spirits trade, history of , covers a remarkably diverse, intricate business that is over a millennium old, involves all seven continents (yes, spirits are both distilled and sold in Antarctica), and supplies probably half the ethanol the world consumes every year. Its participants range from the grandmother who runs a batch of palm wine through her oil-drum still every couple of weeks and sells the results to her neighbors, provided they supply their own bottles, to the publicly held corporation with distilleries in twelve countries, most of them with visitors’ centers and all of them with special bottlings for duty-free.
To chart the trade’s history, much of which has not been written, and lay out its current structure would require a volume larger than this one; here, the best we can do is provide a rough outline of its development and a back-of-the-envelope sketch of its organization. This must necessarily be an incomplete view: although in many countries the spirits trade is among the most highly taxed and regulated of businesses, in others it is completely unregulated or run mostly off the books, making it very difficult to diagram. See moonshine.
Structurally, the spirits trade can be divided into three tiers, each of which operates in its own way and yet is also connected to the other two: (1) distillers who make a traditional product and retail it locally or sell it in bulk; (2) négociants or NDPs (non-distiller producers), who do not distill themselves but rather take spirits made by others, prepare them for market (this can include processes such as aging, rectifying, flavoring, or blending), and bottle them for sale under their own names or resell them to other NDPs; and (3) distillers who prepare their own spirits for market, bottle them, and sell them nationally or internationally under their own brands (thus effectively combining the other two tiers).
These tiers are historical, in that the first came before the second and the second before the third. But they are also contemporaneous, as each subsequent stage did not erase the one that preceded it: despite the prevalence of global brands such as Absolut vodka, Johnnie Walker whisky, and the like, the world still holds untold thousands of little distilleries that ferment the produce of their region, distill it, and sell the spirit to their neighbors just as distillers were doing a thousand years ago.
Nor are the tiers exclusive: in this complicated industry, there are many brands that both buy spirit and distill their own, thus bridging tiers two and three (this is the model followed by many cognac and scotch whisky producers). See cognac and whisky, scotch. Others both sell bulk spirit and bottle and market their own brands, a model common in the rum industry (tiers one and three). It also must be noted that these tiers are not markers of quality, at least not from the consumer’s point of view: thanks to tier-two companies such as Del Maguey, which bottles and provides international distribution for mezcals sourced from village distillers, tier-one products can share the same top shelf as tier-three ones. See
A major step in the evolution of the spirits trade was the introduction of brands with protectable trademarks, such as this 1887 American one for Early Times whisky.
Library of Congress.
Origin of the Trade
Until the early modern period, we have only the slenderest evidence with which to chart the early progress of the spirits trade, and any history must be a tentative one. That said, the earliest traces we have of it are from the period between 150 bce and 250 ce, from Gandhara and Taxila in what is now Pakistan and Afghanistan. There, archaeologists have uncovered the remains of several buildings where back-room distilleries, with multiple clay pot stills and numerous condenser/storage jars, are joined to front-room taverns, with stacks of drinking cups. Both cups and condensers are stamped with seals, suggesting some sort of excise system and thus a well-established and lucrative trade. By the 800s ce, in some parts of Asia first-tier producers such as these appear to have already gone into commerce with (second-tier) traders and merchants such as the ones who were shipping palm spirit in large “Martaban” jars from ports in Siam and Burma to destinations around the Andaman Sea and Bay of Bengal.
By the 1200s, the spirits trade in Asia seems to have developed into a complex system of overlapping networks, with sugar-cane arrack being traded all over northern India, grape spirit moving east along the Silk Road from Central Asia to China, and palm arrack still being traded around the Bay of Bengal, now along with other distillates. By the 1400s, we see not only rice spirit being shipped from ports in southern China to the Philippines and Java but Chinese distillers settling in both places and manufacturing the spirit locally. See arrack, Batavia; and Baijiu. Unfortunately, in the absence of a detailed history of distillation and spirits in Asia, we have frustratingly little detail on all this activity.
Meanwhile, in western Europe, distillation had moved out of the realms of alchemy and speculative medicine and into the marketplace. Michele Savonarola, whose thorough 1440s survey of the state of distillation in Italy is the earliest truly comprehensive treatment of the subject, found that “aqua ardente” was in such widespread use as to be sold “in the piazzas to the poor and wretched.” At the same time, Venetian merchants were exporting a rather higher grade of spirit to the royal courts of England and Burgundy. See rosolio.
