The Business of Bourbon - full documentary

There are only a few things that can claim to be uniquely American. The sport of baseball, the iconic melodies of jazz, and one of America's most alluring commodities, bourbon. This is the story of the nearly nine billion dollar industry built around this legendary spirit, why the industry is currently booming, and what and who you should know if you're thinking of investing in the business of bourbon. Bourbon found me, I didn't find bourbon, so I just happened to fall into it and it worked. It's not like I was this big lover of bourbon or I had this palate that could figure out mash bills or anything like that or that I even knew how bourbon was made. People just kept asking me to find them things, barrels or aged material or whiskey or scotch and it just continued. I ended up helping a Bardstown bourbon company which is now only four years old because of that meet all the other distillery owners and distillery principals and just kind of morphed into what it is. And for Jeff Hopmeyer what it is today is the extremely successful Rendiamo Group, a company Jeff founded in 2012 and through which he has gained unusual access to the bourbon industry. Jeff's timing was impeccable because he got in just as bourbon was beginning an unparalleled boom. Consumers are paying on average $44 for a bottle of bourbon at retail and some special whiskeys have sold on the resale market for up to $1 million for a single bottle. This remarkable growth has been fueled by several factors despite having to contend with the complicated three-tier system the United States established after the repeal of prohibition. Depending on how far and wide you want to spread your wings it gets super complex really quickly but within that the U.S. is by far the most complex country and that's because we live under the three-tier system. So a producer of alcohol has to sell to a distributor who has to sell to a retailer and only the retailer can sell to a consumer. Those laws are different in every state so if you want to sell in more than one state you're dealing with more than one set of regulations. Some call the three-tier system clandestine and impenetrable. All acknowledge it's one of the many challenges in the bourbon industry. While creativity and enthusiasm are in no short supply don't think investing in bourbon is an easy process with a guarantee of success. Just like most investments it can carry a high degree of risk. Your first love all gaga and romantic about what the business is about but very quickly I learned that it's a really multi-faceted complicated business. Yeah it's this is an extremely complicated business and had I truly understood how complicated it is I and how difficult it would be in order to make this dream a reality I'm not sure if I would have set out on the path. But I tell people if you don't have deep pockets and big balls you probably shouldn't be in this industry. This is a this is if you have no patience you have no business being in in the bourbon business. People come in and think they can buy their way into it and that's not really the the way it really works. You can buy your way into owning barrels, you can buy your way into owning a distillery, you can buy your way into owning a brand but it it it takes something more it takes a lot of heart that you have to pour into this. Jeff was was one of those guys that uh it was like he was a mythical figure in this industry and I was like who is who is this guy? You know he's a I call him a bon vivant. He he's kind of that Oz figure in in the industry right you know so he's kind of back there behind the curtain. He's such an easy person to relate to he's just great to be around and boy in a industry of characters he is sure one of them. He's the guy in Pulp Fiction they bring in the wolf to kind of fix the situation. He is the guy behind a lot of these brands and he's he's you know he he's he's the puppet master. Uh to know Jeff is he he's not overtly cuddly like a teddy bear um he's a pretty straight shooter and I won't say that he you know sat down and held my hand and said you know it's gonna be okay because that would not be Jeff at all but what Jeff did is said you gotta follow your gut just do it do what you know how to do. He was very bullish and was always there as a resource. He's been amazing. His transparency is honesty and and his charisma has propelled him to where he is and I think that I would not like him to hear that part because he'll get a bigger head but whatever he it is the truth. He's done deals with Bacardi and Diageo, craft producers, celebrities and athletes and all types of stakeholders including startups. He's more than willing to share his unique experiences and access to the inner workings of the three-tier system to guide those who are considering investing in bourbon futures. Jeff's helped me every bit of the way. He's been a great friend and a good partner to me in business as a member of our board but even bigger than that just all of the things that he knows in our industry and and the people he knows in our industry have been important to me. Jeff is a key player for sure in my experience. I've been with Bardstown Bourbon Company since it really was an idea. David Mandel and Dan Lin knew me from back in the day when we both