How Prohibition Nearly Destroyed Jameson And Irish Whiskey

Prohibition supporters in 1918 Photo, courtesy Wikipedia

This year marks the 100th anniversary of the implementation of the 18th Amendment to the U.S. Constitution. Better known as Prohibition, the amendment banned the production, importation, transportation and sale of alcoholic beverages in the United States.

Significantly, the consumption or ownership of alcoholic beverages was not banned. Individuals could still make their own alcoholic beverages, although not by distillation, hence the rise of the ubiquitous “bathtub gin.”

The ban went into effect on January 17, 1920, and was ended by the ratification of the 21st Amendment, which specifically repealed the 18th amendment, on December 5, 1933. This is the only instance in the U.S. Constitution of an amendment being repealed by a later amendment.

The ban on alcohol was not new. During the 19th century, many communities had banned the consumption of alcohol on the basis that it led to alcoholism and family violence and was a source of political corruption. Campaigning in taverns and saloons had been an American tradition that dated back to George Washington. The political endorsements of saloon owners were highly coveted by candidates, and was blamed for illicit backroom deals and corrupting elections.

By the late 19th century, a Prohibition Party had been organized to advocate a ban on alcoholic beverages. The party, the third oldest in the U.S., is still active. It has nominated a candidate for president in every election since 1872. Its best showing was in the 1892 election when it polled over 270 thousand votes—2.24%. In the 2016 election it polled 5,617 votes. The party has nominated Phil Collins (no, not the one from Genesis), as its candidate for president in the 2020 election.

Additionally, two other organizations, the Women’s Christian Temperance Union (WCTU) and the Anti-Saloon League (ASL) emerged to lead the fight for prohibition. Both organizations still exist and continue to advocate for a prohibition on the sale of alcoholic beverages. The ASL has changed its name to the American Council on Alcohol Problems.

In response, the brewing and distilling industry organized dozens of anti-prohibition or pro-moderation counter-lobbies. Known as the “wets” as opposed to the pro-prohibition “drys,” the groups drew extensive support from Irish and German communities in the U.S., both of which were heavily represented in the brewing and distilling trades.

Both groups, the largest ethnic-American groups in the U.S., had been very influential politically prior to the WW I. Their anti-British sentiment had, initially, helped keep the U.S. out of WW I. By the 1920s, however, their anti-war stance had led to a decline in their political influence.

Prohibition had plenty of loopholes. There was a broad exemption for alcoholic beverages used in religious rituals, a factor that led to a dramatic rise in self-proclaimed priests organizing their own congregations. Likewise, pharmacies could fill prescriptions for “medicinal whiskey,” another loophole, which led to many a visit to a doctor to cure some ailment, real or imagined.

Although home distillation was banned, the sale of home distilling kits was not. These were readily available at most hardware stories. Also available was grape concentrate, ostensibly to make your own grape juice. The cans carried a prominent warning to not expose the contents to air least they start to ferment.

A primitive home still from the Prohibition era Photo, courtesy Marquette Regional History center

Prohibition had two other unintended consequences. The number of arrests from the violation of Prohibition skyrocketed, overwhelming the court system and resulting in multi-year long waits before cases could go to trial. In response, prosecutors introduced the then novel idea of the plea bargain to clear the backlog of cases.

The second unintended consequence was more far reaching. Taxes on alcoholic beverages had funded between 30% and 40% of federal spending. States relied on alcohol taxes, on average, for more than 50% of their expenditures. New York state, for example, derived more than 75% of its tax revenue from taxes on alcoholic beverages. Prohibition eliminated a significant source of tax revenue. The result is that the federal government decided to extend the personal income tax, originally instituted on a temporary basis to fund WW I expenditures, for the foreseeable future. Many states adopted their own income taxes to fill the deficit produced by Prohibition.

Irish Whiskey and Prohibition

By the beginning of the 20th century, Irish whiskey was firmly positioned as the best-selling whiskey in the world. Its global market share has been estimated at around 70%. It was the best-selling imported whiskey in the U.S., outselling both Canadian whisky and the then fledgling Scotch whisky industry. It even outsold Scotch in England.

The “big four” Dublin based distillers, John Jameson, John Power, William Jameson and George Roe, dominated the whiskey trade with an annual capacity of over five million gallons of whiskey a year. By the end of the century, roughly 40% of Dublin’s work force was employed in the brewing and distilling industry. Derry, Cork and Belfast were also major distillery centers. Cork’s West Cork Distillers, which owned the North Mall and Midleton distilleries, the latter the predecessor to Irish Distillers Ltd (IDL) New Middleton distillery where Jameson whiskey is produced today, had a capacity of 1.5 million gallons.

Derry’s Watts distillery, where the Tyrconnell brand of whiskey was produced, had a capacity of two million gallons. Belfast’s Royal Irish Distillers had a capacity of 2.5 million gallons and produced Dunville’s, the best-selling Irish whiskey in the U.S. They also had the largest inventory of aging whiskey in Great Britain. The Tyrconnell brand is produced today at the Cooley distillery, a subsidiary of Beam Suntory, while the Dunville brand is produced by the Echinville distillery.

By comparison, most Scotch whisky distilleries had a capacity of less than 100,000 gallons. The Glenlivet distillery, the largest Scottish distillery at the time, had a capacity of 200,000 gallons.

