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Since becoming chairman of the board of Brown-Forman in 2007, George Garvin Brown has helped to create a 'family engagement' committee to avoid the conflict that has brought down other family firms, and left them vulnerable to takeover. (Rachel Idzerda For the Globe and Mail)
Since becoming chairman of the board of Brown-Forman in 2007, George Garvin Brown has helped to create a 'family engagement' committee to avoid the conflict that has brought down other family firms, and left them vulnerable to takeover. (Rachel Idzerda For the Globe and Mail)

THE LUNCH

George Garvin Brown IV: A family man rides the bourbon boom Add to ...

About halfway through our lunch, George Garvin Brown IV makes me keenly aware of a deficiency in my cocktail ware I didn’t even know was there.

“Everyone,” he says with simple conviction, “needs a mint julep cup.”

It’s an odd thing to hear from someone who grew up in Montreal, not exactly the mint julep capital of the world. But an item in Mr. Brown’s collection of these silver cups speaks to the roots of his conviction about proper cocktail service: The cup, from 1912, was a gift to his grandfather from his great-great-grandfather. The first George Garvin Brown founded what is now Brown-Forman Corp., maker most famously of Jack Daniel’s Tennessee Whiskey.

Kentucky families give the cups as gifts to mark milestones – births, graduations, marriages. As is the tradition, George Garvin Brown I engraved his grandson’s name on the cup; as it was handed down through the generations, more names were added. The names of Mr. Brown, his father, and his teenaged son are now included on the heirloom.

While Mr. Brown is Canadian, he is also the scion of a famous Kentucky family, and now chairman of the board at the company that is his family’s legacy.

What started in 1870 with its first product, Old Forester Kentucky Straight Bourbon Whisky, has become a global stable of spirits brands, including Southern Comfort, Finlandia Vodkas, Herradura Tequilas, Collingwood Canadian Whisky, Woodford Reserve Kentucky Straight Bourbon Whiskey and Jack Daniels, sold in 165 countries.

When Kentucky Derby attendees sip mint juleps at Churchill Downs on Saturday, they’ll be drinking Brown-Forman bourbons – Old Forester and Woodford Reserve.

The Browns were America’s 20th-richest family as of last year, worth $11.6-billion (U.S.), according to Forbes magazine.

As a company built first and foremost on whisky, Brown-Forman has ridden out decades during which brown liquors were distinctly out of fashion. Spirits brands are vulnerable to changing tastes, and whisky began facing declines in the 1970s.

Lately though, brown is back. The retro chic of Canadian Club-swilling executives in Mad Men, and Boardwalk Empire’ s cool Prohibition-era tale both helped. So did the rise in foodie culture, and a return to interest in authentic production processes and complex flavours. After years of vodka cocktails, the rise of mixology led to experimentation with old-fashioned libations based on rum or bourbon.

“I see that Diageo’s clearly been here,” Mr. Brown says, flipping through the menu during a visit to Toronto to check how Brown-Forman’s distribution is doing. “That’s okay. That’s a fact of life. The good news is, they’re selling bourbon cocktails – which they wouldn’t have been 20 years ago. Not even five years ago. The market’s changed. And that’s nice.”

Until their more recent revitalization, brown spirits have had a hard run. Starting in the mid-1970s, vodka saw its market share almost double in North America, “almost entirely at the expense of bourbon,” analysts from New York-based Cowen and Co. noted in a report released earlier this month.

“To be in the whisky business was not a great thing for the last 30 years,” Mr. Brown says. “A lot of our competitors, and a lot of our neighbours and friends in Kentucky sold their businesses in the seventies. They would have sold to the Bronfmans, and to Seagram’s, and to British companies that eventually became Diageo. …We hung in there.”

While all that was happening, Mr. Brown was growing up in Montreal, his mother’s hometown, where he and his brother were raised after his parents divorced. They continued to spend summers in Louisville, Ky., visiting his grandmother’s farm. As a child, Mr. Brown says Brown-Forman “was always in the background.” He had a portrait of his grandfather hanging in his bedroom.

“When it was time to start buckling down and figuring out what I wanted to do for the rest of my life, I wanted to get into the private sector, work in business, and I thought, ‘Why should I work for someone else when I can work for my family?’” Mr. Brown recalls.