had competing vodka brands and they set out five years ago to create this distillery in Kentucky and rang me up and asked me if I would help them find a potential investor in the distillery and I drove up there and met them in a construction trailer in the middle of a cornfield and we agreed you know I agreed to help them out and everything and ended up bringing different people to the party to talk to them and we ended up doing a transaction with Constellation and Constellation owns a piece of Bardstown. I think that Brindiamo is both a connector and the secondary market for aged barrels. His network is really valuable but he's also just a very thoughtful business person and he never stops so he has an energy that is infectious. Jeff has just been a go-to guy that he he knows where to go you know he knows other companies that has products that that we can get and Jeff is just very very knowledgeable guy that that is willing to help us and anybody else to to make sure that the industry itself survives and you know strives. Mark Irwin and Ingrid and Justin and Susie they're the team. All I do is provide them with alternative advice. The team has to manage it and make their own decision right. I am not really active in day-to-day decisions and things like that but there are times when they want a different opinion and that's where I come in. Bardstown bourbon company is only one of many success stories in which Jeff and Brindiamo have played a role. Angels Envy is a wonderful brand created in Louisville by the Henderson family. I originally met Wes Henderson back in the day. We hit it off and have continued to be friends with him and his son Kyle who's great. He got looped in with my dad at probably an ADI conference or discus meeting something like that. Jeff's been pretty well known in the industry. He's been in out of a few different companies and when they when they created this Brindiamo group and started consulting and helping people source barrels and really you know ideate and do the acquisitions and everything else we didn't need a lot of that. Really our need was hey we've got this small brand. Bacardi had just invested and purchased the company and we needed some support to help grow. Bacardi is very good at growing but they have never done whiskey before or at least American whiskey. You know they had scotch and rum and vodka and tequila but this is the first American whiskey and Jeff had a really good knowledge of some of the players in the industry who may or may not be able to help us. So we connected with him and the main purpose of most of our relationship is about sourcing very very specific aged whiskeys to meet profiles that we're looking for for special releases. So you know we'll go to him and hey we're looking for a this Nashville this barrel type of a call it seven eight year old whiskey we want to lay it down in another cast can you help us find that. Really what we do for them is help them fill the needs and Angels Envy actually takes the product and they put it in port barrels and it ages so it changes from anything that we've given them but it's a great operation. I remember when it was being built there and it's been it's been fun to see it grow. And now as you know that's continuing to grow and we continue to work with him you know we're looking at him for possible consulting and just all the other things that he offers is absolutely incredible. I met Jeff about four years ago in Nashville. He had visited us visited our distillery here in Louisville and we had a whiskey food pairing event in Nashville. You know we immediately hit it off. I just I thought that he's so knowledgeable very well dialed in and connected to what the industry is about and then on top of it we both happen to be from Chicago or lived in Chicago for a long time so there was that synergy as well. Kaveh is another Chicago boy like me. We hit it off back in the day when he was starting Rabbit Hole. You know he was very helpful in helping me find some personal barrels for my own collection. Some of them which we now have used for Rabbit Hole. But when I started the distillery as a producer we were able to connect because we do quite a bit of contract distillation or at least we used to do a lot more before when we first started. So it's a combination of both as procurement of barrels but also from the standpoint of contract distillation for other folks that want to get in the business and he obviously manages and kind of arranges that as well. Much like anywhere else I supply and help Kaveh source special barrels and special product for his gaps in his inventory. I probably am a consigliere for him as well and just we bounce ideas, we bounce opportunities, lots of fun conversations. As an immigrant to come to the states and be part of what is quintessentially American is just honestly it gives me goosebumps to think about it. Rabbit Hole I'm able to leave a legacy that hopefully will be here long after I'm gone and be part of my adopted home. And it's not just a few distilleries or brands that the Brindiamo Group has assisted. They offer expertise to a variety of companies and individuals. So in the early days we knew nothing about the business. I didn't even know why whiskey was brown and tasted so good. We didn't know what we didn't know and we were very