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INDUSTRY The Beverage Network REPORT

VOLUME 84, NO. 11 THE BEVERAGE NETWORK, DECEMBER 2008 POST- 75 Years Later, the Beverage Industry Continues to Evolve

By Alia Akkam

America celebrates as the news fl ashes across the nation that Utah is the 36th state to ratify the 21st Amendment. Here, crowds are shown gathering outside a New York night- club to witness the unloading of the fi rst shipment of legal, tax-paid . (Reprinted from the Beverage Media Blue Book 1958-1959)

EDITOR’S NOTE: In 1920, Prohibition, created by the in 1933, the 36th state to do so, Prohibition fi nally ended, slowly and the 18th Amendment, banned the production setting the stage for a powerful marked by ef- and sale of alcohol in the U.S. Although those who yearned for a fi ciency, diversity and responsibility. With 75 years under our dry nation felt this “Noble Experiment” would make for a safer belt, it’s time to refl ect on how far the industry has come from the country, their dreams were squashed when instead it bred over a days of covert and sly sips of from teacups. We decade of anarchy, fi lled with illicit liquor, corruption and blood- also explore the changes we expect to see during our industry’s shed. When Utah ratifi ed Congress’ proposed 21st Amendment next pivotal chapters. that preceded Prohibition could have envi- ndoubtedly, the beverage alcohol industry is sioned the tremendous strides the industry has made over the past 75 years.” unlike any other in our country’s history. Not Ray Herrmann, chairman of The Charmer Sunbelt Group, points out yet only is it more regulated than other industries, another interesting aspect: after Prohibi- tion ended, the beverage alcohol industry it is the only one to have been established by essentially started from scratch. “When Uthe mandate of the people, created on the heels of the the 18th Amendment was repealed, the amendment was ten words. It said nothing sweeping, misguided Prohibition reform. about how the industry would be controlled and taxed and left all those decisions to the states, creating a patchwork quilt of laws, rules and regulations,” Herrmann explains. “The states opted for a wide range of man- th During the thirteen years the 18 agement patterns, from the very liberal, Amendment was in effect, banning the The Three-Tier System: treating it like other consumer product production, sale and transportation of al- The Backbone Of The Industry industries, to very restrictive regulations in cohol, the country found itself immersed in One can not think of the beverage alco- conservative states.” Today, Herrmann de- crime and corruption, the complete antith- hol industry without thinking of the three- tects an overall sense of “creeping liberal- esis of the peaceful utopia dry revolutionar- tier system that has successfully shaped it. ism” across all states. This is supported by ies envisioned. While the law might have “First, the creation of the three-tier system such developments as New York allowing made consuming beverage alcohol illegal, has led to the most dynamic, innovative, & spirits shops to be open on Sun- the public exercised their own free will and consumer friendly — and at the same days, as well as South Carolina abolishing decided that not only was drinking morally time safest and most accountable — mar- its mini-bottle law. With these subtle but acceptable, it was inherently part of their ketplace for beverage alcohol in the world. powerful changes, Herrmann also sees the cultural fabric. They continued to drink That is a tremendous accomplishment in distinct distribution channel continuing with gusto, even if it meant sipping in co- and of itself,” notes Craig Wolf, president to consolidate, which also means more re- vert speakeasies, in the name of protecting & CEO of the Wine & Spirits Wholesalers sponsibility. “As we have gotten bigger, we their personal liberties and, in countless of America. “Second, because the major have recognized our responsibilities as dis- cases, livelihoods. players in the system, across all three tiers, tributors to protect the public and run our With the advent of Repeal, the coun- are committed to being responsible corpo- business as the state wishes to run them. try rejoiced that their freedoms would once rate citizens, the image and standing of the It’s not a divine right to run a distributor- again be protected and the social ills that industry have never been better. I don’t ship; our permit is based on good character plagued them since 1920 could hopefully be think anyone who witnessed the excesses and good performance,” he says. eradicated. But this era also brought along new challenges. How would the industry re-establish itself? How could the failures of Bartenders and customers at Reisenweber’s famous New York City tavern gathered for a fi nal the pre-Prohibition era be corrected and ef- legal drink on the night of June 30, 1919, just before war-time prohibition clamped a tight lid fi ciently organized? on respectable establishments and ushered in an era of organized violence, vice and crime. (Reprinted from the Beverage Media Blue Book 1958-1959) Together, the federal, state and local governments worked out an elaborate plan of regulation controlling the production, sale and consumption of alcoholic bever- ages, creating a powerful force that today continues to be an exemplary model of cooperation, law enforcement and social responsibility. As Dr. Peter Cressy, president and CEO of The Distilled Spirits Council (DISCUS) points out: “The beverage al- cohol industry’s commitment to social responsibility and self-regulation are the primary reasons that Prohibition would not re-occur.” THE BEVERAGE NETWORK, DECEMBER 2008 75TH ANNIVERSARY • REPEAL OF PROHIBITION

