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00:00Welcome back to Bloomberg this weekend. Earlier this morning, we feasted on hot dogs, a true American staple, especially on
00:06this, the 4th of July.
00:07When it comes to beverages, libations, there is nothing more American than bourbon known as America's native spirit.
00:14Yeah, I really did get the good assignment here. We traveled to Claremont, Kentucky, home of Jim Bean, which sold
00:19its first barrel of bourbon more than 230 years ago.
00:23We talked about their long family history and how they're adapting to evolving tastes and an evolving market.
00:36My name's Freddy Noe. I'm the 8th generation Master Installer, and I've been working here for 15 years this year.
00:43My name's Fred Noe. I'm the 7th generation Master Installer here at Beam, and I've been here 42 years.
00:49Is it important that it's Fred and Freddy so that you guys don't get mixed up? When they yell for
00:53one, do you both answer?
00:54Before I was born, he was Freddy. I guess it was a granddad that said, you go by Fred, we'll
00:59call him Freddy.
01:02Talk to me a little bit about the company. How long has Jim Bean been around?
01:06The company actually got started in 1795 when Jacob Beam started making whiskey. Eight generations later, we're still here.
01:15How much has the recipe changed in that time?
01:17None. I mean, you know, I think it's interesting.
01:18None at all?
01:19It's scaled in size, obviously, right? I have a handwritten recipe that Jim Beam wrote down.
01:24Just knowing that, you know, our family's been a part of making whiskey here in America for 230 years, you
01:31know, over 230 years now, it gave me even more excitement and pride.
01:35So if it's not a particularly complicated process, how do you distinguish, how do you make a product that's better,
01:40and how do you improve a product that's been around for so long?
01:43There's so many little areas that where heat and time can impart different flavors.
01:51So it starts there, the yeast, then the cooking process, but then as it ages, there's a lot of magic.
01:56We say there's a lot of magic that goes on in there.
01:57We've been making one recipe for a very long time here and got pretty good at it.
02:02So for people who don't know, how does one make whiskey? How do you guys make it?
02:05Water, grain, yeast. We cook the grain, put it in the fermenter, add the yeast.
02:11After it ferments, we distill off the alcohol, put it in a barrel, and put it away in the warehouse.
02:17That's as simple.
02:19So this has been in here for about two and a half days. You can feel the warmth of this
02:24one.
02:24If you turn around and feel how cool this one is, this being filled.
02:28Oh, wow, this feels like a refrigerator.
02:29Yes.
02:30This one is like room temperature, warmer, yeah.
02:31It's about 65 degrees, and then naturally, the friction of the yeast eating that sugar heats that up, creates alcohol,
02:42heat, and CO2.
02:43So a lot of CO2 will be coming off.
02:45I'll give you a little warning.
02:47It does remind me of beer, like I've been in breweries before.
02:51Am I crazy? I feel like I'm missing breath.
02:54Is it about the CO2?
02:55There's no oxygen right here.
02:56You guys want to get a shot of this? It's pretty cool.
02:58Don't drop the camera in the yeast.
03:00We can get it out. We'll get it out.
03:04This is the most Willy Wonka-looking room we've been in.
03:07So after fermentation, we pump those fermenters near the bottom of the next floor up, and so the heat's traveling
03:13up.
03:14Okay.
03:14And the heat is heating the alcohol in there and turning it into a vapor.
03:19And then we'll re-distill it in that vessel right down there.
03:22And so that's the finished product of Booker's bourbon that will be going to a barrel probably tomorrow,
03:27and then go rest six to eight years in the warehouse.
03:30So drinking out of this fountain would do some damage.
03:32It would, yes, yes, yes.
03:34Still seems like a fun... I'm willing to try it.
03:40This is a nine-story rack house.
03:42There were times when we were walking up here, like, Jim Beam was in this rack house.
03:44Like, this is an OG rack house.
03:46He helped build this one. That's correct.
03:47That's crazy.
03:48What does that height get you?
03:50More, I guess what I'll say, more flavor variability throughout the warehouse.
03:55Jim Beam will be in every floor of this house, and we blend to a vertical cross-section.
04:00We may go to another warehouse and get barrels from the top floor,
04:02and maybe even a third warehouse to get some from the middle to create that blend.
04:07These are oak barrels?
04:09Oak, yes. American white oak.
04:10As producers look at margins and profitability, there's got to be a cheaper way to do this.
04:16Well, maybe 50% to 70% of the flavor you taste in the finished product
04:20comes from the charring of that barrel and the sugars in that barrel.
04:24So you've very stupidly handed me this mallet.
04:27We're going to use this whiskey thief...
04:30Fun.
04:31...to steal us a little sample out of that barrel.
04:33And I've given you the knocker there, and so your job is to remove this bone
04:39so that I can steal us a drink.
