US: Diageo hopeful for solution on Tennessee storage rules
Diageo has claimed it will face "unnecessary" expense if the law is enforced
Diageo has launched a legal bid to overturn a 77-year-old law that forces all spirits that are distilled in Tennessee to be stored within the state's borders.
The UK-headquartered group has filed a lawsuit against the Tennessee Alcoholic Beverage Commission, arguing that the storage law is unconstitutional for not allowing it to engage in “interstate commerce”. The issue arose after Tennessee state officials wrote to Diageo last month informing the group it is in violation of the law by storing some spirits produced at its George Dickel distillery in Tullahoma at a site in Louisville, Kentucky.
Under the 1937 law, distillers must store the spirits they produce in the same Tennessee county where they are made, or, since a 2013 amendment to the law, in an adjacent county.
Diageo has stressed that its George Dickel whisky brand “always has been, and always will be distilled, aged and warehoused” at its Tullahoma facilty and that it produces “other”, unspecified, spirits at the Tullahoma site.
The company argues it would face “unnecessary expense” to move the spirits it keeps in Kentucky, and could be forced to cut production at its George Dickel site.
However, in a statement sent to just-drinks yesterday (2 April), Diageo said: “Based on discussions between both parties late Friday, we are hopeful that we can come to a mutually agreeable solution on this matter in short order.”
The move comes at the same time as Diageo is involved in another legal tussle in the state. The company and other smaller distillers are bidding to loosen the definition of Tennessee whiskey. Current laws, supported by Jack Daniel's producer Brown-Forman, mean that “Tennessee whiskey” must be made from fermented mash of at least 51% corn, aged in new oak barrels, charcoal mellowed and stored in the state.
Proposed amendments to the law will be looked at by a summer study committee, it was announced last week.
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