As whiskey market consolidates, a skirmish in Tennessee

by Rachel Baker on March 31, 2014

March 27th was International Whiskey Day. As the years go by, multinational corporations have made the name of this ‘holiday’ more appropriate than it was the last year. Here’s the story:

Happy International Whiskey Day — a day with a name that gets more appropriate with each passing year as multinational corporations continue to strengthen their collective hold on the whiskey market around the world and in the United States.

In his book Cornered: The New Monopoly Capitalism and The Economics of Destruction, Barry C. Lynn relates in a short aside his experience trying to buy a bottle of bourbon in Tennessee a few years ago. At the liquor store, he normally would have had just two choices: Jack Daniel’s (owned by Brown-Forman) or George Dickel (owned by Diageo PLC). But there was no George Dickel on the shelf because the distillery had been shut down for a few years due to an oversupply at the time. “Not that, frankly, this mattered all that much to the financiers, as the duopoly of Diageo and Brown-Forman still maintained sufficient control over the distribution of whiskey in America to keep most would-be newcomers locked out of our stores.”

This happened just as the American bourbon renaissance was getting under way, as related by Fortune’s Feb. 24 cover story by Clay Risen. A big part of that renaissance is a new proliferation of craft distillers. Furthermore, Lynn somewhat exaggerated the hold on the whiskey market by those two companies — Beam Inc. (BEAM) (then owned by Fortune Brands), Constellation Brands (STZ), and Pernod Ricard all have top-selling whiskeys in the United States.

But the American whiskey market is in fact dominated by a handful of huge players, and that handful is getting smaller all the time. Six of the top 10 best-selling whiskey brands in 2013 were owned by three companies: Brown-Forman (BFB), Diageo (DEO), and (then) Fortune Brands’ Beam Inc. And now, Japan’s food-and-beverage giant Suntory Holdings is buying Beam, further consolidating the industry. Beam went solo for just six months after being spun out from Fortune Brands last year.

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