From The Ashes: America's Distilling Giants

In today’s whisky world, the industry is awash with marketing which extols the significance of various dates in history. There are very few however which can lay claim to greater importance than December 5th 1933. With the tides of public and political opinion having turned against America’s “Noble Experiment”, the 21st amendment to the United States Constitution was ratified and Prohibition ended at last. Once again, alcohol in its many forms would flow across the land as patrons of bars and diners raised their hands to the sky in celebration, like the grateful leaves of a desert plant accepting the first drops of rainfall after 13 years of drought.

Despite having clung on for well over a decade, there were many who had long anticipated the day when the 21st amendment would vanquish the 18th, and they had made significant efforts to ensure that they were prepared for it. Some in fact were able to establish themselves so firmly and so quickly that they were able to weather the next storm gathering on the horizon in the shape of the Second World War, which would shut down the majority of distilling again, less than ten years after it had restarted. In the end, America’s war in Europe and Japan was shorter than its war on alcohol by less than a third, and after 1945 the distilling industry began to flourish again. The profits however were largely concentrated in the pockets of just a select number of companies.

With post-Prohibition success so inherently tied to how efficiently a company had gotten its ducks in a row in the years leading up to repeal, it is hardly surprising therefore that some of them were headquartered in Canada. Both Hiram Walker and Seagram had benefitted hugely from the Volstead Act and the underground demand that it created for Canadian whisky south of the border, amassing huge fortunes as smuggling and bootlegging operations clamoured to satiate it.

Having dragged on for over a decade, the majority of U.S. distillers had been put out of business by Prohibition and its repeal created a vacuum that the two Canadian giants were primed and ready to occupy. Hiram Walker, despite the Scotch whisky market being their preferred frontier, also moved quickly and efficiently in America. In September 1933, several months in advance of repeal, they announced plans to open the world’s largest distillery in Peoria, Illinois. Their flagship Ten High bourbon brand was launched two years later and by 1936 they were so profitable that they had become one corner of the Canadian half of a group of companies being targeted by anti-monopoly legislation. Known as the “Big Four,” between them they commanded a 60% market share of the American liquor business.

Old Ten High bourbon advertisement from circa 1971. Provided by Bourbon & Banter

Of course, Seagram were the other side of the Canadian contingent and had been no less ambitious in 1933, buying up the former Rossville Union distillery in Lawrenceburg, Indiana, better recognised today as the juggernaut, MGP. Seemingly unvexed by legislative attempts to limit their power, Seagram would go on to further acquire the Relay distillery in Maryland, build a new one in Louisville, Kentucky, and by 1943 had taken over Frankfort Distilleries and its famous Four Roses brand in the process.

The American half of the Big Four was represented by Schenley and National Distillers, and their readiness to capitalise on the repeal of Prohibition had been predicated on their belief that one day they would do just that. While the Canadians had spent the 1920s selling whiskey and getting rich, these two companies instead spent it selling whiskey as medicine and merely surviving. Crucially, their medicinal licenses would permit them to ready their distilleries for operations at the end of the decade to replenish their medicinal stocks, and both companies had wisely consolidated as much of the existing brands infrastructure as possible.

Of the two, Schenley played the longest game. It was established in 1920 by Louis Rosenstiel as the Cincinnati Distributing Corp and in the same year acquired the Joseph S. Finch distillery in Pennsylvania, its stock and its Golden Wedding brand which would go on to become one of its flagship labels for most of the 20th century. The expansionism began as early as 1922 after Rosenstiel met Winston Churchill while holidaying in France, and the future British Prime Minister advised him to begin preparing for the eventuality that the unpopular Prohibition act would be repealed. Rosenstiel then spent the next decade accruing further assets and by 1933, Schenley were the owners of numerous distilleries including George T. Stagg, James E. Pepper, and the Squibb distillery in Indiana. They added the famous Bernheim distillery to the portfolio in 1937, and Schenley’s spirits empire dominated much of the market share of American whiskey for the next forty years through brands like I.W. Harper, George Dickel and Cream of Kentucky.

Old Schenley advertisement from circa 1947. Provided by Bourbon & Banter

National Distillers were later to the medicinal whiskey party, however they were no strangers to the industry. The company was the most recent reinvention of the infamous Whiskey Trust of the late 19th century. The Trust was organised with the grand ambition of protecting profits and its members but quickly developed a reputation for the bullying and intimidation of anyone who refused to join, and was eventually outlawed by the Sherman Anti-Trust Act in 1890. It then reinvented itself as The Distillers Security Company, which later went into hiding as the US Food Products Corporation during Prohibition.

Returning to the whiskey business as National Distillers in 1924, they made their big play three years later by investing heavily in the newly reorganised American Medicinal Spirits Company, which now incorporated their Kentucky Distilleries & Warehouse Co, R.E. Wathen & Co, Hill & Hill, and E.H. Taylor & Sons. They also acquired the Overholt distillery in the same year, adding its famous brand to the arsenal of historic names that saw it thrive for the next fifty years, names like Old Grand-dad, Old Taylor and Old Crow.

Old National Distillers advertisement from circa 1942. Provided by Bourbon & Banter

Despite all their success of the mid-20th century, only Hiram Walker still exists and it was the first of the Big Four to back out of the bourbon trade, closing down its Peoria distillery in the 1970s. Their compatriots at Seagram were dissolved in the early 2000s and its spirits division carved up between Pernod-Ricard and Diageo, the latter of whom also owns the assets of Schenley after its predecessor, United Distillers, bought it in 1987. The National Distillers story came to an end in the same year when they were bought by Jim Beam who promptly closed all of its remaining distilleries. Having done the unthinkable and survived the many trials and tribulations of Prohibition, neither of the American companies had the legs to remain standing through the new challenges of the 1980s. 100 years removed, only Brown-Forman remain active of those who originally acquired a medicinal license in 1920, and the modern world of American whiskey has been inherited by the names of distilleries, brands and individuals born in the decades following repeal.