Old (John) Jameson Bottles from the Prohibition Era Photo, courtesy Irish Distillers Ltd

Today, Jameson is the best-selling Irish whiskey in world, and has been a catalyst for the revival of the Irish whiskey industry’s fortunes. Prohibition almost spelled its death knell, however, and could well have been the end of this historic brand.

Prohibition was just one nail, but it could easily have been the final nail, in what might have become the coffin of the Irish whiskey industry.

The first nail was Gladstone’s Spirit Act of 1860. The act allowed Scotch whisky blenders to create blends consisting of grain whiskies and single malts. The legislation allowed Scotch distillers to produce a lighter style of whisky than the typical single malt, one that was similar to the style of Irish whiskey, and was often cheaper to produce. 

The big Irish distillers opposed the legislation, sparking a long running debate on what exactly was whiskey. Notwithstanding the opposition of the big distillers, however, Ireland was producing a lot of grain whiskeys, and many Irish merchants and exporters began to dilute their whiskey, often excessively, by blending grain whiskey into their pot still whiskey. The issue was finally settled by a 1908 Royal Commission that concluded that blends of grain and malt whisky were in fact whisky.

The Scots proved to be brilliant marketers and packagers and began to build market share at the expense of the Irish distillers. Irish independence in 1922 supplied a second nail. Following independence, Irish distillers lost access to markets in the British Empire. Collectively, that market was the second largest market for Irish whiskey, especially Canada and Australia. The loss of access to the Canadian market would aggravate the impact of Prohibition on Irish distillers.

To make matters worse, the Irish government limited the export of Irish whiskey. Preferring to encourage domestic consumption since that was more lucrative tax wise. Dublin was wary of the distillery industry, seeing the industry and its owners as being pro-British Unionists and opposed to Irish independence. The industry’s concerns fell on deaf ears; a practice that seems to have persisted to this day!

Even with the limitations on export sales, however, Irish whiskey remained the best-selling imported whiskey in the United States. Prohibition would be the final nail, and would overturn Irish whiskey’s century long dominance of the American whiskey market in favor of the Scots.

Canada went through a similar experience with Prohibition as the U.S. The Dominion Alliance, an umbrella organization of Canadian temperance groups, advocated for provincial wide bans on the consumption of alcohol. During World War I many provinces banned the manufacture of “intoxicating” beverages as part of the war effort and then extended the ban following the end of the war.

The province of Ontario, for example, instituted a prohibition on the production and consumption of alcoholic beverages from 1916 until 1927. It left open an important loophole however, production of alcohol beverages and their importation was allowed for export purposes.

Canada and British colonies, like Bermuda or the Bahamas, were ideally positioned to supply alcoholic beverages to “rum runners” smuggling spirits into the United States. That would prove to be a decisive advantage to Scotch whisky producers. They were free to export bottled product to Canada and British colonies near the U.S. for illicit re-export to the American market. Frozen out of those markets, the Irish distillers had a harder time getting their product into the U.S.

Disposal of illicit beverages during Prohibition Photo, courtesy Library of Congress

Not that there wasn’t “Irish whiskey” in the U.S. There was, but usually it was locally produced fakes consisting of little more than raw alcohol colored with caramel, and often including questionable ingredients. American consumers quickly began to prefer bottled Scotch whisky, finding it of better quality. That marked the beginning of the ascendancy of Scotch whisky in the U.S., a position it has maintained to this day.

Prohibition decimated the Irish whiskey industry. Many distilleries closed. The period marked the beginning of an industry wide consolidation that would continue until the 1970s. A period that is sometimes referred to as the lost century of Irish whiskey. Nor did the end of Prohibition bring much solace. Dublin’s restrictions on export sales and the loss of the American market during the Prohibition years had led to a sharp reduction on the production of Irish whiskey.

When prohibition ended and Americans were once again able to quench their thirst for whiskey, Irish distillers lacked the stocks to meet this new, now legal, demand. The Scot’s had plenty of whisky, and they leveraged their stocks and their reputation for quality into a dominant position in the American whiskey market at the expense of the Irish distillers.

From 1930 on, sales of Irish whiskey in the U.S., and also overall, began a long decline that would see industry wide sales bottom at less than 200,000 cases in the 1980s.

Since then, Irish whiskey has had a remarkable renaissance. The number of Irish whiskey distilleries have grown from three to now more than 35, either operating, under construction or planned. Irish whiskey sales have soared from under 200,00 cases to more than 12 million over the last 40 years. At the heart of that remarkable comeback has been Jameson, now firmly established as the world’s best-selling Irish whiskey. Two out of every three bottles of Irish whiskey sold in the world today are Jameson.

Post prohibition shipment of Jameson whiskey to the US in 1934 Photo, courtesy Irish Distillers Ltd.

Moreover, to its credit, Irish Distillers, the parent of Jameson, has, in a remarkably farsighted policy, proven instrumental in providing advice, technical assistance and access to its inventory of aged stocks to many Irish distillery startups.

So, when you raise a glass to commemorate the end of Prohibition, why not make it a Jameson? A fitting tribute to Irish pluck and perseverance in the face of overwhelming adversity. Oh, and don’t forget, the fight over Prohibition is still not over.

Sláinte

HelloDrinks is a Sydney based Irish/Australian startup business founded by JP Tucker. HelloDrinks provide alcohol delivery across Australia from their Sydney base, where customers can now use Buy Now Pay Later when ordering their Alcohol. A new way of paying for goods, interest free. 

The above article can be found on Forbes.com and was written by Joseph V Micallef