A little over 3.5 years ago I had the honor of hosting a Four Roses bourbon dinner in St. Louis with Jim Rutledge as our guest of honor. Throughout the evening Jim and I discussed a variety of topics, but the item of conversation that stuck with me most was his response to a question about retirement. Jim said that it "wouldn't be long" before he retired and sure enough, a mere 6-weeks later Jim made it known that his 20-year tenure as Four Roses' Master Distiller would be coming to an end on September 1, 2015.
Since then I've been lucky to keep in contact with Jim and with the news recently breaking about his contract work at Castle & Key, I thought it would be a good time to share (with Jim's permission) a few of the things we've discussed since his retirement. What follows will get you fully caught up on what Jim has been up to, pieced together from conversations over the past year up to our lunch last week.
SINCE YOU ABANDONED YOUR CROWDFUNDING DISTILLERY PROJECT, THE INDUSTRY HASN’T SEEN OR HEARD MUCH FROM YOU. CAN YOU TELL US WHAT’S BEEN HAPPENING AND WHERE THINGS STAND AT THIS TIME?
It seems like it took most of 2016 and a few months into 2017 for one of my partners and me to prepare an operating plan and detailed financial analysis for our distillery project. In the spring of last year, we were contacted by a financial investment firm, which represented one individual, relative to our distillery plans and their potential participation. We worked with them through the spring and summer. The gentleman with the money, plus several representatives of the financial firm visited Kentucky late in June `17. I took them to Woodford Reserve Distillery so they could get a better idea how a distillery could thrive in a rural Kentucky setting, and then onto the property, we had selected as an ideal location for our proposed J. W. Rutledge Distillery. They all left that afternoon even more excited than they already were. In mid-September, the investment firm had a board meeting, and the JWRD project was a key topic on the agenda. The board of directors passed the motion to proceed with funding the distillery 8 to 0, so our financials passed a “litmus test.” However, the gentleman with the money decided a couple days later not to enter into the world of Kentucky Bourbon. It was his money to be invested, so he made the correct decision if he was not entirely sure and committed to the project, and I totally respected his decision.
We are now working with an investment firm in Louisville – Venture First and its founder John Shumate and his superb staff. We are looking for investors who understand the Bourbon business and although there will not be a quick and decisive turn around on an investment, the ultimate rewards for investing in a well-known Kentucky Bourbon Distillery – operated by 4 people with greater than 170 years of varying experience in the industry – will be very attractive and extremely worthwhile. After what happened last year, I am cautiously optimistic that we will have the funding to commence distillery construction by year-end.
I have also been working on a 2-year consulting contract at Castle and Key Distillery. One of C&K’s investors contacted me in spring 2017 and asked me if I would be interested in a project to develop his own brand of rye whiskey at the distillery. The investor, Brook Smith, worked in the insurance end of the eastern Kentucky coal mining industry for many years. When the industry left Kentucky, it left the land nearly useless relative to raising crops of any kind, and subsequently left the residents of the region in a very desperate and bleak situation. Since that time, Brook and his wife, have been working diligently to help restore the area and reclaim the land for the people; hence, his brand names: “Reclamation Rye and Reclamation Bourbon.” The ultimate net profits of the bottle sales of the brands will be funneled back into eastern Kentucky, to help restore the land, and assisting the residents in many ways – including education for the younger generations. When Brook explained his project to me, I was immediately on-board.
Working at Castle and Key, and with its founders – Will and Wes has been a joy and very rewarding. They allow me to run the distillery operation as if I were in my own distillery. The initial couple runs were a challenge – on a one shift and 4 operating days a week schedule – but the distillery staff and I have worked together to overcome obstacles, and we are now making excellent Bourbon. As I respond to your questions, we are on the verge of making our first straight rye distillation run.
While I’m talking about Castle and Key, I would like to say that Will and Wes are two of the nicest, and most passionate and dedicated gentlemen I have ever worked with and will become tremendous assets to the Bourbon industry. When my partners and I acquire the funding to start our own distillery, I will continue to assist C&K in any way I can to ensure the distillery’s success in the industry and that their brands will be Platinum Award winning Bourbons and Straight Rye whiskeys.
YOU’VE OBVIOUSLY GOT A LOT GOING ON, BUT I’M SURE IT DOESN’T COMPARE TO WHEN YOU WERE AT FOUR ROSES. WHAT DO YOU MISS MOST ABOUT WORKING EVERY DAY IN THE INDUSTRY? WHAT ARE YOU GLAD YOU DON’T HAVE TO DEAL WITH ANYMORE?
It’s easy for me to answer what I miss most. In my opinion, I had the opportunity to work with the best men and women distillery operators and barrel warehouse employees in the business. I enjoyed working with all of them from the first day I set foot on Four Roses property, and without them, Four Roses Bourbon would not, and could not, be the success it has been.
