Dive Brief:
- Regulators in Tennessee have halted an investigation into the storage and distribution practices of Diageo's George Dickel Tennessee Whisky brand.
- Diageo and regulators had been fighting in federal court over whether or not the company had violated state law because it had stored some 16,000 barrels of "Tennessee" whiskey in Kentucky over the past five years.
- Diageo has argued that Tennessee's law, which requires that whiskey be stored in the state, violates the interstate commerce clause of the U.S. Constitution.
Dive Insight:
It's easy to read this case as a simple tale of overzealous regulators with too much time on their hands. But things are slightly more complicated than that.
The law has at least one powerful backer in the liquor industry. Diageo's rival Brown-Forman Corp., which makes Jack Daniels, is based in Tennessee. Brown-Forman argues that the law protects the industry from knock-offs. It also, obviously, protects Jack Daniels -- the giant of the Tennessee whiskey industry -- from competition.