04:41Like, above my head, of course?
04:42The hardest you got.
04:42Oh, God. All right. This is not going to... Okay.
04:45I hate you, Patrick.
04:46You got this.
04:46Okay, ready?
04:48Look at that.
04:49I did a thing. Yes.
04:51Can we have alcohol now, please?
04:52This is pretty fun.
04:54Oh, yeah.
04:54This is the most important and probably the most fun part of the job.
05:00I like that it's called a thief because it does feel a little bit clandestine.
05:04Cheers.
05:04Cheers.
05:09Oh, that's awesome.
05:11What are we drinking?
05:12So, this is Jim Beam, right at six and a half years old.
05:15Okay.
05:16And 128 proof.
05:18Cheers.
05:18I'm going to have a little bit more.
05:21What makes a good bourbon?
05:22What makes a good bourbon?
05:23Yeah.
05:23One that you enjoy.
05:24I mean, that's what I always tell people.
05:26Find one you like and drink it.
05:29When you say good, it's what you like.
05:31Have things been going good for the industry lately?
05:34I mean, I know it's been a complicated market, both domestically and abroad.
05:37You guys are now owned by a Japanese company.
05:40Bourbon and whiskey are huge in Asia.
05:42Talk to us about where the growth is in the market and where there are like a little bit of
05:46struggles.
05:47Yeah.
05:47I think you mentioned it right there, right?
05:49Asia has been an extremely emerging market for us.
05:52I think another thing within that is how consumers are consuming.
05:57RTDs are very popular.
06:00What's an RTD?
06:01Ready to drink.
06:02Oh, see, I didn't know that.
06:03That's an industry term.
06:04I'm learning.
06:04I'm learning.
06:05Yeah, yeah, yeah.
06:05All right.
06:06But I also think, you know, a lot of consumers are being very conscientious of where they're spending their dollar,
06:10right?
06:10Yeah.
06:10You know, as Dad said, we want you to enjoy it any way you please.
06:13So, I think the biggest thing is getting people bourbon kind of how they're consuming, right?
06:20When you look at the things that stress the business, what are the big cost factors?
06:24What are the things that are impacting you?
06:26I think tariffs and gas prices are the two things that come to mind.
06:29Oh, yeah.
06:29You know, just the economy in general.
06:31You know, people have to pay for everything else.
06:34It's a luxury item.
06:35Like, you like it, but you don't have to have it.
06:36Yeah.
06:37For sure.
06:37And, you know, the tariffs and stuff, that's part of it.
06:40But, you know, people's taste changes.
06:43You know, like before, they didn't like bourbon.
06:45Now they do.
06:46You know, whether they're going to shift and go away from it.
06:48But, stuff you really can't control, but you just have to deal with it and move on.
06:53Be flexible and be adaptive to change.
06:56I think that's a lot of it.
06:57So, this site can produce 45 million gallons of alcohol per year.
07:02And my name is Julie Myers, a stillery manager at the Booker Note Distillery.
07:06And I've been with the Beam organization for 22 years.
07:09Yeah.
07:10All right.
07:10So, we went to the other facility, but this is like the stuff that's not on the tour, right?
07:14This is where it's, like, really happening.
07:16Absolutely.
07:16This is a much larger volume, much larger capacity.
07:20In terms of capacity for an operation, where does this rank?
07:24Is this one of the bigger ones in the area?
07:25It is.
07:25It's one of the biggest ones in North Maryland.
07:28There are more barrels of bourbon than there are human population in Kentucky.
07:32I think the thing that surprises me the most is the sheer volume.
07:35Even still?
07:36Absolutely.
07:40There's a lot of whiskey and bourbon on the market right now.
07:42There's a bit of a glut.
07:43And your CEO actually called this the golden age of whiskey.
07:47Because supply is higher and that means prices could be lower.
07:51What's your take on that?
07:52To me, I think it's great for us, again, because we've stood by what high-quality bourbon has stood for.
07:58And so when you have a consumer that's being more conscientious with their dollar, I think that puts us in
08:04a very strong position based on the research that we've done.
08:08The company is now private.
08:10Do you think that makes it easier or harder?
08:13I think it's really easier.
08:14I mean, the bourbon's aging.
08:16It's a long-term deal.
08:17You put it in the barrel and it's there for at least four years.
08:20And some, you know, up to nine, ten years.
08:23So if you're looking by the quarter, that stuff hasn't done anything.
08:27It's still sitting in the barrel.
08:28I feel like we're all aging quarter by quarter.
08:31We're doing our best.
08:33What do you do about the fact that young people are drinking less?
08:36It's hit all the producers.
08:38How are you guys adapting to that?
08:39There's a handful of ways.