fortunate to meet and come into contact with a lot of experts and industry veterans who were able to help guide us on our path. They have great family history, great family lineage in distilling and Charlie and the family wanted to recreate this. I heard his name and was told you know you're in Nashville, you're in Middle Tennessee, you got to meet Jeff Hopmeyer. Multiple people had said that and that he you know was a big spirits guy in the area. Back in the day when they were starting looking for capital, looking for investment and it was a pretty rough presentation and rough financials and lots going on. I mean I remember the space that they're in and there wasn't a floor it was just gravel and I mean I was like what are you guys doing? I would say you know there was a time where we were in a tight situation and I talked to Jeff and asked for his advice and of course he said he could help out and he did. In the end, the Nelson boys did a great job bringing it together, recreating it, taking it to the next step, finding a great partner in Constellation and really continue to evolve with some really great Tennessee product. I like to say that I probably said this to him I was like oh great man so we do all the hard work and you get all the credit huh? And he said well hey you wanted out of the situation so it wasn't the easiest path and but it was one that worked and I don't know if anything else would have worked so he got us out and I'm grateful for that. Dixon Dedman is the owner of the historic Beaumont Inn near Harrodsburg, Kentucky that boasts an award-winning restaurant as well as an acclaimed bourbon brand. Jeff helped Dixon grow his brand beyond the bluegrass state. I think one of the greatest qualities about Jeff at least from my perspective is that Jeff is a very very loyal individual. Jeff has helped me both grow my brand, partner with somebody who could help me take it outside of Kentucky. Jeff helped me with kind of our liquid strategy and that type of thing. The guys at Bardstown Bourbon Company actually introduced me to him gave me one of the temporary offices upstairs we met with I met with Dixon at Bardstown because he wasn't sure what he wanted to do with the brand and I just looked and I said just sell it let's sell it then he goes well I don't I don't think we'll get enough and this and that's like yeah we'll get enough don't worry about and we went down the path and we sold it and he was really happy. So he's he's helped me in many ways but probably more significantly than anything it's just kind of on a on a personal level as a as a sounding board and an advisor. Bourbon has almost reinvented itself in the 21st century because of the passion and creativity that is truly the lifeblood of the industry today. It's no longer only about having a distinguished family legacy although many of the newer brands can trace their lineage back several decades but today's consumers are seeking something more. They want unique and fresh takes on this highly revered spirit. They don't want to just drink it they want to experience bourbon. But I do like to collect whiskey and bourbon and really to be honest with you I like to collect them in pairs because I like to open one and drink it because if we only have one we get told what's in it and we can read reviews of what's in it but we really never know what's in it. I do what I do for the adventure of what did the distillers put in the bottle. They're trying to do the best they can do well let's go see how well they did it and that's what that's the chase for me it's just spectacular and the variety is from A to Z. Driving the current bourbon boom are a lot of creative ideas and young brands that didn't even exist 20 years ago. These success stories are a pretty good indication that the American dream with its ingenuity and innovation is still alive and well. Now aging spirits in a barge is different than aging bourbon in a rickhouse in Kentucky. First of all there's already a blueprint for how you age in a rickhouse in Kentucky or anywhere for that matter. There's not one for aging spirits on a barge on the Mississippi River. We pursued an experimental permit because we didn't know if anybody would grant us this license to operate. We received the experimental and we ran the process. After about six months we noticed a difference with the the barge bourbon versus that on land and decided to to go kind of double down and that's when we sought and ultimately received a DSP or a distilled spirits permit and it makes our operation really the first bonded and permitted floating facility anywhere in the world. Hank was introduced to Jeff early on through Jason McMurray now a partner in the Brindiamo group. Forgive the analogy but I think of kind of the silent but deadly fart you know it's something that you don't hear you don't really see but when you know it you know it's strong. So I think the reason that people go to Jeff is because it's a word of mouth game and if you haven't been in this business you have no idea who Brindiamo is but it's such a small industry that after a while you get to know pretty much most of the players and if you have a need for bulk whiskey there's only a handful of people you can call so eventually you have to run into the Brindiamo guys. Some of the things we've learned