A Responsible Eye Toward The Future Ironically, Prohibition’s goal of a peaceful, th alcohol-free existence led to complete crime- “When the 18 Amendment was repealed, the amendment was ridden chaos. Instead of placing safety at the forefront, the forbidden, de-regulated atmo- ten words. It said nothing about how the industry would be sphere fostered the creation of tainted alco- hol products and illicit over-consumption. controlled and taxed, and left all those decisions to the states, Today, with an established three-tier system in place, it is all the more amazing to see that creating a patchwork quilt of laws, rules and regulations,” the alcohol industry is one where social re- — Ray Herrmann, chairman of The Charmer Sunbelt Group sponsibility is at the top of the agenda. One can not talk about the industry’s triumphant efforts over the past 75 years and an end to as the industry distinctly from other consumer products. without focusing on the theme of social marches forward, Blackman also believes Cooperating with local community leaders, responsibility. It is the signifi cant progress the industry still has far to go. “The biggest as well as local law enforcement agencies, is on this important front that truly illustrates change I’d like to see over time is an accep- another ongoing example of how beverage how a once corrupt, illegal industry has blos- tance among policy makers that the indus- alcohol retailers and the industry at large somed into one where ethics is at its core. try has, and continues to make, an impor- have embraced responsibility as more than “The spirits industry has become, through- tant contribution to the fi ght against drunk just a slogan and are making it a reality.” out the supplier, wholesaler and retailer lev- driving and underage drinking in America. In particular, Wiles points out the or- els, truly committed to social responsibility While both drunk driving and underage ganization’s partnership with Learn2Serve, and nothing could be more important for our drinking continue to decline, we must not the online server training program that credibility,” says DISCUS’ Cressy. let down our guard, but instead, redouble helps businesses effi ciently operate with This credibility has undoubtedly been our efforts,” he warns. responsibility front and center. “ABL mem- fostered by organizations like The Century “Alcohol is unlike any other consumer bers, who are the last industry members to Council. In 1991, the non-profi t Century product and should be treated as a unique handle products before they reach the cus- Council was formed in Arlington, VA, commodity that is age-restricted and lim- tomer, realize the important role they play funded by leading distillers with the goal of ited in its availability,” explains Harry Wiles, in preventing underage access to alcohol developing programs and policies to foster executive director of American Beverage and drunk driving,” he adds. responsible alcohol consumption and elimi- Licensees. “In our convenience-driven con- Carolyn Panzer, global director, alco- nate underage drinking and drunk driving. sumer-market, many people prefer that al- hol & responsibility for Diageo, also agrees “The two most important strides made by cohol beverages be treated like sweat socks that tapping into today’s technological op- the industry regarding responsibility can or bananas. ABL advocates and supports portunities is invaluable for spearheading be summed up as depth and breadth,” says greater recognition of alcohol beverages as responsibility initiatives. “The industry has Ralph Blackman, The Century Council’s distinct products that deserve to be treated always played a role in social responsibility. president and CEO. “The depth of indus- try initiatives, whether developed by The Century Council or others, reaches millions of adults and youth providing important in- “The biggest change I’d like to see over time is an acceptance among formation and resources to fi ght underage drinking and drunk driving; the breadth of policy makers that the industry has, and continues to make, an industry activities is apparent in the number of efforts underway in thousands of commu- important contribution to the fight against drunk driving and underage nities throughout the nation.” Just like Cressy, who would like to see drinking in America.” — Ralph Blackman, president & CEO, The Century Council a dramatic reduction in underage drinking

