Around the Barrel - Transcript: Ep028 Larry Combs

 

 

Larry Combs: That's the type of day to day granular activity that, you know, really my role shifted to is more, “How do we get to tomorrow and plan for next week?”

 

 

Lucas Hendrickson: There's a reason why phrases become cliches, such as “A chain is only as strong as its weakest link,” but when your chain metaphorically stretches across multiple continents and deals with a product distributed in 170 countries, you better check those links constantly.

 

 

On this episode, we talk with Larry Combs, senior vice president of the global supply chain for Jack Daniel’s. He's the guy testing those links daily, especially in this moment of a worldwide crisis, making sure every component is in place to make doubly sure every drop of the amazing spirit in your glass first makes it in and then Around the Barrel.

 

 

Welcome back to Around the Barrel, the official podcast from the makers of Jack Daniel’s. I'm your host, Lucas Hendrickson. We've focused a lot on this show on the idea of every drop of Jack Daniel's Old No. 7 emerging from the hollows of Lynchburg, Tennessee. But that doesn't mean every item that goes into making this easy sipping Tennessee whiskey has its origin there.

 

 

Logs for making the barrels, the barrels themselves, the iconic square glass bottles, the labels, the packaging, the caps – all of these items have to come from somewhere, and there's an intricate web of somewheres that has to be managed.

 

 

As the senior VP for Jack Daniel's global supply chain, Larry Combs thinks about that intricate web every day, not only how to get the product made in Lynchburg, but also getting it out of Lynchburg and into the glasses of friends of Mr. Jack around the world. 

 

 

It's a complex job under the best of circumstances. Throw in a worldwide pandemic and the need and opportunity to add a new wrinkle to the distillery's operation to help address that pandemic, and his job got a little more complicated. But it's just another chance to take Mr. Jack's advice to heart and rally that team to do that job the best they can.

 

 

Larry: Hello, my name is Larry Combs. I’m currently the senior vice president and general manager for the Jack Daniel's global supply chain. I live currently about an hour outside of Lynchburg, and I'm responsible for a number of facilities across the U.S. and around the world.

 

 

Feel pretty at home in Lynchburg, small little town, because I'm originally from Campton, Kentucky, which I think has about a hundred fewer people than Lynchburg. So, from where I started to where I'm at today pretty much feels comfortable.

 

 

Lucas: Larry Combs, welcome to Around the Barrel.

 

 

Larry: Thank you. Happy to be here.

 

 

Lucas: We've talked with a lot of folks over the course of this show about various aspects of production, mainly of Jack Daniel's Old No. 7 Tennessee Whiskey, but also their enjoyment of it, how they choose to enjoy it.

 

 

But we haven't really kind of dived into that process of not only starting but finishing and getting into the hands of friends of Mr. Jack all around the world. You've been involved in touching almost every part of that.

 

 

What's your current role within Jack Daniel's and Brown-Forman, but also how has that changed now as the world has turned upside down a little bit?

 

 

Larry: Sure. I'm happy to share. So, my current role within Jack Daniel's and Brown-Forman is I'm the senior VP general manager of the global supply chain.

 

 

What that means is, from an overview perspective, I'm responsible from all the way to sourcing the logs that we produce our barrels from – which Jack Daniel's is one of the few people that produce our own barrels – to sourcing the glass, labels, bottles, closures, all the way through to distribution and getting Tennessee whiskey to more than 170 countries around the world.

 

 

And what my typical day looks like in that is really focusing on the people that make up the organization and ensuring we're prepared for the future and everyone's motivated and has the tools and resources they need to be successful as well as really establishing the strategy.

 

 

So, what is everyone working against and how do we know we're going to be able to successfully support the growth of Tennessee whiskey while continuing to do the things, you know, really well that have gotten us to where we are, right?

 

 

And so that's a lot around capacity and growth and quality and so on. Now, part of that responsibility from that kind of higher 30,000 foot level as well is really, you know, having robust contingency plans.

 

 

So, one of the things I tell people that it's my job to think about every day are all the things that could go wrong. It's wonderful when it's going right, but when it does go wrong, what is plan A and then plan B and plan C?

