Brown-Forman Wins Latest Round in Whiskey Rebellion

Resolution of the feud over the best way to make the state spirit delayed to some other day.

Mar 27, 2014 at 2:51PM

Like the Hatfield-McCoy feud, the warring over a protectionist whiskey law passed in Tennessee at the behest of Brown-Forman (NYSE:BF-B) has been sharp and bitter. While politicians just shelved its repeal to a later date, giving the distiller another win in the whiskey rebellion, it's likely going to lose the war as the legislature seems willing to water down the law or repeal it altogether. 

All Shadow

Source: Jack Daniel's.

It was a silly hornet's nest to stir up from the beginning. Brown-Forman, which manufacturers the incredibly popular Jack Daniel's whiskey, already accounts for 90% of all whiskey sold in the state. With global sales of the spirit soaring 30% in the first nine months of fiscal 2014, the distiller greedily sought to crush its rivals completely by having the legislature adopt a so-called standard of identity law that circumscribes how Tennessee whiskey is made.

Just as sparkling wine can only be called "champagne" if it is produced with grapes from the Champagne region of France, and bourbon whisky can only be distilled in the U.S. (and primarily in Kentucky at that), the state legislature codified Jack Daniel's Lincoln County process of making whiskey, which filters straight bourbon whiskey through charcoal into single-use charred oak barrels, an aging process that takes the edge off  bourbon's otherwise harsh taste. 

Brown-Forman further sought to alienate its rivals by deploying jingoistic rhetoric and warning that "foreign countries" would water down a distinctly American product.

Img Whiskies Select

Source: George Dickel.

That was a not-so-veiled shot at primary rival Diageo (NYSE:DEO), the U.K.-based distiller that owns the rival Tennessee whisky brand George Dickel, a spirit with an American pedigree every bit as storied as Jack Daniel's, though it uses the more traditional "whisky" spelling. Diageo hit back at the protectionism Brown-Forman pushed and sought to have the legislature repeal or rewrite the law. While state lawmakers initially took up the measure, they agreed to table it till after the legislative session ends after facing new pressure from Brown-Forman.

Diageo voiced support for the delay because it will ultimately allow the rest of the industry to have input into the creation of legislative language. That's a less than optimal outcome, since distillers should be free to experiment as they see fit, but at least it is a better outcome than leave a law on the books that only benefits Brown-Forman.

For all of Brown-Forman's fomenting about foreign intrigue, it's the international spirits giant Diageo that is standing up for American craft distillers who like to experiment with flavors and processes to create new enhancements. They're no less makers of "Tennessee whiskey" because they don't strictly adhere to Jack Daniel's methods of production.

Investors may just want to raise a glass of George Dickel to toast the spirit of competitiveness that will come out of this feud, as well as the prospect of ending hostilities between the warring factions. 

Boost your 2014 returns with The Motley Fool's top stock
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Diageo (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information