BUILD-UP TO THE 21st AMENDMENT Prohibition Begins 1874 January 29, 1919 October 28, 1919 1830’s 1851 1869 The Women’s 1893 The 18th amend- U.S. Congress The Maine becomes The National Christian The Anti- ment is ratifi ed passes the Volstead begins gaining ground as ideas the fi rst state to Prohibition Temperance Saloon by 36 states and Act, establishing promoting the abstinence of pass a Prohibi- Party is Union (WCTU) league is goes into effect the enforcement of alcohol start to take root. tion law. formed. is founded. formed. nationally. Prohibition. 75TH ANNIVERSARY • REPEAL OF PROHIBITION THE BEVERAGE NETWORK, DECEMBER 2008

Our message hasn’t changed fundamentally sought out quality spirits which they knew in 75 years,” she explains. However, the were produced by a reputable company, not vehicles for those positive messages have bootleggers. As a result, brands like Seagram’s adapted in today’s world of online accessibil- Gin gained a strong foothold that continues ity. One way Diageo has taken advantage of to this day,” explains Jack Shea, VP, corporate the social networking trend is the launch of communications, Pernod Ricard USA. “As DRINKiQ.com, an online global resource demand for distilled spirits increased, it be- for parents, educators and consumers that came apparent that heavily promoted brands helps shed light on responsible drinking fared well in a competitive environment practices. “We must have an online resource and became leaders. This led to increased for people. What we didn’t want to do was marketing spending behind these individual have another predictable web site,” Panzer brands – a trend that is continuing today. points out. With more and more people During the voluntary ban on broadcast turning to peers for advice, DRINKiQ.com advertising, distilled spirits’ marketers shuns a preachy attitude. Instead, video ex- had to become expert at developing A Dewar’s poster celebrating perts, YouTube clips and a drinks calculator other creative ways to promote in- Repeal Day are helpful, relevant applications. dividual brands to consumers. This showcases both their current bottle Thanks to some unique pro- Panzer points out that Diageo has made creativity – which now extends into and the circa gramming from the Distilled successful strides in the social responsibility broadcast advertising – has been key 1933 bottle. Spirits Council, who created the arena by helping revoke licenses from adults to establishing brand power.” web site www.prohibitionrepeal.com who supply minors with alcohol in certain An anniversary like Prohibition’s repeal, to illuminate the history and legacy of this tu- states and giving a grant to the Medical So- for example, is one opportunity to reap pro- multuous time period. ciety of New York to maintain “screen and motional rewards in a creative manner. On Getting in on the festivities, in anticipa- interventions” for kids abusing alcohol. Yet, Friday, December 5th, people all across the tion of the 75th anniversary, last year, Dew- she says that the job is never done: “The country people will be celebrating. Yes, it ar’s launched the site www.dewarsrepealday. challenge will always be that people are is the prime season for holiday soirees, but com. Easy-to-read, the site is crammed with turning 21. There will always be a cohort these particular festivities revolve around the recipes, historic tidbits and clever toasts. who needs the right information.” 75th anniversary of Prohibition’s repeal. This special web site is a natural marketing extension for a brand that has such a strong The Power Of Promotion Prohibition connection. Back in the days of true speakeasies, choice “Once Prohibition was repealed, De- took a backseat to accessibility. People drank TOASTING SUGGESTIONS war’s was one of the very fi rst spirits sold what was available to them, whether that ★ ★ FROM DEWAR’S ★ ★ legally in the country. Consumer tastes happened to be quality rum from the Carib- (courtesy of www.dewarsrepealday.com) had become more sophisticated, providing bean, or more frequently, “.” To- brands the opportunity to expand and mar- day, when walking into a wine & spirits shop 1. “To the Constitution!” ket their products. In Dewar’s situation it or poring over a menu at a , the 2. “To the 21st Amendment!” was a perfect storm of the brand developing sheer number of alcohol choices is astound- while at the same time providing the con- ing. DISCUS reports there are 7,000 spirit 3. “Stay Wet!” sumer what they were asking for,” explains brands alone that are available today, most 4. “Remember the 5th!” Fannie Young, brand director. “Most Ameri- of which offer multiple SKUs. How did we 5. “To Carrie Nation!” cans have always enjoyed social drinking transition from a bar culture where whatever 6. “Here’s To The Repeal!” but immediately after Prohibition a slight spirit, despite how harsh it might be, was the stigma remained. Two major developments order of the day, to one fl ooded with 7. “Happy Days are Here Again!” happened: As Americans’ attitudes changed and of every variety? and the consumer palate became more so- “At the end of Prohibition, Americans phisticated, combined with brands devel-

