Brown-Forman Sells The Jack Daniel Cooperage To Independent Stave Company

Last week, the Brown-Forman Corporation finalized the sale of its Jack Daniel Cooperage in Trinity, Alabama, to Independent Stave Company (ISC). This is the latest deal between the two liquor industry giants, following ISC’s recent purchase of Brown-Forman's stave mills in Tennessee, Alabama, and Ohio. Sold for an undisclosed amount, this transaction shines a light on the vital role American stave mills play in global spirits production.

What is a Cooperage?

For the sake of clarity, a cooperage is a facility where barrels are manufactured, primarily using wooden strips called, staves. Cooperages are responsible for sourcing building materials, as well as the assembly and maintenance of barrels. Traditionally, coopers - the barrel craftsmen of old - meticulously shaped staves and assembled barrels by hand. Modern technology has increased the use of machine-operated processes, but the craft still requires human oversight and skills to ensure the quality and integrity of the barrels produced.

The Role of Barrels In The Liquor Industry

Barrel aging is an essential part of the production of wine, beer and particularly spirits, where time in the barrel imparts flavors, aromas and color. American bourbon and rye whiskey must be matured in charred, new oak containers by law, necessitating a constant supply of fresh barrels. Since bourbon and rye producers can only use each barrel once, they often embark on a second life, where they are purchased and reused to age other spirits such as Scotch, Irish whiskey, Japanese whisky, tequila, and, in recent years, wine.

The Business Of Barrels

The sale of the Jack Daniel Cooperage underscores broader industry dynamics. Brown-Forman is one of the biggest companies in the spirits industry, with a net worth of $28 billion. Founded in 1870, they bought Jack Daniel’s in 1956 and also own Old Forester, Woodford Reserve, and Herradura tequila, among other brands. They opened their first cooperage in 1945 in order to control every facet of their spirits production.

On the other side of the table, Independent Stave Company was founded over 100 years ago by the Boswell family, who runs it to this day. ISC is now the largest barrel maker in the world, with cooperages all over the globe.

Cooperages, like the one in Trinity, are pivotal to whiskey production, but they cost a lot to run. By divesting in their cooperages, Brown-Forman is selling off an expensive part of their business at a time when they want to focus on expanding their brands. Meanwhile, the purchase helps ISC bolster its bottom line. Increasing its hold on the barrel industry allows the manufacturer to optimize its supply chain and enhance operational efficiency worldwide.

The Jack Daniel Cooperage will be renamed the Alabama Cooperage upon completion of the deal, which is expected by May 1, 2024, according to Brown-Forman. As with previous transactions, ISC will extend the employment of current cooperage employees. Brown‑Forman will continue to run the Brown‑Forman Cooperage in Louisville, Kentucky, which produces half the barrels for its numerous brands.

Will the Jack Daniel Cooperage Sale Impact Consumers?

As part of the deal, the Alabama Cooperage will continue to supply American white oak barrels for Jack Daniel’s Tennessee whiskey, ensuring there’s no change in the brand’s flavor profile. In the short term, the sale won't impact consumers directly. However, it's yet another example that consolidation is at the forefront of the liquor industry. Like other recent business moves - the shuddering of the delivery service Drizly. Molson's purchase of Blue Run - large corporate entities are scooping up power and production, as the free-wheeling opportunities of the “bourbon boom” appear to be dissipating. It's too soon to say, but less choice usually has a negative effect on product quality and consumer satisfaction over the long run.