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Angel’s Envy stands by ‘small batch’ description

Despite the recent acquisition of Angel’s Envy by drinks giant Bacardi and a “crazy” lawsuit over its “small batch” labels, the Bourbon brand will “always be handcrafted”.

Keeping it in the family: Kyle Henderson (left), Wes Henderson (centre) and the late Lincoln Henderson (right)

*This article was first published in the May 2015 issue of The Spirits Business magazine

It was a sad day for the entire Bourbon industry when Lincoln Henderson passed away in September 2013. Having racked up some 40 years with Brown-Forman, developing whiskeys such as Woodford Reserve and Jack Daniel’s Gentleman Jack, the distilling veteran had come out of retirement to oversee the establishment of a new brand produced by the Henderson family: Angel’s Envy.

In 2011, using small batches of whiskey sourced from numerous distilleries, Lincoln Henderson launched the brand that was to become his legacy. At the time, he described the flagship Port cask-finished Bourbon as his “life’s work”, and believed plans to build a US$12 million (£7.85m) distillery on Louisville’s Main Street was a “dream come true”. Sadly, just weeks after breaking ground on the site, Lincoln passed away at home at the age of 75 “surrounded by family, laughter and tears”.

Lincoln never got to see his dream become reality, nor witness the sale of the business to Bacardi in March 2015, one of the most significant acquisitions of recent years and perhaps the brand’s greatest moment in its short yet spectacular history. For Lincoln’s son, Wes Henderson, chief innovation officer and co-founder of Louisville Distilling Company (LDC), owner of the Angel’s Envy brand, passing the baton onto Bacardi may not have been part of the group’s mid-term strategy, but was the next logical move.

Logical next step

“We just got to the point in the growth of the business where it made sense to take the next steps,” Henderson explains. “We were profitable and were building the distillery so we had already completed any equity rounds that we intended. We didn’t see the sale as something we had to do; it just became the most logical extension of the best way to grow the business.”

Bacardi had been a minority partner of LDC since Angel’s Envy’s early days, but as one international spirits company after another entered the Bourbon game, the Bermuda-based drinks group increasingly sought its own slice of the pie, and a minority share wasn’t going to cut it. Of course, Bacardi wasn’t the only company interested in the brand. “We got some calls, and we’d say we were flattered but not interested,” Henderson explains. But if LDC wasn’t interested in a takeover, why did it finally succumb to an approach from Bacardi?

“They understood the DNA of the brand, and having worked with them for so many years we really loved their management style and that was huge to me. Bacardi is a wonderful family-owned business and they have the same types of feelings we do about how to operate, so it was a great fit.”

Angel’s Envy was acquired by Bermuda-based drinks group Bacardi earlier this year

Family business

Family ownership is a business trait that truly resonates with Henderson – three of his six sons currently work in the company, including the eldest, Kyle, who works as production manager, ensuring quality control. But perhaps the most important factor that clinched the deal for Bacardi was its promise to allow LDC to operate as an independent subsidiary. “Their understanding and confidence in us to operate the company in the way we’ve been operating it is fantastic,” he beams. “It’s really a dream relationship and it’s been that way since the very beginning.

“The most important thing is that we execute like a small company while utilising all those wonderful efficiencies a big company brings.”

Bacardi made a promise to Henderson and the rest of LDC’s board that it wouldn’t alter a single aspect of the operation. And aside from the resignation of its CEO and founding partner, Marc Bushala, who left to develop his own investment fund, nothing has changed. But why would it? For a super-premium brand Angel’s Envy has seen some pretty impressive growth over the past four years, most recently doubling its sales in 2014 to 45,000 nine-litre cases within the US alone. With that growth, Angel’s Envy is outpacing the super-premium Bourbon market, which according to Discus, grew by 19.2% in the same year.

Big ambitions

Walk east out of town along Louisville’s Main Street and among the endless construction work to widen the interstate and bridge into the city sits a large, crumbling warehouse destined to regenerate as Angel’s Envy’s new whiskey distillery. Initially due to open in 2013 but delayed by the road works, the new 65,000sqft distillery is now expected to come online in February 2016. With a combined column and pot still, the distillery will have the capability of producing around one million cases of whiskey a year, plus room to expand further down the line. Blending and bottling will be performed on-site, although maturation will take place at LDC’s warehouses in Shively, Kentucky.

