The Lane Report: The bourbon industry has been in boom mode for 15 years or more. Is there an expectation at Maker’s Mark for how long this growth will continue?
Rob Samuels: It is humbling for us because while we celebrate the resurgence of American whisky and what it means to Kentucky, my first day in the industry my dad said, “You need to savor this moment in time.” When he first got into the business (in the early 1970s) there were distilleries in Kentucky literally knocking warehouses down because they could not afford to maintain them. Here at Maker’s Mark, as we think about the future, it is really inspired by our founder Bill Samuels Sr.’s vision. Our family has made whisky for hundreds and hundreds of years. We were farmers and made whisky in Scotland for quite some time. Then we were farmers and distilled from grain in Pennsylvania. What we have today is all because of Robert Samuels, whose portrait hangs on our wall here in Loretto. We have authentic records that Robert Samuels distilled from grain in what would eventually become Kentucky in the 1700s.
My grandparents paid $35,000 in 1952 for hundreds of acres. It is hard to imagine today, but at that time bourbon whisky was in a very different place. So much of the category had its rightful place on the bottom shelf; there were no refined national premium bourbon brands—they did not exist. When my grandfather came here, it was hard to imagine someone getting into bourbon who did not have a business ambition, but his inspiration was only related to the organoleptic (qualities that create a sensory experience). In this world of American whisky that was a little rough, aggressive and bitter, could he elevate American whisky to a place it had never been before?
He obsessed in the distillery. He chose this site not because of the rolling hills, beautiful stream and the charming aspects of the property, but on the other side of the ridge over there is the water source—and to our knowledge this is the only distillery in Kentucky that has its own water source. We have a 14-acre spring-fed lake; a pipe at the bottom of the lake goes straight into the distillery. Today we manage almost 700 acres as a nature preserve and water sanctuary. Fundamentally, he chose this site because of nature. Each and every step of the process was intentional to build flavor. Our first barrel of Maker’s Mark went into the warehouse in 1953, and then we waited—for our bourbon to age. Imagine overhead expenses month after month, year after year, with no sales, a P&L (profit and loss statement) with no “P.” They waited almost six years for those barrels to age.
Keeneland Racecourse in Lexington was our first customer and were it not for consumers and customers throughout Central Kentucky, Maker’s would not have survived because the market was in a different place back then. There was a wonderful moment of discovery in the early 1980s when The Wall Street Journal, center column, front page, featured a story on this quirky little distillery in Marion County, Kentucky, that goes against the grain to make its Mark. The WSJ said, “Maker’s Mark is a model of inefficiency by choice,” which is exactly the way that my grandfather thought about his creation. His goal was never to be the biggest or be the most efficient; it was this deep, overriding commitment of a flavor vision. It is not lost on me and our team that here we are in 2020 and a man who was not a businessman, which he was not, ultimately changed the course of the industry.
There was this awesome moment a couple of years ago when Food & Wine magazine brought together 30 or so brand owners, master distillers and whisky writers, and all but two recognized that Maker’s Mark is the most important bourbon brand that has ever been made. When my grandparents stood up here on the hill and looked down at this valley, their vision was about more than creating one brand.
My grandfather focused on the distillery, and my grandmother did everything else. Before distilleries, she thought about hospitality and hosting. Engineering and manufacturing sites are always designed by engineers who focus on functionality. She was the one who said that if the place were to celebrate the richness and the distinctiveness of his whisky, the place would become the soul. He did not like marketing; he thought marketing in the traditional sense of screaming to promote your brand was rude. He was a Southern gentleman and he thought they would only talk to interested folks, but once they are interested we will treat them like family; there is no more endearing way to have folks into your home to connect. She set up this entire property in the very beginning with the idea of welcoming friends to come visit. It is one of the reasons she would be one of the first females ever from a distillery to be inducted into the Kentucky Bourbon Hall of Fame. Bourbon author Fred Minnick said in his opinion, “She is the most underappreciated figure in the history of whisky.” My grandmother also created the name and design of the bottle. We still have the original bottle design at the distillery, and the Smithsonian has asked us to donate it to them.
What is exciting to all of us is that the culture of Kentucky we have always cherished and been so passionate about–which includes bourbon, music, food, hospitality and Thoroughbred racing–is today interesting to people all over the world. We host people every day who can go anywhere and do anything, but they decide to come to Kentucky. As far back as I can remember we have always hosted visitors. When I was growing up it was primarily a lot of retirees, mostly from Kentucky, and they would come to see us primarily because it was a free tour, but now it has become a destination tour.
In the world today, so much of everything is created by a marketer. An advertising agency or a marketing team envisions a white space and will create something, and once they have what they think is a compelling idea they go ask a site to make it. Maker’s Mark was born out of the vision and the tenacity of a craftsman and his wife, and it is real. Folks are drawn to things that have soul, depth and authenticity. It is honoring our founders’ legacy to stay true to who they were. We talk about it as the founding vision. It is less about the stories of the past, which we obviously cherish. We love the stories of the past, but it is much more about the clarity it gives us for the future.
