Jack Daniel's turns back latest Tennessee Whiskey challenge

NASHVILLE, Tenn. -- Jack Daniel's has turned back the latest challenge to a state law that determines which spirits can be marketed as "Tennessee Whiskey," but upstart distillers hoping their brands make the cut vow the fight isn't over for good.

Opponents of the law enacted at the behest of Jack Daniel's in 2013 said they withdrew their repeal measure Tuesday to try to generate more support before next year's legislative session. But Jack Daniel's master distiller Jeff Arnett declared the proposal dead.

"What it shows is that that dog won't hunt -- and it never will," Arnett said. "We've put a stake in this, and consider it to be over."

The subsidiary of Louisville, Kentucky-based Brown-Forman Corp. is by far the dominant player in the Tennessee whiskey field, producing 11.5 million cases in 2014. The next-largest producer, George Dickel, makes about 130,000 cases per year, while most of the state's other 32 licensed distilleries have yet to bring a Tennessee whiskey to market.

Jack Daniel's says the law ensures minimum quality standards, but some smaller distillers chafed at its requirement to filter spirits through charcoal and store them in unused oak barrels to label them Tennessee whiskey.

Michael Ballard, owner of the Full Throttle distillery in the northwest Tennessee town of Trimble, said Arnett and Jack Daniel's has been acting like a "bully" by demanding every new producer follow the technique known as the "Lincoln County Process."

Ballard noted Scotch whiskies, including the world's top-selling Johnnie Walker brand, are aged in used barrels, and that Kentucky bourbons are generally not charcoal filtered.

"So how is that watered down whiskey?" he said.

Ballard's business partner Jesse James Dupree, lead singer of the hard rock band Jackyl, has put plans to build his own distillery in Trimble on hold until the whiskey law is rescinded.

"It does not guarantee any quality of anything," he said. "You could put terrible whiskey in a virgin oak barrel and charcoal-filter it, and it's still going to be terrible whiskey."

Dupree also decried what he called Jack Daniel's heavy-handed tactics in contributing $96,000 to state lawmakers last year and supplying barrels to craft distillers that have largely lined up to support the law.

"I think that completely discredits the Tennessee Distiller's Guild when they say it's 17-3 in favor of the law. There's a reason we're not in the guild, and that's it," he said.

The guild's president, Speakeasy Spirits owner Jeff Pennington, said he was pleased with the bill's defeat for the year, saying the current law protects the quality and brand of Tennessee Whiskey.

"There's a reason so many people wanted to open up here, because there's a franchise here in Tennessee," Pennington said. "And that's something that separates us from everyone else."

Charles Nelson of Nelson's Green Brier Distillery in Nashville, who supports the law, agreed.

"I'm just glad I don't have to worry about the standards coming into question, and if comes up again I'll be back here every year it comes up until it's totally dead and buried," he said at the legislature.

Opponents of the law found an unexpected ally in conservative lobbying group Americans For Prosperity, an organization backed by billionaire brothers Charles and David Koch.

AFP state director Andrew Ogles said the group would work to find a solution "so that Jack Daniel's walks away feeling they're well represented, but also that smaller distilleries that want to come online and not necessarily use the Lincoln County Process also have representation."

"We'll be back talking about this in 2016," he said.