Spirits

The Coming Age of Super-Premium Rye

Peerless is selling two-year-old whiskies for $125—is this the start of a new era?

Peerless-Distillery
Photo courtesy of Wayne Curtis.

Corky Taylor is a once-retired businessman with a gray buzz cut and a no-nonsense manner that suggests he’s not much for shenanigans. Also, as the sole proprietor of Kentucky Peerless Distilling Company, founded in 2014, he has the freedom to do things as he sees fit. In the past year, the company has been rolling out its two-year-old rye. Next year: a four-year-old straight bourbon. “I don’t have any business partners, and I don’t have any investors,” Taylor says. “And another thing: We’re not for sale.”

Peerless Straight Rye Whiskey has received some impressive accolades since it first hit the shelves. Last year, Whisky Advocate magazine named it one of the top 20 whiskeys in the world—and it was the only craft whiskey in a list that included Elijah Craig Barrel Proof, Rebel Yell Barrel Proof, and Wild Turkey Master’s Keep. It was also the subject of much appreciative murmuring from whiskey experts at a tasting last summer at BevCon in Charleston, South Carolina. Peerless Rye is now distributed in 38 states—and Canada, as of this spring.

But the company may be getting even more attention for its retail pricing. “It’s really ballsy to charge $125 for a young whiskey,” says Elana Effrat, the spirits marketing manager at Martin Scott Wines in New York City.

Molly Wellmann, who heads Wellmann’s Brands, which oversees several bars in Cincinnati, including the Old Kentucky Bourbon Bar, agrees. “My first thought is, I think they’re frickin’ crazy!” she says. “It’s pretty bold to come out with something over $100 that’s only two years old.” But Wellmann says her first thought is followed by a second—“Good for them!” she says. “They might be changing the industry.”

In the 1950s, Smirnoff Vodka, then owned by Heublein, essentially invented the mass-market vodka category by popularizing a value-priced spirit, which in the late 1960s sold for as little at $5 a fifth. Smirnoff owned the vodka category for years, until Absolut arrived in 1979. In selling a vodka that cost twice as much, Absolut invented and then dominated the premium-vodka category for nearly two decades—until liquor impresario Sidney Frank rolled out Grey Goose in the 1990s. He figured that consumers who thought that $20 vodka was good could be convinced that $30 vodka was better. So he invented the super-premium category by building a brand around a good story (vodka made from French wheat and distilled in Cognac).  

It was a risky move. And Frank was proved right. Which leads one to wonder: Is Taylor following Frank’s tracks—selling a craft whiskey that resets expectations of what consumers will pay?

Taylor has lifted some chapters from Frank’s playbook, beginning with a good story. Taylor’s great-grandfather, Henry Kraver, once oversaw his own distilling empire, which he built downriver from Louisville in Henderson, Kentucky, starting in 1885. It thrived until Prohibition, when the family gave up distilling—Taylor’s father went to military school and later served as an aide to General George Patton during World War II. Taylor himself went into finance, eventually managing an investment bank in Florida. “I managed $10 billion,” he says, “had my own jets, and 2,000 employees.”

He sold the business and retired in 2009, but retirement didn’t take. “I walked on a beach for a year and a half,” Taylor says, “and it was the most depressed I’ve ever been in my life.” He and his son, Carson, who had built a successful construction company, decided to join forces and revive the former family business. The simple goal? “To make a damn good product,” Taylor says, and something his great-grandfather would appreciate.

Taylor acquired a 115-year-old brick building in downtown Louisville—a former tobacco warehouse and HVAC duct systems factory—within walking distance of burgeoning Distillery Row. Carson got to work, restoring it from top to bottom and making a distillery showpiece. From the street, it looks like something on an ornate mid-19th-century letterhead: stern and immovable, with the Peerless name painted banner-style in a pleasingly antiquated typeface. Above that are blocky letters reading DSP-KY-50—Kraver’s original federal licensing number, which conveys a distinguished pedigree. (A new producer applying for a “distilled spirits plant” permit today would get a DSP number in the 20,000s.)

grains-at-peerless-distillery
Photo courtesy of Wayne Curtis.