While Maker’s Mark started as a hobby, we essentially did not have any revenue for 25 years, and once the WSJ article came out we have sold every drop of bourbon that has been available every single year since 1981. My father’s greatest legacy is after many, many years of no growth and a long bumpy road of no customers, we started to grow. He chose to expand our distillery but stay true to our founding vision. He resisted the temptation to scale up in the most efficient way possible, which would have let us make more and reduce our cost. In the 1990s he spent an extra $10 million to build a second distillery that was identical to the first one. It is a mirror image: The same equipment, same process, equals the same consistency. Then seven years ago we built our third distillery, exactly like the first two. The distilleries we have are identical triplets. It is also worth mentioning that we have always only ever been a single source of supply, which means every drop of whisky that has ever been in a bottle of Maker’s Mark we made here.
TLR: Talking about financials, what is the percentage of domestic sales vs. foreign? Does Maker’s Mark ship more to foreign markets?
RS: We have had a demand for Maker’s Mark globally for a long time, but we have not had the supply until now. When we share the Maker’s Mark story in Paris, Moscow or London, folks respond to it in the same way that they do here in Kentucky. In the long term there is a nice opportunity to take Maker’s Mark all over the world, but today we sell 85-90% in the U.S. The reason is that we have continued to grow our home market. Slowly, we are starting to share a little bit more each year in leading cities around the world. What is exciting is just the enthusiasm that you see from consumers. The value system of what Maker’s Mark represents, the uniqueness of what is in the bottle, resonates with our friends all over the world in the same way it does here in Kentucky.
TLR: Maker’s Mark has been the tip of the spear when it comes to marketing bourbon outside of Kentucky. Does Maker’s intentionally want to be the category leader?
RS: We had about a 25-year head start before the next big distillery started thinking about creating a brand that would be positioned at a higher level. Another aspect of the brand that I am proud of is the consistency of the spirit. I think we have made one of the more consistent whiskies that has ever been made anywhere in the world. What sets Maker’s apart is that we are a single source of supply, our expansion, rotation of every barrel during the maturation process, and bottling-to-taste by way of our tasting panel.
I love that this is a brand and a place since the beginning that has had a higher purpose. The founders were adamant that we give back to the community and started giving back in the surrounding 30 miles, but as the brand has become more celebrated the charity expanded. We are so honored to partner in communities to serve them when they are under pressure. For example, in the last 15 years or so with Keeneland we have raised north of $10 million for causes throughout Central Kentucky.
On March 16, when the governor made a very difficult decision to close bars and restaurants across Kentucky, the service industry was hit hard. On that day, Chef (Edward) Lee of Louisville turned 610 Magnolia (his Southern restaurant) into a relief kitchen. We (previously had) partnered with Chef Lee in support of minority chefs and helping support their progression in the culinary world. The bartenders and servers have no safety net, and within three weeks we had expanded from one relief location to 22 cities, and have fed hundreds of thousands of meals to members of the service industries and their families, contributed significantly from a financial standpoint. The profile of our brand has led to other high-profile companies stepping up in a meaningful way. It is some of those aspects of leadership that are important to Maker’s Mark.
TLR: With the three distillery lines, is Maker’s Mark producing as much as possible and selling 100% of your capacity?
RS: During the pandemic, we have had some stops and starts for brief periods, but we are operating generally at full capacity. We are planning for a very bright future for Maker’s Mark around the world. Foundationally, we have been obsessed with quality and consistency. As you think about innovation, up until 10 years ago we were the only distillery in the world to make one product. The average distillery has lots of different labels and brands. We are excited about not just innovating but innovating with purpose.
Maker’s 46 was created 10 years ago by my father. The idea for 46 was within cask strength Maker’s Mark: If you were in the warehouse and had a sample of Maker’s at full maturity, straight out of the barrel, uncut, unfiltered, what would be the taste characteristics and flavor camps that you love the most? He wanted to create his perfect expression of who Maker’s Mark could become. Through lots of experimentation with wood finishing, the profile of 46 finishing today is from 200-year-old French oak seasoned for almost three years. We created a (wood) searing oven that is half the size of this conference room, a proprietary searing oven. We could hardly have envisioned a more difficult process! Then we found it (the flavor result) is time and temperature sensitive, which means we had to build a cave. We went 85 feet into the limestone shelf (of the ridge) and created our industry’s first-ever temperature-controlled aging cellar.