over the process in putting this on the barge so while the barrel is losing liquid inside it sitting in a rickhouse it doesn't move. On the barge it rolls so you get more coverage from the wood and generally his product tastes like older product because he's getting more interaction with the wood on the barge and he's been it's been fun to watch it's been fun. Hank's been very creative and done a great job with it. Jeff and Jason were really instrumental in us getting a launch because they'd been through the process and they knew who to call and knew where we needed to go and shop and talk and all these things so they set us up with some wonderful meetings early on that really helped us get where we are today. Carrie Bringle is the owner and pit master of one of Nashville's most successful barbecue joints and the only pit master in the world to own his own spirits company. So I met Jeff Hopmeyer probably seven years ago it was after I had already started my spirits company but while I was in the early early days of it and I met Jeff through a mutual friend at my liquor distributor he said he thought it was somebody that I would probably want to know I had heard his name from somebody else and so I called him up and we sat down and had lunch. Carrie Brindle is amazing his barbecue joint Peg Leg Porker's great. Carrie got to me actually through Jason McMurray and Carrie has all these crazy ideas I want to build a distillery I want to build this I want to do this I want to do this and I want to create my own bourbon but I need product. We hit it off as friends and then he's also been a informal consultant for me over the years and then I buy some product from Jeff as well he's one of the largest brokers in the country always has a line on what's going on in the industry and so if I want to bounce an idea off something off of somebody or ask them what they think their read is on something then I know I can get an honest answer from Jeff and that's nice to have that. We gave him the best advice we can to help him out to make it look like something that I thought would be respectable for what he's doing. The reason that Peg Leg Porker is successful now is because of the mistakes that I've made in the past and the fact that I've learned from those mistakes that came from a lot of hard work from a lot of trial and error and a little help from my friends like Jeff that would have been a sounding board and able to give me advice on which direction I may or may not want to go. Jeff is also known for connecting people and great ideas he approached Suzanne Pfeiffer-Pavitt a successful Napa winery owner about starting a new brand at Bardstown bourbon company that would be finished in Pfeiffer-Pavitt Cabernet barrels. I was a little bit starstruck because I'm a huge fan of Steve Nally hall of fame master distiller I mean just oh I mean just the kindest man he's a cross between my daddy and my granddaddy and the two of us hit it off instantly he basically said I know nothing about making Napa Cabernet you know and I said well that's interesting because I know nothing about making bourbon but together we could really do something special and that was 2016 and we said let's do it let's make a bourbon together and at the time Bardstown was a thought they were just getting started we have packaging we have bottling we have design nothing and so I was in I'm so proud I was in through Jeff's guidance with that development from the very very beginning and that was the beginning of Pfeiffer-Pavitt Reserve Bourbon Among the elements that make the bourbon business so complex is the unique three-tiered framework that governs the beverage alcohol industry. It's a system that requires a deep knowledge and understanding to access as well as a broad network of relationships to navigate. Brindiamo Group does operate in all of the tiers in terms of helping people that are in those tiers but we don't have sales in those tiers right you could call us up and ask us to evaluate a new label you're putting together or a bottle design or a concept right that's at this tier we could help a distributor sell their business that's in this tier but the bulk of what we do is really selling a raw material just like you would sell a piece of paper to somebody right a bulk pulp we're doing the same thing it's really it's not even a brand it's it's just a liquid that still needs to be turned into something and that's really where Jeff and I in Brindiamo I think it all kind of hinges is if if you don't have the liquid it's a non-starter so it seems to spawn a lot of the conversations and starts a lot of the lessons and allows us to kind of lead people along and you know we don't we don't make any of the problems just go away or any of the challenges go away but we get them all together on the page and on the table and we help get an attack plan against it. At every level of the industry you'll find smart and savvy entrepreneurs who came to Bourbon from totally unrelated businesses and surrendered to the allure of the spirits industry. The bulk of my career has been in healthcare I started a home healthcare agency just outside of Nashville about 15 years ago and built that up to a pretty significant rural agency we had 500 patients and I ended up selling that to a regional competitor and while I was doing