Just ask the old-school distillers—and the ‘new kids’ who are disrupting the market.
Imagine that you run a business where, above all else, your customers value how long it takes to make your product. The longer it takes, the better the outcome—or so believes the customer. You’ve become an expert at using time to make the best product possible. And that, hands down, is your competitive advantage.
But then you discover that time no longer matters.
A gang of new start-up companies comes along—and they’re making a similar product in a fraction of the time. It’s a classic industry disruption.
Recently, the Wall Street Journal published an article about rapid-aged whiskey, highlighting the growing tension between the old-school whiskey makers and a new generation of craft distilleries. While the market is still deciding what to make of the new players, the traditional whiskey makers are clearly worried.
You see, venerable scotch distillers like Macallan and Johnnie Walker, and bourbon makers like Knob Creek and Woodford Reserve, sell some of the finest aged whiskeys in the world. The longer the whiskey ages in an oak barrel or cask—sometimes in excess of twenty-five years—the smoother it gets and the better it tastes. But these days, due to the new kids on the block, such traditional distillers risk losing their edge.
Innovate or die
Riding the wave of craft beer, small local distilleries are popping up all over the U.S. Today, there are more than 1,500 craft distilleries, with many focused on making whiskey, and the number only continues to grow.
At the start, however, these new players faced a critical challenge: How does a two-year-old distillery make something that tastes as good as a whiskey that’s been aged for a decade or more? They could either wait for their product to age—and probably run out of money—or they could innovate. And that’s exactly what some have done.
A new kind of aging
As whiskey first enters the barrel, it’s a clear and rather harsh-tasting liquid. Over time, the alcohol seeps in the oak, breaking down the molecular structure and adding color and flavor. The longer this interaction occurs, the better the whiskey becomes—a process often described as mellowing.
Now, craft distilleries are discovering ways to replicate this process in a fraction of the time. Some use smaller barrels to increase the surface area in contact with the oak. Others use heat to produce esters, adding UV light—to break down the alcohol molecules quicker—and then intensifying the heat some more to accelerate the chemical reaction process. Either way, the net results are fine whiskeys aged in days, not years.
To boot, such rapid-aged whiskeys are garnering attention—and accolades. For example, Cleveland Whiskey, which is aged for just six months, won a gold medal at the 2019 Distilled Spirit and Cocktail Competition at the San Diego County Fair, one of the most prestigious competitions in the country. Moreover, in 2016, the company was named Whiskey Innovator of the Year at the Berlin International Spirits Competition.
While the craft distilling industry is in its infancy, it’s definitely gaining share, with craft whiskey accounting for more than 5 percent of sales nationwide.
But traditional whiskey makers are pushing back—fighting against the innovators. Many are hiding behind centuries-old laws such as those in Europe, which maintain that whiskey must be aged at least three years in a wooden cask. Meanwhile, others are choosing to not only disregard the science, but also cast doubt on the product. One even declares: “We don’t believe we can cheat Father Time.”
Nevertheless, not everyone is clinging to the past. Macallan, for instance, is embracing the change, launching their own rapid-aged whiskey under the brand Relativity, including the tagline “Be ahead of your time.” Yes, they’re still primarily focusing on traditionally aged products, but at least they’re not afraid to get in the game.
A lesson for the rest of us
Over the years, most industries have been disrupted by new technologies. From light bulbs to electric cars to music, the incumbent players initially resisted the change, claiming the new stuff isn’t nearly as good or can’t be trusted. But that’s not surprising. Most leaders believe that their job is to protect what made their organization or industry what it is. Yet, in the end, their job comes down to giving their customers a first-rate product—or, in the case of distillers, the best-tasting whiskey—regardless of any previous traditions.
All to say, innovation can’t—and shouldn’t—be stopped. It solves problems, makes customers’ lives better, and sometimes even changes the world.
And I, for one, will toast to that.
This article is reproduced with the permission of Chuck Swoboda. Chuck is the author of The Innovator’s Spirit, host of the Innovators on Tap podcast, and a Forbes contributor. He is the Innovator-in-Residence at Marquette University, president of Cape Point Advisors, and the retired Chairman and CEO of Cree, Inc. You can access his latest content through his website or follow him on LinkedIn and Twitter.