08:41It's just, again, how are you continuing to give them opportunities to see these products and help them be a
08:48part of their lifestyle, right?
08:49And you're doing a non-alcoholic one, right?
08:51You beat me to it.
08:52I was literally about to get into it.
08:54So during Prohibition, Jim Beam was a citrus farmer.
08:57Do I believe that?
08:58Do I believe that Jim Beam wasn't running booze during Prohibition?
09:02He was not.
09:02He did not.
09:03He didn't want to go to jail.
09:04It was actually kind of my idea to come up with the citrus version of a non-alcoholic 0.0%.
09:09Again, it's a refreshing, kind of different take on how to enjoy kind of our family's history.
09:16Fred, you're like a multi-generational distiller.
09:18When he came to you and said, we're going to make a non-alcoholic product, you didn't, like, smack him
09:21across the face?
09:22No, no way.
09:24Because that's the thing.
09:25When Freddie came in, I said, this is your ride.
09:27Do it.
09:27I mean, if he needs my advice, I'm around.
09:30But he's taking it forward.
09:31You know, he's not going to hit on everything.
09:33It's not going to be a home run.
09:34But if you don't take a shot, you're not going to hit a home run for sure.
09:37A shot of bourbon?
09:38Maybe.
09:41What do the next 250 years look like?
09:43You got kids?
09:44Are they going to be doing this?
09:45Do they come run around the distillery?
09:47What does the future look like?
09:48Absolutely.
09:49My daughter was just here, actually, with a couple members on my team.
09:52Has there ever been a woman in this job?
09:54Not from our family, no.
09:56Not from our family, yeah.
09:57Not yet.
09:58She'll be trailblazer for us.
10:00But she's very interested, I think, having the children around to see this is a great place
10:06and a great opportunity to carry on a very strong tradition.
10:11Fred, he seems kind of okay.
10:13Are you confident in your legacy and what this place is going to endure for the next time?
10:16I'm going to be, it's in good hands.
10:18You know, just stay back and watch.
10:25Stand back and watch.
10:26I mean, your thing was cool, too.
10:28But I did get to go to Kentucky.
10:30You can drink some very nice bourbon.
10:32Yeah, there was no bourbon in the National Archives for my consumption, at least.
10:35Maybe you just weren't trying hard enough.
10:36Fascinating.
10:37How big a physical plant are we talking about here?
10:39So the smaller one where we did the barrels and looked at the mash and stuff, that's a
10:44little bit smaller and more manageable.
10:46But then we drove about 15 minutes to that larger facility, which is where, as you heard
10:50Julie say, there are more barrels of bourbon than residents of the state of Kentucky.
10:53They also took us over to a demonstration.
10:56I just want to meditate on that for a moment.
10:58That is wild.
10:58It's a lovely thought.
10:59Yeah.
10:59They let us bottle kind of our own bottle.
11:02You actually rinse it with bourbon because they don't want to add water to it.
11:05And then they let us put our thumbprint on the wax.
11:07I think we've got some video.
11:10And that'll be just so you can personalize it.
11:13How do I do that?
11:14So you just hold your thumb on the top of it for two or three seconds.
11:20Is that enough?
11:21You got it.
11:22Now just lift off.
11:23Woo-hoo!
11:24And there you go.
11:24That's your thumbprint.
11:25That's cool.
11:26It was a lot less painful than my normal waxing experience.
11:33So they gave us a couple of custom bottles, which we did share with our team and we're
11:37very grateful for.
11:38And then I am saving one that I have on my bar.
11:40With your thumbprint on it.
11:42With my thumbprint on it.
11:43So you can't steal it.
11:43But they're also doing, you know, we're talking about how they're trying to appeal to a new
11:48generation of younger consumers who are more health conscious, drinking less.
11:51And they're really tying it into live events.
11:53They've got a U.S. soccer World Cup bottle.
11:56They're doing things with Cadillac and Formula One.
11:59They have all kinds of partnerships and experiential marketing that they're doing to try to get
12:03people's minds around the fact that bourbon is drinkable on its own.
12:06But you can also put it in things.
12:08And you talked about also these ready-made cocktails that are increasingly popular, especially
12:12with young people.
12:12I didn't know you to be a bourbon drinker before this piece, but you are one who enjoys
12:17the taste.
12:17And I will say very clearly in those conversations, just the acknowledgement of the fact they live
12:24in this history is still very front of mind to them.
12:26You talk about how they were purchased.
12:28It's like the business has changed in some fundamental ways, but that historical resonance
12:31is still very acute.
12:33Fred and Freddy still seem very much in charge and know their products just absolutely inside
12:37and out.
12:38And I think, you know, those are the kinds of guys you want making your excellent glass of
12:42Ferb and I would have trusted them with anything in my glass.
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