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Comment by JasonCEC | Hacker News Reader

My company[1] works in this space, building tools for artisan brewers, distillers, and coffee roasters. I know this market quite well!

This is a known practice, and one that a lot of people are unhappy about. We suspect that the TTB will be cracking down quite harshly on this in the near future; forcing a named distiller statement on the label.

That said... not all of the whiskey, rye, or bourbon that MGP produces is bad - some of its aged production is quite good, and companies like Angels Envy which further age it (basically double oak or quarter casking) can produce a unique and high quality product.

My problem with this is from the deception; imagine if it turned out that Dogfish Head and Stone brewing were actually buying their beer from MillerCoors! This is an unfair practice that puts actual craft distillers (some of my clients!) at a huge disadvantage. A named distillery requirement would go a long way to correcting this.

[1] www.Gastrograph.com

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I posted almost this same exact comment on my friends facebook post for this article, even mentioning Angel's Envy. This happens in Wine and coffee too. The reality is many "distillers" are curators and finishers, and sometimes battlers (sometimes not, whoever bottles or makes the Templeton Rye-like bottle must bottle half of the craft market). In wine, this smaller places will buy grapes or wines from the larger vineyards, and often make blends as well. For coffee, most businesses in the Bay Area hit up Royal Coffee in Oakland for their green coffee. Definitely everybody from Peet's and Starbucks to Blue Bottle and Philz have used them, according to my girlfriends father who has used them for 25 years. or tea leaves. even then, a lot of people hit up roasters to supply them roasts or blends.

So, the modern beverage industry is largely an industry based on curation, blends, and added value. And that's fine. I'm not so sure why people care so much, but it must be because people have this romantic view that their beverages should live up to some farm-to-table ideal.

>> I'm not so sure why people care so much, but it must be because people have this romantic view that their beverages should live up to some farm-to-table ideal.

People care because the bottles are straight up dishonest.

Agreed.

I'm not sure how much I agree; wine and coffee work quite differently than distilled spirits.

In wine, you have never needed to own the vineyards to be a vintner - as far back as medieval Europe, we had merchants purchasing grapes from various regions and blending their own house wines. There is still skill in matching various grapes, yeast, water, and oak - much more so than simply bottling someone else's spirit.

It is similar in coffee; individual farmers tend to the crops and produce the green coffee (sometimes a commodity, sometimes a specialty product). Roasters purchase the green coffee from a middleman who takes care of sourcing, shipping, and storage. Often this is done after a sample has been sent and roasted and the price has been negotiated. The roaster is then responsible for the majority of the final flavor profile of the bean. His (or her) level of roast, airflow, timing, etc, will determine how the coffee should be brewed, and what notes will be present and what will be absent.

So again, it's a little different in coffee than spirits... the grapes and green coffee beans are closer to the raw grain used in making whiskey and rye, than to the finished spirit. There is no deception in selling wine made by another vineyards grapes or coffee purchased through a middleman.

As a side note, all of the largest artisan coffee producers (ie Stumptown and Blue Bottle) have started Direct Trade relationships with coffee farms, and pay a price premium to the farmer to increase the quality on the farm side - investment like this has yet to happen in the distilling industry.

I'm not sure about Stumptown, but from what I've heard Blue Bottle still gets a portion, however small or large, from importers.

Here's a somewhat dated article on the issue where Blue Bottle talks freely about sourcing from Royal Coffee:

http://www.eastbayexpress.com/oakland/the-truth-about-your-c...

In this sense, yes, it's true that they have direct trade. I don't believe it's true that it's completely direct trade. Royal Coffee, like MGP, does one thing and they do it very well. They do it better than most anyone with modest resources could hope to do. Is that dishonesty? Is that straight up dishonesty? Maybe, but maybe not. If you are looking for the highest quality coffee for your company, it'd be foolish not to take advantage of a place like Royal Coffee.

As for other whiskies, I do think dishonesty is bad, although I'm not sure how many companies are "straight up dishonest" about their operations. Like Blue Bottle has Direct Trade coffees, High West does have a distilling operation. Angel's Envy seems to almost tout their finishing. Similarly, Hooker's House says their bourbon is "born in Kentucky".

