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Thursday, March 6, 2014

“Bottled in Bond” – Bourbon Propels Early Consumer Protection Law.

The Bottled-In-Bond Act was passed this week in 1897.  But now, nearly 120 years later, is “Bottled in Bond” just an archaic designation?  Does it ensure that your bourbon is better than without the designation?  Why doesn’t every 100-proof bourbon carry this designation?  All good questions to ponder over a glass of “BIB” bourbon.

The Bottled-In-Bond Act of 1897 (29 Stat. 626, Comp. St. § 6070 et seq.) was drafted to protect the public and to give assurances about the actual spirits contained in a bottle.  Among other requirements, the Act required that any spirit labeled as “Bottled-in-Bond” identify and be the product of one distiller at one distillery during one distillation season, be aged in a federally-bonded warehouse under federal governmental supervision for at least four years, have no additives, be bottled at exactly 100 proof and be sealed with an engraved strip stamp.

As noted in earlier posts (Kentucky Wasn't Big Enought for two Col. Taylors and E. H. Taylor, Jr. Review), Col. E. H. Taylor, Jr. was the driving force behind the Act  While Col. Taylor, George T. Stagg, and many other Kentucky distillers were making true straight bourbon whiskey, rectifiers, blenders and charlatans were blending neutral spirits (and sometimes bourbon or other whiskey) with additives, and passing off these much cheaper spirits as bourbon. 

The Kentucky Court of Appeals, in E. H. Taylor, Jr. & Sons Co. v. Marion E. Taylor, 27 Ky.L.Rptr., 124 Ky. 173, 85 S.W. 1085 (1905), noted the difference between blended whiskey and straight bourbon:

Rectified or blended whisky is known to the trade as “single-stamp whisky,” while bonded whisky is known as “double-stamp goods.”  The proof shows that the rectifiers or blenders take a barrel of whisky, and draw off a large part of it, filling it up with water, and then adding spirits or other chemicals to make it proof, and give it age, bead, etc.  The proof also shows that from 50 to 75 percent of the whisky sold in the United States now is blended whisky, and that a large part of the trade prefer it to the straight goods.  It is a cheaper article, and there is therefore a temptation to simulate the more expensive whisky.

Blenders and rectifiers could make their product in hours or days, compared to the years of aging required for bourbon.  Lower distillation costs, zero barreling and aging costs, and the speed of getting their product to the market gave blenders and rectifiers a tremendous competitive advantage.  To make matters worse, no law prevented them from still calling their product “bourbon.”

The real bourbon distillers needed to protect their brands and profits, and the politically-acceptable way to accomplish this was to sell it as a consumer-protection law.  Not all blenders and rectifiers were bad, but there were reports of hazardous additives, and consumers had a right to know what was in their bottles.

So E. H. Taylor, Jr. – who was himself an extremely well-connected politician – helped push through the Bottled-in-Bond Act of 1897 with the help of then U.S. Secretary of the Treasury, John G. Carlisle (a former U.S. Congressman and Senator from Northern Kentucky).  Perhaps not coincidentally, the second distillery built in 1880 next to the O.F.C. was named the Carlisle Distillery.

As an added benefit to bourbon distillers, they got a tax break.  Normally, distillers would pay taxes on the bourbon aging in their warehouses, but under the Act, they would not pay taxes until it was bottled, and only on what they bottled (thus avoiding taxation on the angel’s share).  The consumers received the government’s solemn guarantee that the contents of the bottle was exactly as stated on the label, and that there were no additives.  As explained by the Sixth Circuit Court of Appeals in W. A. Gaines & Co. v. Turner-Looker Co., 204 F. 553 (6th Cir. 1913), this was not a guarantee of quality, but it was a guarantee of the purity and authenticity of the contents

Since 1901 (the first year BIB bourbon was available; it had to age four years after passage of the Act in 1897), the restrictions have been loosened, but it took over eighty years.  In the de-regulation climate of the 1980’s, BIB no longer required a tax stamp with the season and year made and bottled, so now brands no longer have to disclose the age.  The current restrictions are found in the Federal Regulations, requiring the contents to be a single type of spirit, produced in the same distilling season by the same distiller at the same distillery, aged at least four years, unaltered (except that filtration and proofing is permitted), and proofed with pure water to exactly 100 proof.  27 C.F.R. § 5.42(b)(3).

Not all 100-proof bourbons meet these criteria, so they’re not all labeled BIB.  Some that could seemingly meet the criteria (like Four Roses Single Barrel or Rock Hill Farms) aren’t labeled BIB, but they certainly stand on their own merits without any governmental assurances.  In the end, the BIB label doesn’t ensure that you’re buying good bourbon, but it does tell you more information about what you’re drinking.

To celebrate the 117th anniversary this week of the Bottled-in-Bond Act, soon I’ll be posting the results of the “Bottled in Bond Challenge,” which compared three BIB bourbons in three price ranges – under $20, under $30 and under $40 – Old Grand-Dad Bottled in Bond; Henry McKenna Single Barrel 10-Year Bottled in Bond; and E. H. Taylor, Jr. Small Batch Bottled in Bond.  Stay tuned!


9 comments:

  1. I think we should support and strengthen the Bottled in Bond act. I would love to see a return of the stamps.

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    1. Heaven Hill has really been the only producer that has embraced Bottled in Bond lately with multiple brands, and I think it has helped distinguish Heaven Hill. As more and more brands hit the market with unknown or questionable sources, or which might have undisclosed additives, I'm guessing that Bottled in Bond will make a broader resurgence.

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    2. If I was a "craft" distiller, I would embrace the Bottled in Bond act. It really provides a road map to produce a high quality spirit. It is American Whiskey's answer to Single Malt Scotch Whisky.

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    3. I would too if I was a craft distiller, but I'm sure that I don't understand all of the financial pressures. I think we'll see a resurgence of BIB over the next few years.

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    4. Update: Rock Town Distillery of Little Rock, Arkansas has produced a BIB bourbon that has been aged a minimum of 4 years. It is getting rave reviews. Very good stuff.

      You are right BIB has enjoyed a mini-renaissance.

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    5. I'm hearing so many good things about Rock Town Distillery!

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  2. Seems like most of the BIB labels (w the exception of the EH Taylor line) have become "value" brands. And those are almost all legacy labels that have stood the test of time and consolidation. Not sure we will see a wider embrace of BIB, but I'm glad to have them around.

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    1. True, true. It may be a combination of more regulatory hoops plus it's difficult to produce a BIB Bourbon -- no blending with other ages, unaltered except water, etc. -- so there's no hiding. Add the barrel proof trend to the mix and it's no wonder that BIB is by far the minority. Thanks for reading!

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  3. Is this tax advantage still in effect for distillers producing Bottled in Bond bourbons today? -- "As an added benefit to bourbon distillers, they got a tax break. Normally, distillers would pay taxes on the bourbon aging in their warehouses, but under the Act, they would not pay taxes until it was bottled, and only on what they bottled (thus avoiding taxation on the angel’s share)."

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