Chip Tate’s Shares In Balcones Remain Unchanged After New Investment, Board Says

The founder of Balcones Chip Tate retains a 27 percent interest in the company despite a major capital investment finalized without him, a board representative wrote to me in an email.

The board of Balcones, which is suing Tate in civil court, issued a public statement posted online by WhiskyCast Tuesday saying it had finalized a $15 million dollar investment deal. All of the money came from within the board, according to the statement issued by board member Michael Rockafellow.

Earlier this month, the board filed a civil lawsuit against Tate, alleging that he had taken actions detrimental to the company and refused to cooperate with the board’s efforts to raise capital.

In a court filing responding to the allegations, Tate said the board had tried to force him out and wrest away his share of the company.

Tate referred to a letter of suspension issued by the board to him last month as a “termination.” He contended that the board didn’t have the power either to suspend him or to approve major investments without his consent.

The company agreement states that Tate’s presence is necessary for the board to establish a quorum.

Tate is under a gag order prohibiting him from discussing the case, but has joined Twitter, where he has said that future court filings will reveal new information about the legal battle.

Chip Tate Says Balcones Board Tried To Force Him Out In Court Filing Denying Allegations Against Him

Balcones founder Chip Tate denied the charges pitted against him by the board of his company and alleged that the investors tried to orchestrate a hostile takeover of his share of the company, according to a court filing submitted Friday and posted Tuesday to the web by Whisky Cast.

In the filing, Tate denies saying he would shoot Balcones board Chairman Greg Allen or burn the distillery down, as alleged in the civil lawsuit filed earlier this month by the board. Instead, Tate says the owners tried to wrench away his share of the company through actions taken at meetings held without him. If true, those actions would violate the company’s bylaws, which require Tate’s presence for a quorum.

“This is not an employee dispute,” the filing reads. “Quite the contrary this is an attempt to purloin the plump ripe peach that is Balcones from the founder Chip, who built it with his own two hands from scratch. This is a private equity group trying to unjustifiably take advantage of a craft distiller and take his ownership in Balcones.”

The filing says that the board authorized an internal offering, which Tate opposed, of $15 million in debt that would have diluted Tate’s ownership of the company from 27 percent to less than 10 percent. Taking such action without Tate’s consent violated the company agreement, according to the filing.

The document says that Tate was not suspended, as alleged by the board, but rather terminated after talks between Tate and Allen over buying each other out of the company broke down. According to the filing, Allen “barged, unannounced and without warning, into a meeting (literally throwing open the door and stopping the meeting) Chip was having with a corn supplier at Balcones on August 5, 2014. As Chip tried to diffuse the situation created by Allen, it was revealed to Chip that two sheriff’s deputies were waiting outside with instructions to remove Chip from the Balcones premises.”

Following that, the document says, Tate received a letter of suspension and was then served with a lawsuit.

“It is absurd to call this anything other than a termination,” the filing says.

The document denies that the board has the power to suspend Tate because Tate’s presence is needed for a quorum and he did not attend the meeting at which the board voted to suspend him.

A hearing in the case is scheduled for Thursday.

Buffalo Trace’s Experimentation May Push American Whiskey In Exciting New Directions

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Few American distilleries are show a stronger commitment to experimentation and innovation than Buffalo Trace. For the last few years, Buffalo Trace has created hundreds of experimental barrels, in the hope of creating something approaching perfection.

“We don’t think the perfect whiskey’s actually been made,” Buffalo Trace CEO Mark Brown said at the event. “So the question is — what would the grail look like? What would the perfect whiskey look like?”

Acknowledging that picking the perfect whiskey is a personal choice, the team at Buffalo Trace has been developing a sort of ideal type of the perfect bourbon, baptizing the idea as the “Holy Grail” project (with a nod to Monty Python). They did this by taking the top 100 or so ratings from a handful of highly esteemed whiskey authorities, and then parsing out the qualities most commonly associated with bourbon greatness and compiling them into a database.

Then, they’re identifying the chemicals in the whiskey that account for various flavor notes, in order to gain a better understanding of how to craft the whiskey’s flavor. Ever get a note a celery in your bourbon, for example? That’s acetyl aldehyde, according to Brown, and it comes from the distillate. The major elements the Buffalo Trace is tinkering with are mashbill, and atmosphere and wood. By Buffalo Trace’s reckoning, the first two elements each account for about 25 percent of what you’re tasting in the glass, whereas wood accounts for 50 percent. Brown didn’t get too specific about which flavor notes Buffalo Trace is looking to accentuate, but he did mention a few that didn’t make the cut —  roses, geraniums, raspberries and cheese among them. In more general terms, he said the ideal bourbon should strive for complexity and balance.

