Your Guide To Drinking This Weekend: Maker’s Mark Watered Down? UPDATED.

Bill weighs in on Maker's Mark's controversial decision to go 84 proof.

Last Saturday, Maker’s Mark sent an email out to the members of its Maker’s Mark Ambassador program, announcing that they were lowering the proof of the iconic bourbon by three percent, dropping it from 90 proof to 84 proof. The resulting furor on the internet and beyond has been accompanied by so much garment rending, wailing and gnashing of teeth that you’d be forgiven for thinking that the Pope had resigned.

The outrage over the change to Maker’s Mark from consumers has its roots in success. As a company, Maker’s has spent over 40 years building brand loyalty and devotion through their Ambassador program and some of the most effective advertising ever, starting with this piece from the 1960s that basically single-handedly created the small batch, premium Bourbon market at a time when the national perception of American whiskey was that it was basically hillbilly rotgut.

More recently, Maker’s has used the tag line, "No changes, no compromises, no comparison,” and until last week, despite the founding Samuels family selling the brand to Hiram Walker & Sons in 1981, who in turn sold it to Allied Domecq in 1987, who in turn sold it to Fortune Brands in 2005, which in turn spun off its liquor brands into Beam Global in 2011, that was basically the case. Even today, the grandson of the founder is at the helm of day to day operations, and Maker’s loyalists took heart in the consistency of their Bourbon in a variable world.

In short, there are a lot of people out there who are spewing venom and going off half cocked, so let’s take a step back and look at things rationally.

A Brief Bourbon Primer

There are more common fallacies regarding Bourbon than perhaps any other spirit. Though most associated with Kentucky, Bourbon can be produced anywhere in the United States (there is not currently a working distillery in Bourbon County, KY), with a mash bill that must be at least 51% corn and no more than 80%, with the remainder made up of other grains, primarily rye, wheat and barley. It must be distilled to no higher than 160 proof and bottled at no less than 80 proof. It must be aged in charred, new oak barrels for a minimum of two years, but anything fewer than four years of aging must be revealed on the label.

Bourbon gets its flavor from both the mash and the barrel. The charring of the barrel lends smoky wood notes and the wood itself imparts creamy caramel, vanilla and toast, while the low distillation allows the flavors of the mash to come through—higher corn content results in a whiskey that seems sweeter, and a lot of wheat adds a smooth mellowness. More rye in the mash bill adds spice notes. Barley contributes roundness and depth.

What Does The Above Have to Do With Anything?

Unless you’re drinking a cask strength bourbon like Booker’s (which ranges in proof from about 121 to 128), your whiskey has water added to it to bring it down to bottling strength. Those who are crying about Maker’s Mark “watering down” or diluting their whiskey often seem to miss that point; Maker’s - and almost every other producer out there - has always diluted to bottle strength. They’re just doing a bit more of it now.

Current Maker’s CEO Rob Samuels and his father, Chairman Emeritus Bill Samuels, Jr. claim that the 84 proof version of Maker’s is indistinguishable in flavor from the 90 proof original. It’s a claim you’d expect them to make, as they had to know this decision was going to stir up a storm of epic proportions, but the fact is, very few people have tasted the new version yet, and until we can compare both bottles side by side, blind, rushing to judgment on the flavor of the “New Maker’s” is a touch premature. For all but the most sensitive palettes, the difference will most likely be minimal, if discernible at all. There is a very real concern for the craft cocktail bartender, who uses technique, ice and ingredients to create a balanced cocktail, that the diminished alcohol by volume will impact cocktail recipes or change the profile of a menu drink, but again, time will tell. And despite an over inflated sense of our own importance, those of us who care passionately about cocktails are a pretty small minority out there in the world.

Why’d They Do It?

According to Maker’s Mark, rising demand created a situation where they had three bad options. The first: Run out of product in some markets. The second: De-age the whiskey. The third: Reduce proof.  They elected to go with option three, seeing it as the option that didn’t change the character of the whiskey and that would serve the most consumers.

Demand for Bourbon has exploded not just in the United States, but in other countries as well. Recent trade agreements have opened markets like South Korea, Russia Columbia, Panama and Brazil that were previously hampered by high import tariffs on American whiskey, and the American whiskey category continues to enjoy explosive growth domestically as well, with Maker’s Mark claiming that they’ve seen an 8-10% increase in sales every year for the last decade or so.

The problem with whiskey production is predicting the demand for your product years ahead of time. Maker’s Mark ages between roughly five years and nine months to about seven years, not to an age statement on the bottle. Maker’s has always aged to taste, rather than a date, but usually say they need “at least six summers” to hit their target flavor profile. The whiskey being bottled today was most likely distilled sometime in 2006 or 2007.

Any Bourbon distillery needs to make decisions well in advance about how much to make for a vague future market, but those decisions are not just economic - they’re related to how much space they have in the rickhouse to store barrels, how much capacity they have in their stills and how much grain they can store on site. Make too much in 2006, and you have a glut of product in 2013. Make too little and you have a shortage. One of the more recent, well publicized shortages in the industry happened in 2009, when Knob Creek ran out of product, famously sending T-Shirts to their Ambassadors reading, “I Survived the Drought of 2009.”