March 23, 1933 1920’s 1925 1932 President Franklin Prohibition Ends Prohibition’s dark side Collier’s magazine Republican presiden- D. Roosevelt signs December 5, 1933 becomes more prevalent describes both tial nominee, Herbert the Cullen-Harrison With the state of with the arrival of notorious San Francisco and 1929 Hoover, discusses Act, legalizing the Utah ratifying the mobsters and bootleggers St.Paul, MN as the The bloody St. the ills of Prohibition manufacture and sale 21st Amendment, on the scene like Chicago’s nation’s two “wet- Valentine’s Day in his acceptance of beverages not more Prohibition is . test” cities. Massacre speech. than 3.2% alcohol. repealed. HOW CAN YOU CELEBRATE 75TH ANNIVERSARY • REPEAL OF PROHIBITION PROHIBITION REPEAL DAY? oping more extensive and unique environment,” says Richard Hurst, marketing and public relations cam- svp, beverage alcohol of the Nielsen Encourage your customers to get into the spirit of the by sipping one of these old-fashioned paigns, the country discovered that Company, who attributes the pleth- at the bar — or by whipping up a few themselves the alcohol industry was and is an ora of innovation occurring in the at home. accepted aspect of our nation’s fab- industry with high-end spirits. ric. The Prohibition-Repeal story Greg Kirrish, vice president of THE SOUTHSIDE from the ‘21’ Club Ingredients: is a great example of what defi nes sales and marketing at the Chicago- 2 ounces gin America — the right to choose. The based National Restaurant Associa- Juice of one lemon 2 tsp. of granulated sugar right to choose is how we have been tion, notes that now more than ever, 1 tbsp. fresh mint leaves able to unite the country — and the beverage alcohol is a complementary Method: Place all ingredients in a shaker, and shake vigorously to spirits industry has promoted mak- aspect of dining. As more customers bruise mint leaves. Strain into a chilled Collins glass fi lled with ice. ing that choice responsibly.” become savvier about food, they are Louisville, KY-based Brown- also becoming more sophisticated JACK ROSE Forman Corporation has the about their beverage choices, and will from Eastern Standard unique distinction of being the only look to enjoy restaurants that can in- Ingredients: 2 ounces of Laird’s U.S. wine & spirits company to tegrate both aspects. “In tough eco- 3/4 ounce real Grenadine have operated before Prohibition, nomic times, people are looking for 1/2 ounce fresh squeezed lemon juice Dash of Peychaud’s Bitters since 1870. Even when the rest of value and more bang for their buck Method: Shake over ice and strain the country was dry because of the and asking ‘If I’m going to go out to straight up into a chilled martini glass. 