that I started a home health and hospice software company a data analytics firm that predicted probability of patient readmission and all sorts of data driven outcomes and and I was introduced to Jeff by virtue of a mutual friend a fellow that works at a bank downtown thought we would be interesting collaborators on a technology project that Jeff had decided to work on. I sort of came on as a consultant on the technology effort that he was working on and so I got into the deep end of the wholesale and raw material side of of the spirits industry and had a front row seat understanding how all of the transactions with Brindiamo worked and who the partners were and what the outcome goal was and so it became really clear to me that there was an opportunity to leverage sort of an arbitrage and so we assembled a group of investors and have made pretty what have now become pretty substantial investments in Kentucky bourbon over the last 18 months. Brett Moore also came from a business far from the spirits industry prior to owning a retail store he sold shoes. Yes there are a lot of women who enjoy buying shoes and they have a ton of them. I happen to be in the men's side of the business men don't care about buying shoes it is a chore it is a have to not a want to. Unknowingly I didn't realize that the difference between somebody buying a product or you know a service that they have to buy versus buying a product that they want to buy is night and day difference. Every person that walks through that front door for us has a smile on their face and can't wait to get in there to make their purchase and potentially purchase something that they walk out with that they didn't come in to buy but they walk out being happy that they bought and can't wait to get home and have a taste of it. Jeff Hauptmayer and the Brindiamo group are experts at guiding clients in every tier level. Sometimes Jeff even partners on projects with the friendly competition. Mark Harris and I have this great relationship that's part of that brotherhood sisterhood thing right and and over the years have helped each other out over the years I've lost deals to him he's lost deals to me. It's a fun I mean we call each other up probably daily and just talk about something but you know it's it's a fun relationship you know he's he's somebody in the industry that we get to work really well together yeah we're a little bit of competitors but we do a lot more stuff together than we compete. We have been fortunate to have some pretty good relationships over time. I think that we value those relationships higher than anything else and we protect them and those relationships give us access and and those relationships get access right so it's definitely one of the most important things within the space because it also creates trust and you can't walk into this business off of the streets at any of the tiers and not have trust you just won't go forward. And Jeff is not alone in his commitment to his colleagues helping each other is a tradition that has seen the industry through some difficult times. Several several years ago the the bourbon industry was on a downslide you know it was thought that bourbon may not survive you know that was when vodkas and gins and the clear spirits were taken over and we didn't start at that point saying well we're going to survive and you're not in the bourbon industry we all kind of stuck together and waited it out and then when bourbon started on the upswing again we were all still there together and you know we're now enjoying it on the upswing and we're all enjoying it together and we're still there to help each other out through the good times and the bad. I do think it's a very fascinating industry and I've loved getting to learn so much about it and be able to work with my dad that's a very unique opportunity. I've always looked up to him we've always had a very similar personality type and I've learned so many life lessons from him that it's cool to now be able to actually see him in his element doing what he loves to do. I think that for people that want to get into it into the industry as investors the first thing I always tell people is you have to be willing to write the check and never look back right as soon as you put that money out there it's gone you're never getting it back so if you can't do that don't do it if you're gonna call me every month every week and ask me what are the prices of barrels or how's this brand doing or forget about it it's just not this is not the place for you for them the story the history the growth things people are seeing right now and everybody wants to be say they own a barrel or they own a brand or that beverage alcohol is sexy I mean that's people want to be able to say oh I'm an investor in that or I did this so I think people are allured by many different things right and they but they come into these things pretty blind and not all of them work you can't be just a gimmick and you can't use sex to sell right you can't that those just doesn't work so you really you really have to have something special whether it's in the bottle whether it's part of the story the DNA of whatever it is I think to have longevity and to have other people interested in it I think you have to treat the industry with respect I think that's critical