Since becoming chairman in 2007, Mr. Brown has been working for the family in more ways than one. He and company chief executive offider Paul Varga created a “family engagement” committee to avoid the conflict that has brought down other family firms, and left them vulnerable to takeover.

The family still holds roughly 70 per cent of the voting shares, and the committee was designed to keep the fifth generation – nearly 40 cousins, the majority of whom do not work at the company – connected to the decisions that executives are making.

“They had such a unique approach to things,” said Lloyd Shefsky, co-director of the Center for Family Enterprises at the Kellogg School of Management at Northwestern University, which last year gave the company an award for family governance. “Ninety per cent of family businesses don’t make it successfully to the third generation. Here’s a company that’s in their fifth generation.”

Research at Kellogg showed family-controlled public companies have a 21-per-cent better return on investment on average compared with similar public firms that are not family businesses.

“It’s their biggest asset; it’s what makes them unique,” Prof. Shefsky said. “But there has to be something more for people to go through the extra effort, and sometimes trauma, of continuing family ownership of the business. … Families generally don’t work on that enough.”

That connection traces back to the Civil War, when the first George Garvin Brown was a pharmaceutical salesman. At the time, people went to the pharmacist to buy whisky, filling bottles from a barrel there. But consistency was a problem: Some might have too much water added, or not enough. After years of seeing how this worked, he came up with the idea to sell a bottled and bonded bourbon whisky – meaning it was guaranteed to be the same every time. Now, “bottled in bond” means a bourbon is no less than four years old when it is bottled, and that it originated at a single distillery during a single season.

The company had a licence to make and sell bourbon for medicinal purposes during Prohibition, and stayed afloat partly through the efforts of Owsley Brown, the founder’s son, who went to France at that time to sell off some of that inventory in the Cognac market. Brown-Forman went public in 1933.

That original brand, Old Forester, is now growing again with the brown liquor resurgence. Mr. Brown’s brother, Campbell, was named president of the brand in March, overseeing a more than $30-million investment in a new distillery.

History and a sense of authenticity are important assets for spirits companies these days.

“We’ll be talking about the history of the brand and the quality credentials. Old Forester is made with more rye than the average bourbon whisky, so it’s got a lovely spicy resonance to it. I’d compare it more to a Cabernet than a Merlot,” says Mr. Brown, speaking like an oenophile. (At lunch, he sips tap water.)

The foodie movement used to be a niche phenomenon, but has now led to a widespread interest in where food and drink comes from.

“All of that has led to an uptick in strong coffee, which of course Starbucks would have seeded in the early nineties. … Tabasco is selling well. Tequila and whisky are doing very well,” Mr. Brown says. “Flavour is back.”

Since about 2012, vodka’s share of the global spirits market has begun to fall, while bourbon has made up some ground.

The growth in brown spirits is happening in Canada as well. Over all, whisky consumption declined slightly from 2005 to 2014, but there is good news for the industry hidden in those numbers. The declines are all in “economy” brands, according to Spirits Canada.

In other words, people are drinking less of the cheap stuff; meanwhile, in that time, bourbon consumption has shot up 85 per cent; Irish whisky is up 242 per cent; “deluxe” and “premium” Canadian whiskies are up 3.5 per cent and 6 per cent (smaller gains, but on a much larger base); and “deluxe” scotch is up 4.5 per cent.

The Cowen and Co. report suggests that of spirits producers, Brown-Forman most stands to benefit from the rebirth of bourbon, as its net sales recently were on average higher than its competitors in the United States.

Brown-Forman’s revenue grew 4.3 per cent to $3.95-billion (U.S.) last year.

While bourbon consumption still pales in comparison with vodka, the report predicted that there is significant room to grow.

Brown-Forman’s biggest brand, Jack Daniel’s, has also been responding to these trends. By volume, Jack Daniel’s accounts for roughly two-thirds of the company’s sales, a steadfast label that Mr. Brown likes to say appeals to everyone “from bikers to bankers.”

But it has also had to adapt: The company has launched brand extensions such as Gentleman Jack and the higher-priced Jack Daniel’s Single Barrel for those who want to move up to a different flavour profile from the base brand.

Mr. Brown now observes the global trends – more than half the company’s sales are now outside the United States – from London, where he has lived with his wife and kids since he was managing director for Western Europe and Africa, before becoming chairman.

