Home of Jack Daniel’s in Turmoil : Whiskey Firm’s Relations With Town on the Rocks

For most of his working life, Bully Sullivan was an official taster for the Jack Daniel Distillery here. Now, he says, the very thought of Jack Daniel’s leaves a bitter taste in his mouth.

Not the charcoal-mellowed sour mash spirits, which he still heartily sips and savors, but the Jack Daniel’s company itself, which he says dumped him unceremoniously and without warning two months ago after 22 1/2 years of faithful service.

“They just called me into the office one Friday and said they were doing away with my position, and I had the choice of basically quitting without getting any benefits or taking early retirement,” said 58-year-old Sullivan, who took the retirement option.

“It was a terrible shock,” he added. “I wouldn’t have any grudge against the company if they had prepared me for it. But they never gave me any idea of what they planned to do.”

For years, magazine advertisements for Jack Daniel’s Tennessee sippin’ whiskey have suggested that the good ol’ boys who run the world-famous distillery back in the “Holler” in tiny Lynchburg (“Population: 361”) are just about the nicest folks on earth. And for years, hardly a voice here suggested otherwise.

But now, a number of townspeople all over Lynchburg (actual population: 668) are telling stories a lot like Sullivan’s.

Jack Daniel’s, the sixth best selling brand of liquor in the nation, has always thought of itself not only as the town’s biggest employer but as its greatest public benefactor, a down-home company with old-fashioned concern for its employees and the community in which it operates.

Its classic advertisements are filled with seemingly unaffected scenes--smiling Jack Daniel’s workers in baseball caps and open-collar shirts, local farmers sitting around the vintage courthouse square, the town’s volunteer Fire Department posed against the big red fire truck donated by the distillery.

So stories in Lynchburg about raw deals at the company’s hands are unsettling, to say the least.

Nevertheless, many are the townspeople who have turned sour on Jack Daniel’s in recent months.

“Jack Daniel’s isn’t the goody-goody place they’d like to have you think it is,” said one longtime resident of this town 70 miles southeast of Nashville. “All they care about anymore is the dollar--just like any other big business. And they don’t mind who they trample over making it.”

A variety of groups--workers, farmers and ordinary townspeople--have developed grudges against the company lately, but perhaps the most disgruntled are those who have lost their jobs at the 119-year-old distillery. Since the beginning of this year, more than 60 of the 350 Jack Daniel’s hourly employees have been laid off.

Jack Daniel’s officials say the reduction in the payroll was necessitated by the company’s shifting economic fortunes.

Economic Woes

“We’re in a declining industry,” said Allen Hovious, Jack Daniel’s communications director. “Our growth rate went up at a 15% compounded annual rate during the ‘70s and early ‘80s, but it was about nil in ’82 and ’83. Our annual sales reached a peak of 4 million cases in 1983. Today, we’re down to about 3.5 million.”

Hovious said the distilling industry has been hard hit by the fitness craze--”People are sipping Perrier instead of Tennessee sour mash,” he said--and by the recent 20% increase in the federal excise tax on liquor.

In nearby Tullahoma, home of the George Dickel Distillery, which produces Tennessee’s lesser known brand of sippin’ whiskey, the work force has been cut by about one-fifth in the last year or so.

But many Jack Daniel’s workers, while conceding that they understand the need for layoffs during hard times, are angry that the distillery offered to rehire them at reduced wages with few or no benefits.

“I was making $9.17 an hour with the usual benefits before I got cut on Sept. 20, which was a Friday,” said Linda Smith, a 32-year-old mother of two who had worked since 1978 in the distillery’s bottling house. “But they said I could come in the following Monday, only I’d be making $6.50 an hour with no benefits.”

She took the offer, but she says she is not happy with it.

“They’re treating us like we were dumb hillbillies,” she said. “Well, you can only push us so far. You get us against the wall, and you’ll find you can’t push any more.”

Smith has joined other present and former employees of Jack Daniel’s in an campaign to form a union at the distillery.

Chief among their grievances, the union organizers say, are the lack of job security and the disregard for seniority rights.

“What they did to Bully Sullivan just added fuel to the fire,” Smith said. “If they would do that to a salaried employee with an outstanding record on the job, then you could imagine what they’d do to the hourly employees.”

Interestingly enough, only six months before his retirement, Sullivan--who holds a master’s degree in education and was a high school teacher and coach before joining Jack Daniel’s--was featured in a company ad with his 35-year-old son, Eddie, who still carries on the family tradition as a taster at the distillery.

There have been other attempts at the plant to form a union, but this one appears to be the most intense ever.

“I have fought against the unions for years,” said one 19-year employee who was handing out union handbills at the distillery gates. “But since the company’s been the way it is, I’ve had to get behind them.”

There is no denying, however, that the union movement faces tough opposition.