At the end of the 1400s, of course, heavily armed European merchant-explorers reached both the Americas and India, upending the trade networks in both hemispheres (among many other things). By the 1510s, the Portuguese were shipping palm arrack back to Lisbon from Goa. At the same time, the Spanish were shipping wine and brandy to their new colonies in the Americas. The rest of the century saw these tenuous threads develop into a new, global trade network uniting Europe, Asia, Africa, and the Americas, with way stations at many of the islands in between.
The 1500s also saw a global boom in distilling, from pisco in the Spanish Viceroyalty of Peru and agave spirits in Mexico, to whisky in Scotland and Ireland, vodka in Russia and the Baltic, brandy in France, genever in Holland, and korn in Germany. See pisco. Although it is almost entirely undocumented, it also appears that cane spirits began to be distilled first in Brazil and then in Mexico and in the Spanish Caribbean, possibly sparked by the Portuguese experience in Bengal, where sugar-cane arrack was in widespread use. See rum.
With the spectacular growth in transatlantic traffic that marked the beginning of the seventeenth century, the center of the spirits trade shifted from the Indian Ocean / South China Sea to the Atlantic (marking the triumph of the wooden barrel over the earthenware jar as the world’s preferred shipping container for spirits). See barrel. If the previous century saw breakthroughs in tier-one distilling, the new one was the age of the trader. Led by the Dutch, European merchants learned to mature, blend, and rectify spirits and to use them to fortify wine so that it would survive the long ocean voyages that were the mark of the new age. Dutch traders, it should be noted, also did much to encourage distillation, to the point that they supplied their trading partners in places such as Java, northeastern Brazil, and the Loire region of France with stills and instruction in their use. In 1631 alone, Nantes, the base of the Loire brandy trade, imported 235 copper stills from the Netherlands.
At the same time, governments began to try to control the trade: to channel it, encourage convenient branches, and truncate inconvenient ones. We can see the effect in the American rum trade, a byproduct of the metastasizing American sugar industry, which was swallowing human lives by the hundreds of thousands and making a few families unprecedentedly wealthy. Beginning in the 1650s, the English colony of Barbados began exporting the spirit, first to other English colonies in North America and then, by the end of the century, to the home country and other parts of Europe. In that trade, it was soon joined by Jamaica and England’s other Caribbean colonies. (Barbados, too, might have had Dutch instruction in distilling.) See
On the other hand, Spanish, Portuguese, and French America also made enormous quantities of sugar yet exported no rum at all, at least legally. In all three empires, the spirits trade was regulated to benefit European brandy producers, and distillation in their American colonies was banned or tightly restricted. With enforcement of these rules being spotty at best, they did little to stop domestic spirits trades from arising in colonies such as Brazil, Martinique, and Mexico (which had extensive industries making not only rum but also agave, palm, and maize spirits). While ineffective at preventing much of the colonial population from drinking the cheap domestic spirits, the prohibitions did ensure that the trade would remain at a first-tier level—that it would be denied the capital, expertise, and markets needed to compete internationally. Indeed, in the mid-1600s, when Brazilian distillers began illegally shipping their rum to West Africa, their discerning would-be customers ranked it at the very bottom of the list of available spirits. See cachaça.
In the eighteenth century, we see the groundwork laid for third-tier production—for distillers to be in control of their own marketing and distribution and turn production into branding. At first, this took the form of closer integration between distillers and merchants, whether it was James Delamain (1738–1800), the pioneering Dublin-born cognac merchant, setting up his own distilling operation with which to supplement the brandy he purchased or the move by the Wedderburn family, who distilled a very high grade of rum at their numerous Jamaica estates, into the shipping business. See cognac and rum, Jamaican.
There were still three important conditions lacking for tier-three production: (1) a way of building consumer demand targeted for the product of one distiller, rather than for a category of spirit, the product of a region, or from one merchant; (2) a way of reliably getting the product from the distillery to the consumer without passing through the blender’s vats; and (3) a way of brushing off the free riders that any success in building a brand would inevitably attract, as George Smith’s Glenlivet whisky and Benjamin Hodges’s Old Tom gin did in the 1820s. See Glenlivet and Old Tom gin.
