The way Stephen Rust tells the story, the moment he took a sip, he knew it was the one. “You instantly understand,” he says. “There’s magic.” Rust, the luxury division president at the alcoholic-beverage company Diageo, was in Kentucky bourbon country earlier this year to taste a forgotten, 20-year-old whiskey that had been pulled from the historic Stitzel-Weller distillery’s rick house. With him were Ivan Menezes, the company’s CEO; Larry Schwartz, its president of North America; and Peter McDonough, its chief marketing and innovation officer. Together, in front of a big bow window out of which, legend has it, Pappy Van Winkle himself once shot turkeys during the workday, they all sampled the amber liquid. The whiskey was left over from Diageo’s brief ownership of the Bernheim distillery in Kentucky. Though it had come with the purchase, it hadn’t found a purpose in any of the company’s existing whiskies, and it had been aging well past typical American whiskey age, waiting for someone to figure out what to do with it.
On the spot, the executives behind the world’s largest distiller–maker of Tanqueray, Ketel One, and Johnnie Walker, among many others–decided to bottle this small batch of whiskey. Just months later, in March of this year, Diageo began releasing it as one of the first varietals under a new label called Orphan Barrel. The first offerings are a 20-year-old whiskey called Barterhouse ($75), a 26-year-aged Old Blowhard ($150), and an upcoming version called Rhetoric ($85), which is the same age as Barterhouse but was aged in a different type of barrel.
Whether or not Orphan Barrel’s offerings are great whiskeys is, interestingly, somewhat beside the point. In addition to finding new life for old liquor that would probably have otherwise gone unused, the brand is an exercise in the power of narrative: Diageo wanted to create a story that will make people talk about the product. If the story is good enough, salespeople will relate it to buyers at bars and liquor stores, who can then tell their customers (and, of course, journalists will write about it, as evidenced by the story you’re currently reading).
Diageo, which was created in 1997 through the merger of Guinness and Grand Metropolitan, acquires liquor brands the way Yahoo acquires startups: frequently and seemingly regardless of genre. In addition to its beer, wine, and other spirit brands, it produces more than 25 whiskeys, including two of the five most widely distributed brands in the category. It is a colossal operation. But like Yahoo, it would rather be perceived through the lens of the small teams it has acquired.
This is especially true in the booming whiskey category, where brands go to great lengths to establish the heritage–invented or otherwise–of their liquid. Johnnie Walker is more than 100 years old, which you may have noticed if you caught its 157-foot luxury yacht retracing old maritime trade routes with the history channel. Bulleit, another Diageo whiskey, was founded in 1987. But, its website reminds us, its founder quit his job to fulfill his “lifelong dream of reviving an old family bourbon recipe.” He was “inspired by his great-great-grandfather Augustus Bulleit” who, “one fateful day, while transporting his barrels of bourbon from Kentucky to New Orleans vanished… his creation nearly disappeared into history along with him.” Diageo recently announced it would be investing $2 million to create a visitor center at 79-year-old Stitzel-Weller, where it will showcase its relatively new Bulleit brand.
As one cynical whiskey reviewer named Rob Theakston put it, “nothing shines quite like a good lacquered coating of embellishment to make a product beam in the eyes of the unsuspecting and trustworthy.”
Diageo didn’t necessarily “discover” the small batch of whiskey at Stitzel-Weller that became Old Blowhard, Barterhouse, and Rhetoric. At any one time, Diageo has around 13 million barrels of aging whiskey in storage. It is has enough experience managing inventory that it doesn’t exactly “forget” what it owns, but sometimes, the whiskey aging in rick houses it acquires doesn’t immediately fit into its products. In the case of the whiskey being used in Orphan Barrel’s first varietals, for instance, some of the Bernheim distillery’s barrels of aging whiskey remained at Diageo’s Stitzel-Weller rick house even after Diageo sold the Bernheim distillery (and the rights to its name) in 1999. It was not enough liquid to turn into a new brand by itself, and it didn’t work in the recipes for Diageo’s other whiskies. So it sat–until Diageo figured out that it had whiskeys with similar stories sitting in its rick houses all over the world that it could introduce as a series under one, continuous brand.
The idea sprung from two big shifts. The first was that Diageo, and everybody else, had become interested in new whiskeys. The category had been catching up with vodka as an industry growth powerhouse, and by the end of last year, bourbon and Tennessee whiskey was the fastest growing product category by volume in the U.S. alcohol business. “I used to laugh that my aunt Edna was the only person I knew who ever drank a Manhattan,” Rust says, “until all of a sudden, Manhattans became the second most popular drink besides a martini on a martini list. You saw it in craft cocktails. You saw it in these little farm-to-table restaurants. Everybody wanted the story, everybody wanted brown [liquor], everybody wanted to understand whiskeys.”
At the same time, Diageo was rearranging the way it did business in general. In March 2013, it announced that it would reorganize the company in order to merge supply operations, which had previously been run as a global unit, with regional business operations in 21 markets. In addition to saving the company around $100 million, it meant that the North American supply people were now talking with the North American sales people. The sales team knew that they needed a whiskey with a story. The supply team, meanwhile, knew where to find whiskey that already had one.
Diageo built a hand-bottling line in Tennessee to accommodate the delicacy of the old liquid it had pulled from Stitzel-Weller, and it had its first Orphan Barrel product on store shelves within a couple of months after committing to the project. With Barterhouse, Old Blowhard, and Rhetoric, questions like “what distillery made this?” “How did it get to the warehouse?” “Where was it stored in the warehouse?” “How does this taste when it’s just a little bit older?” have answers that some of Diageo’s larger scale whiskeys don’t. Diageo’s sales team took the whiskeys on tour, along with some samples that had been, for instance, aged too long, and was able to use them to point out the difference that age and barrel selection can have on taste. “It gives them other things to talk to their customers about,” Rust says. “It makes my front-end sales team and distributors more relevant to accounts.”
Reviews from whiskey buffs, while not negative, have not described the instant magic Rust experienced in Orphan Barrel’s creation story. They say things like, in spirits journalist Geoff Kleinman’s words, “Bourbon fans who enjoy big oak will probably get what they are looking for out of Barterhouse, but it falls short of a WOW experience,” and “Orphan Barrel has done a good job of creating a bottle of whiskey that’ll look a lot better on your shelf than it tastes in the glass.”
But Diageo sold its entire supply of Old Blowhard to distributors within 60 days (Barterhouse will be released again next year), and regardless of quality, Bernheim’s 20-year-old and 26-year-old bourbons are undeniably interesting. “Whiskey is the great communicator right now,” Rust says. And Diageo, with the liquid that it’s pulled from its vast storage, has unearthed a truly distinctive tale for it to tell.