18th Amendment, eat anyway, how can I improve my Brown-Forman experience?’” For some DEWAR’S OLD FASHIONED Ingredients: managed to stay restaurants, Kirrish notes 1 part Dewar’s White Label Blended in the game by that alcohol repre- Scotch 1 teaspoon sugar securing a feder- sents 30% to 40% of 2 dashes bitters al license to sell revenue. “22% per- 2 orange slices its Old Forester cent of wine is sold 2 maraschino cherries Water or soda Bourbon whisky through restaurants Method: In the bottom of a rocks glass, for medicinal and I expect that to carefully muddle the sugar, bitters, 1 orange slice, 1 cherry and a splash of water or soda. purposes. Prior grow. It has much Remove the orange rind and add Dewar’s and to Prohibition, This more infl uence than ice. Garnish with the remaining orange slice special gift set and cherry. one of Brown-Forman’s celebrates both 22% because brands are now fl agship brands, the anniversary of built on-premise before Prohibiton’s repeal DEWAR’S & GINGER Jack Daniel’s, was well and when Lynchburg, they go to retail.” Overall, Ingredients: known regionally. In TN started making the presence of alcohol 1 part Dewar’s White Label Blended 1896, when Jack won a Jack Daniel’s in the restaurant sphere is again. 3 parts ginger or ale gold medal for his Tennes- vital and creates a win-win Orange wedge Method: Fill pint glass with ice and add see whiskey, he put it on the situation for all parties according Dewar’s. Top with ginger and garnish with an map, and remarkably, it became an to Kirrish: “The consumer is happier orange wedge. early example of product differen- because they have a much more pleas- tiation, vital in today’s competitive ant dining experience.” NEW AGE GIBSON from PX Ingredients: marketplace. “Interestingly, Prohibi- Whether it is an inventive mar- Chilled Martini Glass tion was actually very important to keting campaign or the launch of 1 ounce Bombay Gin the brand,” says Nelson Eddy, Jack a new product, it is apparent that 1 ounce Saffron-infused dry Saffron Infused Onion Daniel’s historian. “It helped us con- the beverage alcohol industry has Method: Fill shaker cup with ice. Pour sider the things that would defi ne us grown tremendously since 1933. In gin and shake vigorously until ice crys- th tals form. Strain into a chilled martini later; for instance, we were charcoal 2033, when we celebrate the 100 glass and add one small squeeze (from fi ltered before Prohibition and we anniversary of Prohibition’s Repeal, the soda spritzer) of the saffron ver- mouth mixture. Garnish with one saffron stuck with it.” how many SKUs will we boast then? infused pearl onion. What will our burgeoning tastes de- The Future mand in 25 years? As palates adapt THE BILLIONAIRE from Employees Only The industry as a whole has contin- and brand power continues to grow Ingredients: 2 oz. of Baker’s 7 year 107 proof ued to experience signifi cant growth in the next phase we are entering, ¾ oz. fresh squeezed lemon juice rates. “You’re still seeing four to fi ve it’s amazing to think of the over- ¾ oz. simple syrup percent growth in the off-premise, whelming choice that has become 2 dashes of Absente or Herbsaint ( substitute) ½ oz of homemade Grenadine syrup* which is pretty healthy in the current the trademark of the industry. ■ Lemon Wheel THE BEVERAGE NETWORK, DECEMBER 2008 75TH ANNIVERSARY • REPEAL OF PROHIBITION