“I think the people here are treated better than if they had a union,” said Marty Messmer Jr., 45, Jack Daniel’s computer operations manager. “I’ve never been in a union, but I’ve worked in places with them. A lot of these people have never worked anywhere other than here. They don’t know what the real world’s like outside of Lynchburg. A lot of these people have been carried along anyway. Now, they’ve laid them off, and it’s upset them.”

Byron Burnett, 37, who joined the company two years ago, added: “Comparing this place to other places where I’ve worked, it’s great.”

Farmers, however, have a separate grievance. A group of 10 has filed a $12-million lawsuit at the Moore County Courthouse in Lynchburg against the company, charging that it has reneged on its promise to continue supplying them with spent mash from the distillation process to feed their cattle, forcing them into economic ruin.

This mash, which the farmers usually refer to as “slop” and which looks like watery corn-bread batter, is a byproduct that is basically grain and very high in protein.

In the early days of the company, when old 5-foot-2 “Mr. Jack” himself and his nephew, Lem Motlow, were running operations, the distillery fed the mash to its own cattle.

But as production increased, so did the mash supply. The excess was at first given away and then sold to local farmers--most recently at around $10 per 1,000 gallons. A 1,000-gallon ration was usually enough to feed 40 head of cattle a day.

More than 100 farmers in Moore County and several surrounding counties hauled the slop from the distillery to their feedlots. The beef and dairy cattle economy built up on this feed totaled more than $18 million in Moore County alone as recently as the late 1970s.

In April of 1984, however, Jack Daniel’s decided to switch to a process that would permit the company to recover most of the grain from the spent mash, dry it out and then sell it on the open market for cattle feed at a much higher price.

A company study had shown that under this so-called “dry-house” process--in common use by distillers elsewhere--Jack Daniel’s could realize a profit of $1.25 million a year, compared to $153,000 the old way.

The move infuriated farmers, who had come to rely on the inexpensive spent mash.

One of those who joined to file the suit is a distant cousin of the original Motlow family, which owned the distillery for decades before selling it to Brown-Forman Distillers Corp. in Louisville, Ky., in 1956.

“My heart went up to my mouth when they announced that they were converting to a dry-house method,” said Lanny Medley, 45, another plaintiff in the suit. “What upsets me is that they strung us along for years, promising us that they would continue to supply the slop. Then they pulled the rug out from under us.”

As a result of Jack Daniel’s move, he said, he lost his dairy farming business, which at one point had grown to 200 milk cows and 150 heifers on 225 acres of farmland. For a while afterward, he leased and operated a gas station in Lynchburg but now works as a field manager for a North Carolina-based feed company.

Changing Image

“You know, Jack Daniel’s word used to be good as gold,” he said. “You always got what they said you would. But this is so typical of the way they operate now. Five years ago, you’d have had a hard time finding five people out of 100 to say something bad about Jack Daniel’s; today, you’d find it hard to find that many with something good to say.”

Jack Irion, an attorney in nearby Shelbyville who is handling the case for Jack Daniel’s, denies that the distillery ever made any promises to continue supplying spent mash and says that the farmers in the suit are blaming the company for their own shortcomings as businessmen.

“They can’t make a living because their cost of production is higher than the price they can get for their product in the market, even when they’ve been given a free ride on this feed,” he said. “Now, someone comes along and says Jack Daniel’s has deep pockets, let’s see if we can’t recoup some of our losses.

“I feel sorry for them,” he added. “But Jack Daniel’s is in the business of making whiskey, not in the business of making cattle feed.”

Whatever the farmers’ complaints, the distillery appears to have done a lot for Lynchburg itself. “We just got through building a new sewage plant,” Mayor Nath Osborne said. “Jack Daniel’s matched a $260,000 grant from the federal government--which the town couldn’t afford that much money. They furnished a fire truck, they built a $40,000 gazebo (in the town square). Anytime that we need a little assistance, why, they come right along and give us a check.”

And the distillery has been good for business in the town, attracting more than 250,000 tourists a year.

But even so, some townspeople also cast a jaundiced eye at the civic projects that the company has financed.

“Jack Daniel’s has never done anything for this community that they haven’t made a bundle from in some way--especially in all the free publicity they get,” said one resident. “Take that gazebo, for example. They built that because the governor was going to kick off his Tennessee Homecoming ’86 in Lynchburg, and all those television cameras would be trained right on it.”

But Mayor Osborne disagrees, expressing a common sentiment in his own way: “Without Jack Daniel’s, we’d all be cutting cordwood and selling it down on the square.”

Osborne also points out that some Jack Daniel’s philanthropy remains largely unpublicized, such as leasing an old school building that it owns to the town’s senior citizens’ group at $1 a year and picking up the tab for the utilities there.

“I don’t think they’re running roughshod over anybody,” Osborne said. “I think they’ve been awfully good for the town.

“It’s hard to please everybody. Jesus Christ didn’t suit everybody; they hung him. I think eventually, though, all this will blow over.”