The large distillery and visitors’ centre will be a huge step-change for the brand that is currently blended in 500-gallon vats and describes itself as “small batch”. While there is currently pending litigation against the company for its use of the term, a lawsuit Henderson describes as “frivolous” and “the craziest thing I’ve heard”, does Angel’s Envy still intend on describing itself as such when it’s producing one million cases a year? “There are so many interpretations for what is considered small-batch or handcrafted that I don’t know what the future is going to hold as far as that labelling goes,” he says frankly. “I know we will stay true to our production methods though, which is very hands-on in terms of how we blend and finish. We will always be handcrafted as far as I’m concerned.”

Henderson is right – there are so many different definitions of the word “craft” bandied around that the term has lost all meaning. If Angel’s Envy is to continue using it on its labelling, what does the word mean to him? “I can use our brand as an example of what I believe is craft: a product that is produced in a way that has human hands involved throughout a good portion of the production process and was created by someone who has an art for craft and an artists’ mentality,” he explains confidently. “You don’t have to be a tiny company to be craft; it’s more a mentality and mindset than it is a specific definition. But at the end of the day it’s the consumer that decides what they perceive to be hand-crafted.”

LDC revealed plans to build a new multi-million dollar distillery for Angel’s Envy in 2013

Innovative mindset

Trying to live up to a definition of your core values you had nothing to do with creating is not something Henderson anticipates losing sleep over. Instead, he subscribes to the goal to continue producing Angel’s Envy in much the same way as he and his father set out to. That said, he admits one of his primary focuses, and loves, is innovation and pushing the boundaries of flavour within whiskey. “Secondary barrel finishes seem to be the niche we’ve found in this industry,” he explains, referring to the Port cask-finished Bourbon and rum cask-finished rye in the Angel’s Envy core portfolio. “We are the first American whiskey that’s really been successful at that. A lot of experimentation revolves around other barrel finishes, but certainly as we get the new distillery open that research will take on more depth as we look at different mash bills and other things. I have a big interest in Bourbon history and historic recipes like using lower barrel entry proofs and mash bills, so those are things I can mess about with more soon.”

But the distillery opening is still a long way off. In the meantime sales are doubling and LDC has plans to launch Angel’s Envy in some mature whisky markets like London, Paris and Berlin, and perhaps duty free, before the end of the year. For a brand that’s currently sourced from other distilleries, how confident is Henderson that LDC, and now Bacardi, can fulfil demand from new overseas distributors while maintaining growth on home turf? “Stock is always an issue,” he says, reflecting the much touted “Bourbon shortage” that’s blighting Kentucky. “But we’ve got to show restraint and make sure we still take care of our current consumers. We want to make sure we have supply before we go crazy and start spreading it everywhere.”

Global outlook

The most obvious benefit of being a part of the extended Bacardi family now, albeit one that may be more use once stocks from the new distillery are mature, is the advantage of its expansive routes to market. While for Bacardi, the world’s fourth largest spirits group now has a footprint in the rapidly growing Bourbon category, and with a brand that not only resonates with consumers but reflects its own family values and operational ethics. It’s been a gap former Bacardi CEO Ed Shirley identified in the business’ portfolio for some time, but always held that the group would only make a move on a brand “if it’s right for us”.

Someday, Wes hopes to have all six of his children working in the family business, although he insists they are still free to choose their own paths. “I look forward to us growing with the Bacardi family as their brands continue to grow,” he enthuses. “It’s very exciting to be part of a larger family and to have other family members support us and us support them. And to be able to work with my kids, that’s really the dream. Three of my six sons currently work for me; child labour laws prevent me from hiring the rest of them. But just to be able to see them every day is a day well spent.”

For Henderson, the dream isn’t quite complete with one key family member missing from the business, but he is confident his father would be proud. “Dad would be thrilled if he could see us now,” he affirms. “He saw the brand take a trajectory that was unheard of, but the thing that saddens me is he is not around to see the distillery open. We were blessed to have him as long as we did, and he’d be very proud.”

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