Jackson Cannon, the Prohibition cocktail-loving ★ ★ mixologist at SPOTLIGHT ON THE Eastern Standard in Boston, MA “ here’s a certain romantic kind of feel for doing something “illegal”, even though it’s not illegal now,” says mixologist Gary Regan of the popular- ity of America’s contemporary speakeasy culture. T“Speakeasy bars that have sprung up in recent years tend to serve really good cocktails like Death & Co. [in New York] and Bourbon & Branch [in San Francisco].”

These days, once we’ve read about a speakeasy-esque bar, it seems the next day another one has opened fl aunting a similar “In the speakeasy, the emphasis is on cocktails. I’m not using pre- clandestine entrance and de rigeur pressed tin ceiling. Yet, since the really esteemed made mixes or soda out of a gun. I don’t have any refrigeration behind ones attract a cultured audience with refi ned palates, it’s obvious that these are not insti- the bar, it’s all just on ice... it’s sort of back to the 1920s again.” tutions with formulaic gimmicks, but rather, truly civilized establishments to enjoy a stel- — Todd Thrasher, mixologist at PX, Alexandria, VA lar cocktail—many which are recipes from or pre-date the Prohibition era. “The ones ‘21’, even though his creative bartenders are are made and served in teacups. Yet on that have remained popular will always be making Sazeracs with absinthe and experi- any given night, owner Jason Kosmas says popular; it’s highly unlikely they’re going to menting with amaro. Naturally, Manhat- guests order cocktails with modern twists, go away,” notes Regan. tans, Sidecars and French 75s, all Prohibi- inspired by the ones of yesteryear, like The The fabled is as well known ‘21’ Club tion-style cocktails, are classics Rice says the Billionaire, with Baker’s bourbon, absinthe for the collection of jockeys lining its stair- restaurant can’t part with. bitters and grenadine, or The Westside, a case as its historic reputation as New York’s Downtown in the West Village, each variation of The Southside fi rst served at quintessential speakeasy. “During Prohibi- year Employees Only, the popular speak- the ‘21’ Club, but substituting gin for Char- tion, there were 30,000 speakeasies that easy bar, throws an industry Prohibi- came and went in NYC, which is pretty tion party, where homemade punches amazing. What separated us was the great One of New York’s most treasured haunts, the quality,” explains Roger Rice, restaurant ‘21’ Club, is known for both its colorful jockeys and secret cellar, which stored quality booze manager. “People were sick and dying of throughout the country’s dry spell. bathtub gin but we were known for a swanky crowd and quality products. The owners re- ally wanted to have something more than the average speakeasy.” Their invisible wine cellar, pried open by a meat skewer insert- ed into a brick, was fi lled with 2,000 cases of wine & spirits, surely a powerful way to stand apart from the crowd. Guests of ‘21’ knew they could rely on a bottle of good Bordeaux in good company; the speakeasy didn’t part its door to allow just anyone en- try. “You were part of the club because they knew you,” Rice points out. Today, he still believes that sense of history and clubby feel continue to attract a traditional crowd to 75TH ANNIVERSARY • REPEAL OF PROHIBITION

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is also heavy on experimentation, whether a cocktail incorporating butternut squash, spiced pineapple bay Meyer lemon . Of the speakeasy or a re-creation of a vintage Hai- trend, Kosmas offers a New York-centric tian rum drink. “Everything always comes view: “New Yorkers like to be in the around again, whether fashion, politics or know. If they can discover something farming. Speakeasies were old and now it’s that doesn’t have a sign, that makes them new again. It puts fun back into going to cool. A speakeasy allows them to have bars,” says Thrasher. that element.” Yet he also points out that Jackson Cannon, the bar manager at customers do liken speakeasies to good Eastern Standard in Boston, MA, who also cocktails. “There’s an irony since half of lectures on Prohibition at Boston Univer- the speakeasies served crap and half of the sity, decided to celebrate the 75th anniver- cocktails were developed out of the coun- sary of Prohibition’s repeal by highlighting try by American bartenders. It fi ts into a different cocktail from the Golden Age a nice package, though. What would be for $7.50 each month in 2008. For exam- the purpose of having a speakeasy without ple, in July, guests sampled the Sensation emulating that era?” he asks. These days, with Plymouth gin, maraschino, mint and speakeasies are synonymous with quality. lemon, while this month, they’re bellying Todd Thrasher, mixologist at PX, the up to the bar and drinking Astorias with intimate speakeasy in Alexandria, VA, London dry gin, vermouth and bitters. “It’s agrees. “In the speakeasy the emphasis is a moment in the drinking continuum,” on cocktails. I’m not using pre-made mixes says Cannon of Prohibition. “Human in- or soda out of a gun. I don’t have any re- genuity persisted and we have overcome frigeration behind the bar, its’s all just on the obstacles.” He also acknowledges the #!"!,,%2/3).# ice... it’s sort of back to the 1920s again,” rise of speakeasy appeal, but not without 3#/20)/.-%:#!,#/- he notes. Thrasher’s bar, playing only old good reason. “I think what unifi es a lot of  jazz standards, is indeed a serious one. Men those establishments and some of the more must wear jackets and collared shirts, and public ones, what’s getting them more at- guests must fi nd a seat; there’s no standing tention than historical sensibility, is rev- room. While Thrasher says the Manhattan erence for well-made drinks,” he explains. is the quintessential Prohibition cocktail, “I think of it more as how Americans got (“timeless, always popular and everybody back into food, wine and cocktails. It’s an has a different variation on it”) his menu evolved art.” ■ )-0/24%$"9#!"!,,%2/ 3 ).# /!+4/. 6!0%2#%.4 ! ,#6/,0%2#%.4!'!6% 3 0)2)4  0 ,%! %$2).+2% 0/. )",9777 #/20)/.-%:#!,#/-