Schenley Industries, the 20th Century Bourbon Empire

Bourbon in the mid- 20th century was a creature of post-Prohibition and the conglomerates that came to dominate American commerce.

At one point, Schenley Industries was headquartered in the Empire State Building.

• In 1937, the New York Times reported:

"More than four floors in the Empire State Building at Fifth Avenue and Thirty-fourth Street have been leased to the Schenley Distillers Corporation and affiliated companies. Closing of (the) contract for this large space was announced yesterday by former Governor Alfred E. Smith, as president of Empire State, Inc."

Sidenote: Smith was a four-term New York Governor who ran for the presidency in 1928, and lost to Herbert Hoover, before the Great Depression hit. It had been said Prohibition was one of the issues that sunk Smith's campaign. While he was in favor of relaxing Prohibition, rural voters from the Democratic Party in the South still leaned dry.

• Mad Men Dreams

In the late 1950s/early 1960s, Mad Men's Don Draper would have considered grabbing the Schenley ad account as a coup, just like Kodak, Lucky Strike, Maytag, Right Guard, etc -- the power houses of the day.

• Rosenstiel

Schenley was organized by Lewis "Lew" Rosenstiel (1891-1976) in the 1920s, the company having benefited from having one of the six licenses to produce medicinal whiskey during Prohibition. Rosenstiel had gotten his start working at his uncle's distillery, Susquemac Distilling Company in Milton, Kentucky 

The other companies with medicinal rights were Brown-Forman, Frankfort Distilleries, the A. Ph. Stitzel Distillery, the American Medicinal Spirits Company, and James Thompson and Brother.

The story goes that Rosenstiel had met Winston Churchill, who predicted America would eventually repeal Prohibition, which would make those who were in the position to do so become very wealthy.

They acquired whiskey from several sources and, interestingly, got the last remaining inventory of Jack Daniels Old No. 7. In order to avoid paying a royalty for use of the brand name, Schenley called it Old No. 8.

• The rise of an empire

When Prohibition ended in 1932, Schenley was formed as a public company and became the largest liquor manufacturer in the 1930s. They became Schenley Industries in 1949, one of the "Big Four," which included Seagram, National Distillers and Hiram Walker.

The bourbon whiskey brands Schenley owned included: The Old Quaker Company, Golden Wedding Rye, I.W. Harper, and James E. Pepper and of course Schenley. They produced Crusam Rum, had a controlling interest in some beer, and they made a Canadian whisky, Schenley Reserve.

The latter was also known as Schenley Black Label, the only liquor available during World War II to submarine officers at Midway Island. It was notoriously known as  "Schenley's Black Death"

For fun, here is a review of one of the brands Schenley had acquired, Old Quaker.  According to Dusty Dan, this bourbon was put in the barrel in 1937 and bottled in 1941:

• Uncle Sam declares bourbon a uniquely American product in 1964

Bourbon being declared a unique product of the United States by Congress in 1964 -- which today is regarded by the bourbon world with reverence akin to the Declaration of Independence -- began as just a marketing strategy.

1. Rosenstiel thought the Korean War would grow into a world war, so he ramped up production of the liquor in anticipation of coming shortages. He misjudged terribly  and got stuck with a large inventory. 
2. By having the U.S. Congress declare bourbon a uniquely U.S. product (like Champagne can only come from Champagne,  France), Schenley could unload its stock around the world, and avoid overseas competitors.
3. Rosenstiel had established the Bourbon Institute, his lobbying firm, run by a retired Admiral who had commanded a ship at the storming of Omaha Beach, during D Day. 

• End of the empire

The days of Schenley's reign in the liquor business was coming to an end as the 60s and 70s saw bourbon and other whiskeys/whiskies falling out a favor with consumers. Vodka and other spirits were beginning to dominate the markets, and bourbon was increasing seen as the bottom-shelf alcohol favored by grandfathers. It was not helped by the mass production and inventories of conglomerates like Schenley .

Rosenstiel retired in 1968, selling his shares of the company. Thereafter, the giant liquor company went from acquiring brands to selling them off.

Schenley was bought by financier Meshulam Riklis in 1968, who later sold it to Guinness in 1987 (Schenley having imported the Irish dry Stout).  Schenley was sold to United Distillers and ceased as a company. 

The company that dominated the American liquor industry, having once had over four floors in the mighty Empire State Building was no more.

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