 

 

So, that leads to kind of where we're at today, right? Because we've had something that's gone pretty wrong. Not us, Jack Daniel's, but the world in general. And so that really started to change life starting in early February.

 

 

So, as we continued to see this develop, launched here in Lynchburg our crisis management team initially. And that consists of my leadership group, other key support functions. And I lead that, you know, separate from my normal managerial oversight. But really focused on assessing the crisis. How prepared are we for it? What do we need to be thinking about?

 

 

And those meetings really were every single day, 30 minutes to an hour, just to assess the incoming data. You know, how are people doing? What's next? And then that led to kind of the next step, which, you know, we creatively called our “pandemic response team.”

 

 

And that gets a bit more focused on really, as this crisis develops and it's right in front of us, how do we pivot and adapt, keep our people safe first and foremost, keep our communities safe and be in a position to continue to produce and supply Jack Daniel's? Right?

 

 

Because you have to start thinking of it – it's far beyond what happens here in Lynchburg, so that's critically important. But, you know, if our glass supplier, for instance, they're not in the spot they need to be and we don't have bottles, it's certainly very difficult to put whiskey in bottles you don't have.

 

 

Lucas: Right.

 

 

Larry: Same for our other facilities, like our own cooperages. It’s, you know, how do we make sure they're in the right place and that we have barrels to put the whiskey in we're distilling? And then starting to think about, you know, what are other things we can do to help support that broader mission?

 

 

And so that really shifted to a point where, from probably early March through early April, that was a 10 to 12 hour a day, seven day a week exercise, because stuff was coming at you from every direction.

 

 

Lucas: Sure.

 

 

Larry: And one fun example – and I don't really mean it's fun, but as you can think, is one of the things you're trying to do to keep people safe. You're social distancing and many other things, which I'm sure we'll talk more about.

 

 

But in the midst of that, we had the series of tornadoes roll through Tennessee, southern Tennessee and northern Alabama. Which, to keep people safe there, we had to put everyone in storm shelters, right?

 

 

So, then you have, you know, 50 to 100 people crammed in a storm shelter, and somebody calls in the next day with a fever. So, there you go. But so that's the type of day to day granular activity that, you know, really my role shifted to is more, “How do we get to tomorrow and plan for next week?”

 

 

Lucas: Yeah. So, we talked with Jeff Arnett for the first episode of this season about what those initial responses were. Basically looking at creating hand sanitizers and other products for Lynchburg and around that region, but then kind of pivoting the idea of creating alcohol for an external partner to create larger amounts of hand sanitizer. 

 

 

Can you give us an update on where that system is right now and kind of what it took to pivot or really add to the distillery's operation as far as getting that project underway?

 

 

Larry: Yeah, absolutely. So, you know, one of the things I'm proudest of with the team down here is really their can-do attitude and ability to do whatever it takes. And these are some great examples of it. So, I'll talk about the hand sanitizer and then share another example of some great stuff that the team has been able to do.

 

 

So, early on in the process of planning for and managing through the pandemic and looking at how we keep our employees safe and make sure we have all the PPE and the things that we need to do that, one of the keys was having enough hand sanitizer to provide our employees, provide the community and put throughout the facilities just to make sure we're keeping everyone safe and comfortable.

 

 

So, with that need, one of the things we quickly realized is that everyone was trying to get the same stuff and it was very difficult to get.

 

 

So, we pivoted and realized that, “Hey, you know what? One of the things we do make is ethanol. So, that's one thing we can certainly do.” So, we adapted the World Health Organization formula for hand sanitizer and started producing some internally.

 

 

We couldn't even get enough of the bottles, the typical type of square bottle and container you'd normally use for hand sanitizer. So, we actually then made another adjustment and started bottling it in our normal Jack Daniel's 375 milliliter bottle.

 

 

And we use that to supply our employees, supply the local community fire departments, EMS, nursing homes and so on. But we're really not set up to make hand sanitizer. It's not our core business. We're really, really good at making whiskey.

