LOUISVILLE, Kentucky. — New Orleans-based Sazerac is taking the plunge into Tennessee whiskey production, continuing an expansion strategy highlighted by its purchase of Southern Comfort.
The family-owned, privately held company said Thursday it purchased a distillery in Newport, Tennessee, for an undisclosed price. Sazerac said it expects to begin producing Tennessee whiskey at the distillery in early 2017.
Before production begins, the company said it needs to modify the distillery's pot stills.
"We see a lot of potential in the distilling capabilities of this operation," said Sazerac President/CEO Mark Brown.
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The company said it's long been interested in expanding to Tennessee whiskey production. The dominant Tennessee whiskey brand is Jack Daniel's, the flagship brand of rival Brown-Forman Corp.
Sazerac purchased the iconic Southern Comfort brand from Brown-Forman earlier this year in a $542.4 million deal that also includes Tuaca, a premium liqueur brand. Sazerac has an extensive lineup of whiskeys, vodkas, gins, tequilas and other spirits.
Sazerac is looking to further tap into a growing market for American whiskeys. Combined U.S. revenues for bourbon, Tennessee whiskey and rye whiskey shot up 7.8 percent to $2.9 billion in 2015, up $210 million from the prior year, according to the Distilled Spirits Council.
"As the American whiskey market continues to develop and evolve, we believe there will be further 'whiskey style' segmentation within … the category," said Sazerac spokeswoman Amy Preske. "We believe that Tennessee whiskey as a style will be a part of that evolution, and we want to fully participate in that evolution."
Bourbon and Tennessee whiskey exports in 2015 topped $1 billion for the third straight year.
Sazerac said it hasn't officially coined a brand name for its Tennessee whiskey.
Chuck Cowdery, an American whiskey writer and author of "Bourbon, Straight," said how big a player Sazerac becomes in Tennessee whiskey is "an open question."
"It's a gamble," he said. "It's not by any means a sure thing. It really remains to be seen if there actually is a Tennessee whiskey category, other than Jack Daniel's."
The acquisition was limited to the Avery's Trail distillery and does not include any brands, the company said. The distillery's best-known product was the Popcorn Sutton whiskey brand named after a colorful Tennessee moonshiner. Sazerac did not immediately say if the white whiskey will continue to be made at the distillery.
All of the East Tennessee distillery's employees will be retained, including veteran master distiller John Lunn and master blender Allisa Henley, Sazerac said. Both bring considerable whiskey-making experience as former distillers of George Dickel Tennessee Whiskey.
Sazerac looks forward to tapping their expertise "to start laying down true Tennessee whiskey," Brown said in a statement.
Lunn and Henley said they look forward to creating a new Tennessee whiskey.
"Anytime you're making a really good, quality product, there's going to be room for that," Lunn said.
Sazerac said it will follow what is known as the "Lincoln County Process," which requires whiskey to be filtered through maple charcoal before being aged in unused charred barrels made out of oak. The filtering requirement makes up the principal difference from making bourbon.
Sazerac is one of New Orleans’ oldest family-owned companies, tracing its New Orleans history to 1850, though some of its products have even older connections. Earlier this month, the company announced plans to develop a museum at Canal and Magazine streets dedicated to the Sazerac and many other facets of local cocktail history. It will have a gift shop and will also house offices for the company's local staff.
In addition to its New Orleans operations, Sazerac has locations in Frankfort, Bardstown, Louisville and Owensboro, Kentucky; Fredericksburg, Virginia; Carson, California; Baltimore; Lewiston, Maine; Manchester, New Hampshire; and Montreal.