That led us to think, what would it look like if we let leading restaurateurs of the world have exactly this same opportunity to design and make their own perfect expression of Marker’s? That idea led us to create our industry’s first-ever custom barrel program. In addition to finishing staves for 46, we have four additional finishing staves, all cut differently, ‘cooked’ differently, but designed with purpose to amp up the unique flavor aspects that live within Maker’s Mark. We have leading restaurants of the world come here and design and make their perfect expression.
TLR: Your grandfather went into this and it was seven years before he ever even sold the first product. The whole sector must operate today based on market expectations of four to 10 years down the line. How do you come up with your forecast?
RS: We spend more time thinking about the 10-year vision than next month or the next quarter. We are in it for the long term and we are limited in ways others are not, which is we are a single source of supply. It can be common in the industry for different brands and distilleries–if they make too much or make too little–to buy, sell or trade it around from one another. We have never done that. Our brand has been built in stages. This is 60-plus years since the founding, and we literally sold every drop available for 30 years essentially in Kentucky and maybe surrounding cities. Then when Maker’s Mark finally began to grow, it was in the leading restaurants in America. But it was everywhere in America; it was not just New York, it was New York, LA, Chicago, and within those cities it was a certain style of account where folks were willing to look for something more special. And now for 25 years it has been slowly, steadily nurturing that along. And the next chapter of the brand’s life is staying true to the founders’ vision but building a global brand. We plan for that vision.
TLR: Last year, pre-COVID, visitation across the Kentucky Bourbon Trail increased 23% in one year. What is your strategy for participating in the bourbon tourism market?
RS: They could choose to go anywhere, take their family to Las Vegas or New York or wherever, and to see them come here and to exceed their expectations is a lot of fun. Pre-COVID we were at about 160,000 visitors, but we’re very careful not to define our success on a number of visitors. We want to define our success based on quality. We love the fact that you have to work hard to get here. We would rather mean a lot to a few and treat you really really well versus … having the masses.
Our vision for the distillery is to create the most culturally rich and endearing environment possible for any home place of any brand in the world. We have hosted friends here since literally before the brand was born. Some of those early years when those first barrels were maturing over time, my grandparents would host curious friends, folks from the community who were just intrigued by what they were doing. Hosting has been important here since day one. The distillery itself today sits on less than 5% of our property. While we are planning for a future, the good news is that many of our guests, when they find us a little off the beaten path, don’t want to leave.
Five or six years ago, when the state allowed us finally to serve cocktails, the day that law passed we decided to open a nice high-end culinary and cocktail program. We sourced all the ingredients locally. We brought someone over from London, England, who had been responsible for managing some of the leading bars and restaurants in London, and she is living in Bardstown and partnering with Chef Newman Miller to lead our culinary and cocktail program. We have art on display by dozens of different artists. Some are local Kentucky artists and some are well-known artists. We have plans in the future to open Star Hill Farm. This distillery sits on a 1,000-acre farm.
It is interesting that even the folks who come here who are passionate about whisky, often associate whisky or bourbon with an agricultural product. We are beginning to take folks into Star Hill Farm so they can experience nature’s influence on the whisky we make. We believe that the water source, the water sanctuary, enhances the experience.
The University of Kentucky pulled a tissue sample last year from a 400-year-old American white oak tree, and for the first time a team within the university will map the reference genome for the American white oak. If there is ever pressure on this tree, like you are seeing with the ash tree, the scientists will have a deeper understanding and be able to build resiliency into the American white oak. There are 300 different variations of American white oak along the Eastern Seaboard, and on 23 acres here on Star Hill Farm we are going to create the first-ever oak repository in America, where we will plant 30 of each of the 300 variations. So, we will have more than 9,000 American oak trees planted on the farm.
TLR: Are there expectations the brand will grow to include a Maker’s Mark hotel or other ventures like that?
RS: We are imagining a future where we can continue to take steps towards being a destination. All those plans would be to delight our customers, the majority of whom–I think 85% of our guests–are coming in from out of state. We have a talented design team whose efforts we continue to invest in improving the facility and infrastructure to host more folks but enrich the experience along the way. As an example, we are just finishing our second Private Select tasting room. It is tucked in the woods overlooking our water source. It is designed to be LEED gold (Leadership in Energy and Environmental Design, the rating system used by the U.S. Green Building Council to measure a building’s sustainability and resource-efficiency), with a sod roof, built with the creek stone from the property. It is all glass, right on the water, where you can design your whisky with the lake as a backdrop. We also just cut in four miles of trails so you can hop in our solar-powered golf cart with a team member and get into nature. We also are planting an orchard and other environmentally friendly additions.
TLR: Let’s switch gears and ask a couple of bourbon questions. When was the first time you tasted bourbon?
RS: On my 21st birthday, of course! I do remember being curious at a young age; I do not remember what age, but I remember being curious. When you are in this industry with a family legacy, it is not a 9-to-5 job; you live it all the time, which is what I remember. It was every waking moment not just for my dad but for my mother. She would have groups to the house several times a week where she would help entertain. I tease her that she has served more Maker’s Mark than anyone in Kentucky, maybe the world.