It seems like the labeling restrictions are what matter here. I can buy a wine from France and see it was grown and bottled on the estate. Or I can see it was bottled by a negociant/middleman. I really have no strong preference either way, as long as they're labeled correctly. (Louis Jadot, anyone?)

This bourbon thing, though, I guess Americans don't care what's printed on the label. Hell, it was France that gave Andre flak for their "California Champagne". (Champagne comes from France, nowhere else) Anything goes here, I guess. Bourbon should be labeled similarly: either it's distilled, aged & bottled on the estate or it's bottled by a reseller. It's rather funny to think about champagne now, because I think "bourbon" is an American trademark like "champagne" is a French one. Naming things, harder than it seems.

The EU has quite strong laws regarding the naming and labeling of wines. A Champagne bottle is not only a sparkling wine coming from France, but from the specific Champagne region, from a limited types of grapes grown in that region and obtained using a specific fermentation process. There is also a limit on the cultivated surface and the number of bottles produced each year. As the "champagne" name is renowned, this keeps the prices very high for the whole process. As I remember, only the right to cultivate a couple of acres of vineyard in the Champagne region can cost up to $1M - not including the actual land and vines. (in the EU the vineyards are regulated, you cannot just plant 100 acres of vineyard wherever you want, you have to obtain a kind of license to be able to cultivate wine grapes, and this license is given only for specific types of grapes depending on the region).

Bourbon has quite a few labeling restrictions for instance: - Must be produced in the US. - Must be 51% corn on the mash bill. - Aged in new charred white oak barrels.

If it is straight bourbon it must be at least 2 years old. If it is less than 4 years old it must say how old it is. If it has an age statement on it, that must be the youngest bourbon in the blend.

I'm not sure, but I think interstate legislation requires that the distillery location be on the label as well. Anyone who knows what they are talking about can narrow down the distillery based just on this.

> So, the modern beverage industry is largely an industry based on curation, blends, and added value. And that's fine. I'm not so sure why people care so much, but it must be because people have this romantic view that their beverages should live up to some farm-to-table ideal.

You don't get to second-guess or rationalize peoples' reasons for buying your products. You can't lie to people and then tell them they shouldn't care you lied to them.

My wife loves Templeton Rye, both because of the taste and because she grew up in a small town in Iowa. Knowing it's made by MGP doesn't change the taste, but knowing its made in Indiana would sure as hell leave a sour taste in her mouth!

From the article:

> “I have purchased hundreds of barrels of rye and bourbon from them,” John Bernasconi admits when asked about the Indiana factory. A principal in the New Mexico company, Bernasconi says that purchasing whiskey from MGP and bottling it is “a means to develop a brand and help fund the next step” of actually distilling a unique product.

Said like the contemptible opportunistic scab he obviously is.

> My problem with this is from the deception; imagine if it turned out that Dogfish Head and Stone brewing were actually buying their beer from MillerCoors!

Kona Brewing has the vast majority of their beer brewed in facilities on the mainland. Many people buy the beer thinking it's a brewed in Hawaii beer, but realistically it's just brewed on the mainland according to Kona's specs.

With consolidation in the craft beer industry I'd only expect more of this sort of truthiness in the future.

I guess I'm okay with this. It seems kind of silly to ship a liquid across half an ocean to the mainland...

Now if I were to discover that the Kona I purchased while in Hawaii was actually brewed on the mainland I'd feel a little miffed...

What consolidation are you referring to? From what I can see in Chicago, the trend is in the other direction.

Consolidation is a ways off. The large beer producers have acquired a few craft producers in the last few years, but the artisan beverage market will continue to grow in both number of firms and amount of production.

I think it will be at least another 10 years until we start seeing large craft brewers purchasing smaller craft brewers. This has already happened in coffee with Blue Bottle (venture backed) purchasing Tonx Coffee and Handsome Roasters. Artisan Coffee has had ~10 years of growth on Craft Beer.

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