The distillery fills about 11 barrels a day, sourcing corn from Kentucky and barley and rye from Minnesota. The company mills its own grain using a roller mill, which Taylor says produces a more consistent product than a hammer mill. A sweet-mash process is used in fermenting rather than the more common sour-mash process, in which spent mash is carried over from batch to batch, in part to ensure consistency.

Peerless instead draws consistency from computer automation, which controls heating, cooling, and holding cycles throughout the process, such that quality isn’t wholly reliant on who’s overseeing the process on any given day. That applies to the company’s 2,000-gallon fermentation tanks and its 25-foot Vendome continuous still. “When we built this five years ago,” says Carson, “it was the most automated system in the country.” The distillate comes off the still at 131 proof, which Peerless staff has found optimal for capturing the most desirable grain flavors.

Peerless also revived the pre-Prohibition practice of barreling whiskey at 107 proof, rather than the more typical 125 proof preferred by many distillers today. “It costs us about one barrel more per day, but it’s worth it,” says Carson, as he believe this allows more complex flavors to develop. The whiskey is also bottled at barrel proof. “We’re not going to add a drop of water,” says Corky Taylor. “If you want water, add it yourself. There’s a lot of things we’re trying to do differently.”

Among the differences is that Peerless decided not to identify and market to a niche but instead to aim for quality and assume the market will pay for it, no matter the cost. “I sit down, I make the best stuff I can, I tally the bill, and that’s what we charge,” says head distiller Caleb Kilburn. “There’s really no higher thought to it. It sounds simple, but it works.”

The price is high but not wholly out of range of other high-end craft spirits—like Hillrock Double Cask or Whistlepig Rye, at around $90, and Redemption Rye and Old Potrero, at $80, although these have all been aged longer than two years. Peerless may also be benefiting from the absurd-verging-on-obscene prices for Pappy Van Winkle (with online pricing well into four digits). Pappy has been Grey Goose on steroids, resetting the perception of value.

Like Pappy, Peerless has heritage, which is emphasized with the distillery’s DSP-KY-50 mark on building and bottle, and its marketing material, which plays up family history. Says Wellmann, “People love the solid roots and history that goes with it” and will pay for it.

Effrat has perceived a shortage of high-end rye and other American whiskeys for consumers willing to pay for top quality, although the upper range is still murky. “The sweet spot seems to be in the $50 price range—and you can get away with up to $80,” she says. She praises Hillrock, based in New York, whose solera-style bourbons sell for around $80 and also come with a solid story—Hillrock grows its own rye and has an extensive rebarreling and barrel-finish program. Says Effrat, “I don’t have any issue selling it.”

fermentation-at-peerless-distillery
Photo courtesy of Wayne Curtis.

Still, $125 for Peerless is a daunting leap for a consumer to make from $80 or $90. But this doesn’t seem to trouble the Peerless team. “We’re driven by quality, not by profit,” says Corky Taylor. “We’re very serious about making the best product we can.”

Peerless is also poised to offer more value for the $125 price tag over time. It’s holding back plenty of stock for later releases, and is looking to release four- and six-year-old ryes when available. Yet the Taylors say they don’t have plans to raise their prices, so consumers will get better quality and value for the same outlay.

The Taylors report little resistance to their pricing. “Accounts have not pushed back,” says Carson. “Once they try the product and hear the heritage and legacy of the story and our quality philosophy, it’s kind of hard for them to push back on price after that.”

If Peerless has a secret weapon, it’s patience—letting the world (and inflation) catch up to its pricing may prove to be a winning strategy for companies with capital to last. When other brands top $100 for their super-premium whiskeys, Peerless will have been waiting for them for years. “We don’t look at this as a five-year goal,” says Carson Taylor. “It’s a 50-year goal. We’re trying to build Peerless as a legacy.”

Wayne Curtis is the author of And a Bottle of Rum: A History of the New World in Ten Cocktails and has written frequently about spirits for The Atlantic, Imbibe Magazine, Punch, The Daily Beast, and Garden & Gun, among others.

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