Is It All About the Money?

Isn’t it always?

Maker’s Mark is part of a publicly traded company. They have a responsibility to shareholders to make money. That’s capitalism, and it’s not romantic, but it is the way business works. With demand rising beyond the level of stock, the decision to lower proof makes profound economic sense, at least in the short term.

In 2012, Maker’s Mark hit the million case mark in sales. Reducing the proof by 3% will allow that same production capacity to produce an additional 30,000 cases of whiskey. Moreover, it will reduce their tax burden - which is based on proof - by about $2 a case, and there is no expected decrease in price, despite the product containing less alcohol. That’s a pretty nice chunk of change.

But Maker’s did have other options.

They could have resisted expanding into other markets until their production and facility expansion allowed them to comfortably grow. They could have tinkered with the proof of export versions, something they’ve done in the past in the Japanese market, while maintaining the proof of domestic bottles. They could have raised prices to limit growth. They could have limited production on the newer Maker’s 46 line, a product that uses the same mash bill with a different aging technique near the end of the process. They could anger consumers by running out of product in certain markets.

They went with lowering the proof.

The Hypocrisy of the Herd

Competitors have been quick to jump on Maker’s Mark, despite them not being the first American whiskey brand to lower proof. Jack Daniels lowered the proof of its flagship Old No.7 Black Label to 80 from 83 in 2004. Sazerac produced Eagle Rare dropped production of its 101 Proof in favor of a 90 proof single barrel version in 2005. But the most stunning hypocrisy has come from Wild Turkey, a brand that saw demand for its (quite good) 101 proof Rye Whiskey explode along with the cocktail revolution and ended up (allegedly temporarily) reducing the product to (a far less good) 81 proof version. That hasn’t stopped Turkey from producing quick hitting ads like these:

The thing is, none of these other companies - who have done the exact same thing - saw fit to notify their loyal customers of the change. So Maker’s gets some credit for being up front here.

But…

Booze is big business, with the vast majority of the brands on your back bar or liquor store shelf controlled by a handful of multi-national corporations, and they acquire more brands everyday. As multi-national corporations are wont to do, they look for ways to squeeze every last drop of profit out of a product. All these brands capitalizing on the Maker’s fall out (and it’s not just Wild Turkey) are watching closely here, not just gauging the PR disaster that this decision has become, but what happens a year or two from now. If this decision enhances Maker’s bottom line - and, honestly, it probably will once the fallout subsides - you can bet other Bourbon brands will follow suit, because the whole Bourbon industry has been chasing Maker’s Mark since the 1960s. For Maker’s Mark, a company that has so successfully promoted and advertised its product, that has cultivated a passionate and loyal following, that has employed some of the best trained and hardest working sales people in the business, this whole affair is strikingly tone deaf. With one decision, they have wiped out a good portion of decades worth of good will. As someone close to the brand told me privately, it broke his heart to hear of the change, and that feeling seems to be going around for anyone who has ever been passionate about Bourbon.

UPDATE:

From a Maker's Mark announcement released yesterday: 

Maker's Mark announced Sunday morning in a Facebook post that the company is reversing course and will not change the alcohol by volume in their famous bourbon.

"(We) are reversing our decision to lower the ABV of Maker’s Mark, and resuming production at 45% alcohol by volume (90 proof). Just like we’ve made it since the very beginning," the company said in the Facebook message signed by Chief Operating Officer Rob Samuels, and his father, Chairman Emeritus Bill Samuels.

The decision to change the alcohol content of their product led to a backlash by many bourbon lovers, who flooded the Loretto, Ky., distillery with negative comments. Maker's Mark officials said the lower alcohol by volume wouldn't impact the bourbon's flavor, but that wasn't enough to quell the controversy.

Here is a copy of the Facebook message posted by Maker's Mark Sunday:

Dear Friends,

Since we announced our decision last week to reduce the alcohol content (ABV) of Maker’s Mark in response to supply constraints, we have heard many concerns and questions from our ambassadors and brand fans. We’re humbled by your overwhelming response and passion for Maker’s Mark. While we thought we were doing what’s right, this is your brand – and you told us in large numbers to change our decision.

You spoke. We listened. And we’re sincerely sorry we let you down.

So effective immediately, we are reversing our decision to lower the ABV of Maker’s Mark, and resuming production at 45% alcohol by volume (90 proof). Just like we’ve made it since the very beginning.

The unanticipated dramatic growth rate of Maker’s Mark is a good problem to have, and we appreciate some of you telling us you’d even put up with occasional shortages. We promise we'll deal with them as best we can, as we work to expand capacity at the distillery.

Your trust, loyalty and passion are what’s most important. We realize we can’t lose sight of that. Thanks for your honesty and for reminding us what makes Maker’s Mark, and its fans, so special.

We’ll set about getting back to bottling the handcrafted bourbon that our father/grandfather, Bill Samuels, Sr. created. Same recipe. Same production process. Same product.

As always, we will continue to let you know first about developments at the distillery. In the meantime please keep telling us what’s on your mind and come down and visit us at the distillery. It means a lot to us.

Sincerely,

Rob Samuels Bill Samuels, Jr

Chief Operating Officer Chairman Emeritus

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