The first problem, that of publicity, was solved by the growth in literacy that came with industrialization the nineteenth century and the subsequent rise in journalism and advertising, while late-century developments in bottling technology and the move to factory bottling and tamper-resistant packaging solved the second. See bottles, labeling, and packaging. By mid-century, distillers were already supplying retailers, who bought spirits by the barrel and bottled them for the consumer, with branded labels; the vulnerabilities of that system are, and were, obvious. Finally, the mid-century adoption of trademark laws by the major industrialized countries helped would-be brand builders to solve, or at least mitigate, the problem of imitators, although in the early years it often took a great deal of legal wrangling.
By the end of the nineteenth century, not only were spirits booming—“distillation follows industrialization,” as the saying has it (in France, e.g., per capita spirits consumption tripled between 1830 and 1900)—but third-tier companies were appearing worldwide, from Scotland’s pioneering whisky conglomerate, Distillers Company Ltd., formed in 1877, to the Bacardi company, formed in 1862 after Spain lifted its prohibition on colonial distilling, to the 1901 BAM (Batavia Arrack Maatschappij), which combined the highly regarded KWT (Khow Wan Tjiang) and OGL (Ong Goan Liong) Indonesian arrack distilleries under one Amsterdam-based corporate ownership. See arrack, Batavia; Bacardi; and Distillers Company Ltd (DCL). Although such companies enjoyed the advantages of controlling their own production and eliminating the markups between producer and merchant, as well as certain marketing advantages attendant on the ability to point to a distillery where their product was made, they did not replace tier-one or tier-two companies, which learned to work around the new producers.
The twentieth century brought another wrinkle in the form of state ownership, where a national government becomes the producer, brand owner, and distributor. Such spirits were generally kept for domestic use, but not always, and indeed such iconic brands as Havana Club rum, Stolichnaya vodka, Absolut vodka, and Kweichow Moutai are, or were, entirely or in part state-owned. See
This century has seen the popularity of micro-distilleries explode, first in the United States and now in places like Ireland, Italy, and England. While many of these upstarts produce what they sell, many others buy spirits from large bulk producers, like Midwest Grain Products of Indiana (MGP) in Lawrenceburg, Indiana, and Distilled Resources, Inc. in Rigby, Idaho—making them second-tier producers masquerading as first-tier ones.
Meanwhile, most modern multinational spirits companies, such as the British Diageo, the French Pernod Ricard, the Japanese-American Beam Suntory, and the Italian Gruppo Campari, maintain diversified collections of brands large and small, including everything from recently purchased tier-one micro-distillers to iconic legacy brands that are produced on a massive scale. The small brands give credibility to the large ones, and the large ones guarantee market access to the small. See Campari; Diageo; Jim Beam; and Pernod-Ricard. All the while, there are still untold thousands of small distilleries operating—legally or otherwise—around the world, where the owner gets up every morning to check the fermentation, fire up the still, or fill a neighbor’s water bottle with new-make spirit. It must be borne in mind that the vast majority of these are essentially invisible to the global trade, which is largely confined to the spirits categories that made up the Atlantic trade in the nineteenth century—brandy, rum, gin, and whisky. Yet the trade is not immutable: the twentieth century saw vodka and tequila globalized, and it is entirely possible that there will be further additions. At present, baijiu is standing in the wings, and it is not impossible that we will see a return of palm spirits to international trade.
Cullen, L. M. The Brandy Trade under the Ancien Régime. Cambridge: Cambridge University Press, 1998.
Francis, A. D. The Wine Trade. London: A. & C. Black, 1972.
Haworth, Alan, and Ronald Simpson, eds. Moonshine Markets. New York: Brunner-Routledge, 2004.
Kops, Henriette de Bruyn. A Spirited Exchange: The Wine and Brandy Trade between France and the Dutch Republic in Its Atlantic Framework, 1600–1650. Leiden: E. J. Brill, 2007.
Nourrisson, Didier. Le buveur du XIXe siècle. Paris: Albin Michel, 1990.
Royal Commission on Whiskey and Other Potable Spirits. Interim Report. London: HM Stationery Office, 1908.
Savonarola, Michele. I trattati in volgare della peste e dell’ acqua ardente. Edited by Luigi Belloni. Rome: Società Italiana di Medicina Interna, 1953.
Weir, R. B. The History of the Distillers Company, 1877–1939. Oxford: Clarendon, 1995.
By: David Wondrich
A major step in the evolution of the spirits trade was the introduction of brands with protectable trademarks, such as this 1887 American one for Early Times whisky. Source: Library of Congress.