TLR: Currently, what is your favorite cocktail made with Maker’s?
RS: We released the 101 proof Maker’s Mark, which is in limited availability, mostly in overseas airports. My grandfather enjoyed that recipe sometimes during the holidays. It is unfiltered, a nice midpoint for a proof. Maker’s classic is 90; our cask strength is about 110. I poured 101 proof over a block of ice the other night and that is a nice proof point for my palate. I love a Manhattan, with a vermouth that is complimentary. Some of these vermouths are so big and bold that they try to dominate the cocktail.
TLR: As bourbon continues to grow in popularity and the new drinkers come of age, as a brand, how do you look to capture that next market?
RS: We stay true to who we are; we do not try to be somebody we are not. Fundamentally our approach has never changed, which is to talk in a meaningful way to one customer at a time and build a solid relationship vs. skimming the surface with the masses. I think offering things that are unique and pioneering helps us. We will not push new ideas out if we do not believe in them. Can we take shortcuts? Of course, but we stay true to our heritage.
TLR: How did the dipping and the design of the bottle all that come about?
RS: Go back to the ’50s and the idea of waiting for those barrels to mature over time. My grandfather would sit right here in this office. He was the tasting panel, and he would keep his fingers crossed that each batch was constant as he tasted his whisky through the months. Almost casually one morning over breakfast, my grandmother asked what he was planning to name his new handmade, elevated bourbon.
I think in his mind he was going to name it after the family, which is what everybody did. She said you might not want to do that because we owned a whisky brand for a century called T.W. Samuels and she thought that might generate confusion. He was running away from that brand; my grandfather torched the 160-year-old family recipe in a copper bucket that still sits in our conference room today. He agreed and put her in charge of the name and bottle design.
She was a passionate collector of English pewter. She would talk a lot about how the craftsmen and women on the proudest pieces of their handmade pewter would always make a mark to celebrate. It was called “the mark of the maker.” She suggested that he had gone to greater lengths than any whisky maker in the world and that he should make his mark. So out of that discussion, the name was created. So, the Maker’s Mark is the “Star SIV,” and it is also blown into the bottle. The S is for the family, Samuels. He was a registered fourth-generation whisky maker in the commonwealth of Kentucky, so that is how the IV, the Roman numeral for four, came into the design. The star is for Star Hill Farm, which is what Robert Samuels, my namesake, named the farm when he settled on a land grant before Kentucky existed.
To my grandmother’s point, she wanted to design a name and create a bottle design that would celebrate the essence of his handmade whisky. She was adamant that every label be printed, them torn “by hand.” She decided to spell the word “whisky” as the Scotch distillers did—the Americans and the Irish always spelled the word “whiskey” with an “e”—in celebration of the Scottish legacy. She said what better way to finish the handmade touch than to hand dip each and every bottle in red sealant wax. She said that way, each bottle would be a little unique and different and special from the next.
TLR: Are you the driving force in keeping Maker’s Mark Kentucky-centric?
RS: I think it is in the DNA of Maker’s Mark to do the right thing. It is very much in the DNA of this brand to give back to the community. As we grow a little bit over time, having a higher purpose at the center of our brand has always been important. It is very important to me today; this is an aspect of what we do that gets me most excited for the future. If we go global, what sort of impact on the world can we have? That is very motivating to me. Sustainability is part of that. Are we doing everything we can do and should do for natural resources? It is important, we talk about it every day.
TLR: How do you maintain the local flavor and protect the brand when your parent company is a global operation based in Japan?
RS: Suntory is a family-owned company. Suntory today is in many different businesses, but their heart is in whisky. Their forefathers founded Japanese whisky; Japanese whisky did not exist until their family. So, they share our values. The things that get me excited are the same things that get them excited.
TLR: Do the leaders of the distillery companies meet to discuss common industry issues? Is there a formal structure?
RS: Yes, all but one of the heritage distillers are members of the Kentucky Distillers Association. This association has been important to bourbon’s success. We do not have to agree on every topic, but we work together to have one voice. That has been helpful for Kentuckians, especially the leadership in Frankfort, to view the industry for its real impact. Here we are in Marion County, Kentucky, and I think we pay our team members 50% more than the next highest manufacturer.
TLR: Are there any public policy actions that would benefit the bourbon industry?
RS: Kentucky taxes on spirits are higher than any state in America, so that might be an opportunity. Social responsibility has become important to everyone in the industry. We are getting much greater cooperation from Democrats and Republicans who are starting to see the industry for the impact, jobs, tax base and culture.
After my dad retired, I met with a political leader in Frankfort who said, “Rob, your industry is nice, but it is not a signature industry.” That same politician a couple of years gave a speech and said, “Bourbon is our only signature industry.”
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