I always enjoyed traveling across the U.S. and in Europe, and Japan promoting Four Roses Bourbons. I had the opportunity to meet so many new friends wherever I traveled, and I could never get tired of talking Four Roses Bourbon…but I will enjoy immensely getting back in distillery operations and making the best Bourbon and Rye whiskeys money can buy. That is my first love.
2017 WAS ANOTHER GREAT YEAR FOR BOURBON. CONSUMER SALES WERE UP, LOTS OF NEW RELEASES AND ALONG WITH THAT PRICES HAVE GONE UP DRAMATICALLY - ESPECIALLY FOR “LIMITED RELEASES.” WHAT’S YOUR POINT OF VIEW ON THE PRICING TREND AND DO YOU THINK IT WILL DO MORE HARM THAN GOOD WHEN YOU CONSIDER THE DIEHARD DRINKER ARE MOST OFTEN THE ONES THAT GET HIT WITH THE HIGHER PRICE RELEASES.
Throughout my ~49 year career at Seagram and Four Roses the demand for Bourbon…went through many up and down cycles. During the down years, the cost per bottles was generally down versus the upswings when the prices would rise. The growth period of Bourbon in recent years is entirely unprecedented, and for many reasons, I think the growth will continue for many years to come. With any commodity when the demand is greater than the supply – as in recent years with Bourbon – the cost will increase, and the higher the shortage of supply relative to rising demands the prices may continue to increase dramatically – simple economics. The major distilleries have been expanding production capacities, and hundreds and hundreds of small distilleries have come online, but still, the supply is short of demand. Eventually, supply will catch up, and although I think the demand will continue to grow, I don’t think it will be as fast as the distilleries can supply the markets, and prices will eventually level out and perhaps drop to more reasonable costs.
Also, the majority of the startup distilleries find themselves in negative cash flow circumstances and put very young whiskeys on the market at exorbitantly high prices to consumers. The vast majority of these whiskeys are not as good as the big guys can make, so why should the major players not take advantage of these situations and put better whiskeys in the market at higher costs. I think it’s an upward spiral that can’t last. Eventually, things will balance out, and I believe we’ll see more reasonable bottle prices, but until that point-in-time expect to see prices continuing to spiral upward.
I'VE HEARD A FEW DIFFERENT STORIES ABOUT WHAT LED TO YOU DECIDE TO RETIRE IN 2015 BUT WOULD LOVE TO GET THE REAL STORY FROM YOU IF YOU DON'T MIND SHARING.
I “assume” you are referencing the very erroneous rumors that somehow got around that I left FRD under some kind of duress or I was even fired, or I was simply disenchanted with FRD…. I don’t know how rumors like that get started, but this is exactly why I’ve never given credence to rumors. During my last month or two at FRD, I was in several meetings with Kirin executives in which I was asked to reconsider my retirement wishes and plans and stay on for as many years as I wished to continue working. However, I had made my decision. I was at a point in my career in which I wanted to get back into the distillery proper, on a full-time basis, and leave all the travel…to brand ambassadors. I honestly never did care about being in the spotlight and limelight, and I simply wanted to get back to basics – making great Bourbon and Rye whiskeys. For whatever reason, my name became too well known to achieve my desires at Four Roses. The feeling at executive management levels was that I was too valuable as a marketing resource to grant me my request to return to distillery production.
Subsequent, to retirement I made several mistakes, and I/we found out we may know the distillery business inside/out, but we didn’t know how to raise capital. I was originally asked to partner with a couple of friends, with whom I’d worked with for many years, to start a small craft distillery. I knew I’d go crazy working all day and being excited if we filled 2, 3, 5…barrels in one day. I insisted on building a mid-size distillery in order to make a profitable business versus what I called a hobby distillery. Had I not been so stubborn we could have started small and had the funding to build a distillery a couple years ago, and by now perhaps we could have been in an expansion mode. (Live and learn….) As previously mentioned, we needed investors to acquire the substantial funding to start a mid-size distillery, and we didn’t know anything about fund-raising…. Hopefully, we’re on our way at this time – now that we’ve partnered with Venture First to assist us with fundraising.
Throughout our lunch conversation last week, it became clear that Jim is chomping at the bit to get his hands busy on a daily basis with the operational aspect of distilling. And I'm happy to see that despite the challenges he's faced these past few years he remains optimistic that he'll soon break ground on his distillery and get back to what he loves doing best. As someone who loves his work, I couldn't be happier.
Please join me tonight in raising a glass and wishing Jim and his partners the best of luck in securing their funding and breaking ground on their project soon.