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Tasting Buffalo Trace experiments at the Brandy Library.

The distillery has dedicated some 2,000 barrels to carry out a total of 350 experiments as well as the specially designed Warehouse X, which cost the company about $1 million to build. The company has experimental barrels aging in a total of 50 warehouses. It will take a total of two decades to cycle through them all. Some of the better results make it onto the market as part of Buffalo Trace’s Experimental Collection, the latest of which is a series of three 12-year-old bourbons with the same mashbill aged on different sites in the warehouse. (Mark Gillespie has reviewed them at WhiskyCast.) Most of the experimental production, however, is purely destined for research. That not an entirely bad thing — Brown openly admits that some of the experiments have produced downright awful whiskey — but it sparks a certain curiosity about what’s going on down at Buffalo Trace’s massive whiskey laboratory.

At the Brandy Library on June 4, I sat down with a group of writers and other enthusiasts and tasted through a sampling of these experiments. I was happy to see that, despite the project’s stated aim of creating the “perfect” whiskey based largely on our collection of established wisdom, Buffalo Trace is truly thinking outside the box. What follows are my notes for each.

  1. Sweet and honeyed nose, with some floral qualities. Astringent on the palette. Seemed rather like new whiskey to both myself and some others in the crowd, but it was in fact an 8-year-old wheated bourbon.
  2. This one was extremely unique and probably my favorite of the bunch, not necessarily because it tasted so great, but because it was something I’ve never tasted before. It was a dark, brooding nose, with an ashy feel. Someone threw out “dandelions,” and I agreed. Absolutely unlike any American whiskey I’ve ever had before. It has something in common with Scottish whiskies with grassy noses, which is my experience with Inchgower and Bladnoch, but it’s not quite that either. On the palette it was dry with an unusually bitter finish, with tones of black coffee or very dark (like 90 percent cacao) chocolate. Turns out the unique flavor in this one comes from the use of midnight wheat — so much in fact that the whiskey isn’t technically bourbon, as the unique wheat takes up more than half of the mashbill. According to Brown, this is like chocolate when it comes off the still. I imagine the bitterness in this, particularly on the finish, would hold it back from wide commercial success. (The guest next to me complained that she couldn’t get the taste out of her mouth.) But though I’m in the minority, I thought highly of this experiment and I would hope that it has some potential, if perhaps in smaller doses. It remains young, at 3 years old. Brown says they’re still waiting to see how it develops in the barrel.
  3. Sweet. A lot of people got honey on the nose and palette for this one, but I felt something more akin to citrus, with floral notes behind that. At any rate, this one had the most traditional feel of the bunch, exhibiting some of a classic bourbon flavor, with the vanilla downplayed. It struck me that in a tasting with so much experimentation going on that Brown should say they viewed this one as one of the most promising. More on that later.
  4. This was the star of the night, a bourbon aged for six years in Mongolian oak. It was certainly unique. It was lighter than a typical bourbon, less sweet and it had a bit of funky rankness that I associate more with Scotch, which added a bit of complexity. A straw poll of the audience found that this was the most the one that most people would take a bottle home of with them, if that were an option. (Not me, I offered one of the few votes for the midnight wheat because it was so awesomely weird.) Brown said they were “pleasantly surprised and encouraged” by the results, but the price will be a serious barrier to developing it as a commercial product. The barrels cost about $1,000, compared to between $600 and $700 per barrel for French oak, which is already one of the more expensive barrel options on the market. “These are world topping prices,” Brown said. That’s a shame, because it’s a nice to see such an unconventional approach to bourbon. They’re waiting to see what the whiskey looks like after 10 years in the barrel, so there may be hope for it yet.
  5. A grassy nose with floral notes and bitter herbs. Complex. This had the most complex development of the bunch with the flavor coming in a couple of distinct waves. With a mix of six grains, Brown referred to this one as “multigrain on steroids.” I really liked the direction this one was moving in. It was easy-drinking, complex and unique. The unconventional mashbill gave it some depth and excitement.

I’m glad to see Buffalo Trace making the investment into such broad experimentation. I can only hope that more American whiskey fans will get a chance to taste the wild things they’re coming up with, and not just the whiskey that closely approximates the ideal bourbon Buffalo Trace is imagining. I view whiskey tasting as a hunt not only for well executed tradition, but also as an exploration of the new and unique. In my book, a whiskey that’s trying something different can be forgiven its flaws more readily than one that’s sticking to a formula perfected over more than a century. I admire Buffalo Trace’s commitment to perfect the imperfectable, but I’m more excited about their potential to pioneer the unknown.

Top Image: Chris Nelson dot ca @ Flickr