But what happens if the vogue for brown spirits passes once again?

“We’ve been through downturns before,” he says. “… As long as we’re true to our brands, they’ll always buck any negative trends, and when the categories are in our favour, it puts a slightly higher hop in our step. … We try not to get lazy. I look back at documents that my grandfather wrote in the fifties and sixties and he was worrying about the exact same things.

“Each generation can only do what it can for the next.”

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CURRICULUM VITAE

George Garvin Brown IV

Age: 45

Born: Miami, Fla.

Education: Bachelor of Arts in political science and history from McGill University; masters in political science from the University of British Columbia; MBA from London Business School

Family: Married to Steffanie Brown for 19 years. They have two children, a boy and a girl.

His drink: A self-professed “wine geek,” his favourite is Sonoma-Cutrer Les Pierres Chardonnay. When not sipping wine, his go-to drink is a Manhattan, straight up, made with Old Forester bourbon whisky. (Both brands are owned by Brown-Forman, naturally.)

Reading: History books are a recurring theme. He recently finished Return of a King: The Battle for Afghanistan, 1839-42 by William Dalrymple.

Favourite vacation: Skiing with family. He grew up skiing in the Laurentians in Quebec, particularly at Mont-Tremblant and Mont Saint-Sauveur, and raced as a teenager while at boarding school in Connecticut. When out east, he prefers Mont-Tremblant; his favourite in the west is Sunshine Village in Banff.

The one person, dead or alive, that he’d like to have lunch with: his late father, George Garvin Brown III

Favourite cuisine: Indian

Guilty pleasure: Nutella

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To ‘e’ or not to ‘e’?

That is a regional difference. “Whisky” is the standard spelling in most places, including Canada, Japan, Scotland, and other countries. “Whiskey,” is mostly the standard in Ireland and in the United States. Jack Daniel’s and Woodford Reserve labels say whiskey. But Old Forester, a Kentucky brand, leaves the “e” out. The company says it has simply stayed true to previous generations’ spellings, even when they depart from the standard. “Rest assured, it confuses us too,” a spokesperson said.

TGIF

Employees at the Jack Daniel’s distillery in Lynchburg, Tenn., get a free bottle on the first Friday of every month.

‘The nectar of the gods’

That’s what Frank Sinatra called Jack Daniel’s. The crooner gave the brand a wildly valuable unpaid endorsement, drinking it on stage (two fingers, with three rocks, and water) and lending it a cachet it hadn’t had before. Ol’ Blue Eyes was even buried with a bottle. Last year, Mr. Sinatra joined a long list of celebrities used to endorse products from beyond the grave, with footage of him used in an ad for the brand’s Sinatra Select line.

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How to make a $1,000 (U.S.) mint julep

Brown-Forman’s Woodford Reserve brand is the official bourbon of the Kentucky Derby. As part of the event taking place this weekend, the company is continuing an annual tradition, selling a mint julep that costs $1,000. (Proceeds go the Wounded Warrior Equestrian Program, a non-profit that supports horse rescue farms and therapeutic riding programs for military veterans.) How do you make a cocktail worth such a sum? Here’s Brown-Forman’s recipe:

2 ounces Woodford Reserve Double Oaked bourbon

3/4 ounce coconut palm sugar syrup

6-8 chocolate mint sprigs

Crushed ice

Candied orange and lemon slices for garnish

Powdered sugar

Method

Combine the first three ingredients and shake.

Just add marketing. Partner with a fashion designer to make hand-engraved pewter “Victory Cups,” sporting a gold-plated horse racing crest and the 2015 Derby date. Make only 90 of these available, each individually numbered.

Sell the cups ahead of time online and at Churchill Downs on Derby Day, if any remain.

Present the cups to their new owners in an oak box designed by a Nashville woodworker, lined with custom silk fabric, accompanied by a gold-plated sipping straw

Place three sprigs of mint at the bottom of the cup, then add crushed ice

Strain the shaken mixture over the ice

Garnish with a mint sprig, candied orange/lemon slice and powdered sugar

For those seeking a more rarefied vessel, the company also designed 10 “Winner’s Circle Cups” online for $2,500. These are gold plated, with a sterling silver-plated crest and silver sipping straw. Proceeds from the sale of these also go to the charity.

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