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US: Scotch fear behind Diageo Tennessee whiskey row - Brown-Forman

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Brown-Forman has opened a new front in its row with Diageo over Tennessee whiskey, claiming that the Johnnie Walker owner is trying to weaken global growth in North American whiskey because it threatens Scotch sales.

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Speaking to just-drisnks today (18 March), Brown-Forman VP Phil Lynch said moves by Diageo to change laws set last year to standardise production of Tennessee whiskey are an attempt to “undermine” regional categories in the US. Lynch said Diageo was “concerned” that North American whiskies such as Tennessee whiskey and Bourbon grew global volumes last year while Johnnie Walker stayed flat.

“That's part of a long-term trend in which (Brown-Forman-owned) Jack Daniel's and American whiskies are moving into global markets around the world and taking market share from Scotch whisky,” Lynch said. “We believe Diageo is threatened by that and is doing its best to undermine Tennessee whiskey and therefore Jack Daniel's.”

The row started last week, when Brown-Forman claimed that proposed changes to Tennessee whiskey's production rules, which are supported by Diageo, were an “attack” on the category's quality.

Yesterday, Diageo retaliated, calling Brown-Forman's accusations “false” and the company “anti-competitive”.

Diageo and some smaller distillers in Tennessee want state legislators to allow reused barrels whereas the current regulations stipulate only new oak coopers can be used to age the whiskey. They claim loosening the regulations would bring more “flexibility” to the category and be beneficial to smaller distillers.

However, Lynch today said Diageo has “hid behind craft distillers” and is using its corporate might to shape the argument in its favour.

“Diageo has deep pockets,” he said. “They are funding their lobbyists well and their lobbyists are all over the the Tennessee legislature doing whatever they can to do Diageo's bidding.” 

The proposed changes to the rules were voted through by a Tennessee legislature subcommittee last week and will today go up in front of a full committee meeting in the state's house of representatives. If they pass, they will move to a vote in the Senate committee next week.

Meanwhile, asked if Brown-Forman was being anti-competitive, Lynch said: “We'll acknowledge that (Diageo-owned Tennessee whisky brand) George Dickel hasn't been very competitive with Jack Daniel's in the global market place, with less than 1% of Jack Daniel's sales.”


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