The decision has opened the way for small companies, especially in the Midwest and on the West Coast, to nip in with a cheaper product.

Let There Be Light. By far the most important measure was the Government's decision to permit U.S. distillers to make a totally new kind of tipple called "light whisky." Pale in color, varying in strength between 80 and 90 proof, and bland-tasting enough to get lost in the mixer, it will come to market in July 1972. An estimated 140 million gallons are gently aging in warehouses, and the inventory is expected to reach 200 million gallons by introduction time.

The new drink represents a billion-dollar gamble, the industry's biggest since repeal. The prime plungers: Schenley, Seagrams, National Distillers, American Distilling and Publicker. They are betting that the drink will appeal to changing American taste, especially among young people and women, who generally demand a "light" liquor. No one can even predict with certainty how light whisky will taste until it has matured a legal minimum of four years; in its present unripened state it somewhat resembles whisky-flavored vodka. Prices will range between the cost of a popular Scotch like Johnnie Walker Red Label and an inexpensive blend like Imperial. Some new brands will appear, but many of the larger companies will bottle their new drinks under old, familiar labels.

Most U.S. whisky men agree with Joseph Haefelin, American Distilling's vice president and research director, who says, "Light whisky will make it because it is in tune with the times." The times have not been kind to bourbons and rye blends, which are often the preference of a breed that seems to be vanishing--the men who take their tots neat. Though both types of whisky continue to rank first in the thirst of U.S. drinkers, their appeal is diminishing. Vodka, the quintessential light drink, with little flavor and less aroma, is becoming increasingly popular. Scotch and Canadian blenders have also profited by promoting their products' lightness.

The results can be seen in the following share-of-market figures:

7957 1970

Bourbon 30% 23%

Blended spirits 34% 19.5%

Scotch 8% 14%

Canadian 5% 9%

Vodka 6% 12%

The bourbon and blended-rye distillers were most interested in turning back the competition by bringing out a light whisky, but until recently they were effectively barred from making it. Federal law required that anything labelled "whisky" had to be distilled at less than 160 proof--because the lower the proof of distillation, the more pronounced the flavor. The whisky executives, led by Haefelin, argued that spirits distilled between 160 and 190 proof, as the lights are, still had enough taste to be called whisky. They also contended that the flavor would improve if this whisky were allowed to mature in used casks--like Scotch and Canadian whisky--rather than the new ones required for bourbon and rye. In 1968, the Government gave in to the industry on both counts, and the distillers began the four-year process of aging their light whisky. One side benefit: by ripening the whisky in used casks the distillers will hold down production costs. The barrels that Americans had bought for about $25 and sold slightly worn to Scotch producers for about $3 can now be used over and over again for up to 40 years.

Diamond Lil and Moby Dick. Distillers are already clashing over the market for lights. Brown-Forman got Government approval to bring out a new light drink this year--a clear-as-vodka, 80-proof potion called "white whisky." The drink, named Frost 8/80, is distilled at more than 160 proof, then filtered through hardwood, softwood and nutshell charcoal to make it colorless. Schenley, National Distillers and American Distilling have brought suit --so far unsuccessfully--to halt the marketing of Frost 8/80. They accuse Brown-Forman of jumping the gun on their spirits of '72 and of causing confusion that could hurt light whisky's introduction.

Brown-Forman introduced Frost 8/ 80 last month in 15 major markets. The whisky is promoted as "a bar in a bottle" and buyers are urged to try their favorite mixed drinks under a heady assortment of new names. Thus, using a base of Frost 8/80, a Bloody Mary becomes a Diamond Lil; a Manhattan, a Great White Hope; a Daiquiri, an Igloo; a Martini, a Moby Dick; and a Screwdriver, a Monkey Wrench. The new whisky, it seems, is versatile enough to masquerade as gin, vodka or even rum.

Seagrams has brought forth a new light entry of its own. The company recalled its Four Roses brand, increased the neutral spirit content to lighten its flavor, renamed it Four Roses Premium, added 10-c- to 15-c- to the price and introduced it with a splashy promotion campaign two weeks ago. To speed consumer acceptance, Seagrams salesmen have been passing out free samples of the new drink to key customers of local dealers. The company's ads have already drawn federal attention. One message reads: "We can offer a product right now that can't be equalled a year from now." The Internal Revenue Service has entered into discussions with Seagrams. The IRS men want to guard against any implication that Four Roses Premium is the equivalent of light whisky.

Whatever its plans for Four Roses Premium, Seagrams, like many distillers, is still banking on the acceptance of light whisky. Says Jack Yogman, Seagrams executive vice president: "If light whisky is a success, it will probably capture 10% to 12% of the total market in ten years." Otherwise, the American liquor industry could be in for a monumental morning after.

This file is automatically generated by a robot program, so reader's discretion is required.