 

 

And then through other connections throughout the state – you know, I worked with many other executives through the Tennessee State Chamber of Commerce and started to connect to companies that their business is to produce hand sanitizer and other hygiene type products like soap, shampoos and mouthwash.

 

 

And so we started discussing and thinking about how we could do our part and do more, right, and keep our focus on making great Tennessee whiskey. So, one of the things we looked at and we were fortunate to be in the place to do it is that our most recent distillery expansion we just completed last year.

 

 

And as I mentioned before, in terms of overall strategy, look, that's what we're doing is we're planning for the next 5 to 10 years. So, that capacity we just put in place, we don't need it today, right? And so we were able to take and turn to saying, “Look, one thing we can do is we can make the ethanol that these companies can use to produce hand sanitizer.”

 

 

It's not the typical source. They would normally use what's called grain neutral spirit. So, odorless and flavorless, which is the opposite of what we try to do. But we thought we could get closer, right?

 

 

Lucas: Right.

 

 

Larry: But when I was working with these companies and we started talking about the odor and aroma – and it still smells a bit like whiskey when you splash it on your hands. They’re like “Oh, we don't know if folks will like that.” And I'm like, “All you do is tell them it's Jack Daniel's and you'll get three times the price for the bottle.”

 

 

But recognizing, you know, that's something people are splashing on their hands everyday, we were able to look at our process and simplify the formula, right? There's no reason to put rye in alcohol you're making for hand sanitizers.

 

 

Lucas: Nope. Not so much.

 

 

Larry: It just adds a bit of flavor. So, we turned to a pure corn formula more or less. And we also worked on tweaking our stills so we can distill significantly higher than we normally distill Jack Daniel's. So, we're able to make a very consistent higher proof product that has much less character, you know, relatively clean.

 

 

But they were able to work and formulate that with some complimentary aromas to make a pretty decent hand sanitizer and make it commercially available.

 

 

And when we looked at that, with that capacity we had available, we started producing to supply that ethanol April 8th. And we're now shipping enough between the two companies to allow them to produce 40 million six ounce bottles of hand sanitizer per month.

 

 

Lucas: Wow.

 

 

Larry: So then we do this basically at cost or less. We're not making any money on it, because that's really not what it was about. But we felt that's the biggest impact we could have is to make as much as possible available to the community at large.

 

 

And so that was our approach to that. And then out of that, we did work with them, saying, “Hey, I'd like to turn back towards having all of our focus on making and bottling Jack.” And so we got an allocation back from them from us selling the ethanol of all the hand sanitizers to meet our needs as well as for our regional and local community.

 

 

So, we use that to give back to, for instance – I mean, last list I saw, we've donated to over 150 organizations. But, you know, all the way from Vanderbilt Hospital to all the local Sheriff's departments, EMTs, nursing homes, schools and so on. So, it's been quite the journey.

 

 

Lucas: Yeah. You can't overstate the importance of that expanded capacity to be able to do that, not only for what you want to accomplish with the brand itself going forward, but also just be able to respond in a very positive way in this completely unique moment.

 

 

So, you ended up, when we last talked – when we talked with Jeff, they were kind of ping ponging back and forth between a couple of companies. It sounds like you went ahead and went and partnered with both. 

 

 

Larry: Correct. 

 

 

Lucas: What's the average daily capacity that you're able to then ship out, of this ethanol, to those companies?

 

 

Larry: Yeah. So, in a week's time we're shipping out about what we would call a proof gallon, so about 600,000 gallons a week.

 

 

Lucas: Okay. Now is that something that you want to continue to do past – who knows how long this is going to last, quite honestly. 

 

 

Larry: Correct.

 

 

Lucas: But being able to use that capacity to do that and then move the needle back towards using that expanded capacity to create Tennessee whiskey. Or is at some point the goal to kind of wind down that operation and then have that sitting ready when growth necessitates spinning that back up? If that makes sense.

 

 

Larry: Exactly. So, when we kind of looked at – you know, and it's anybody's guess at this point, right?

 

 

But when we looked at it, we felt that, “Look. There's enough volatility, enough questions with states just starting to open up, and demand has not slowed down at all,” that we agreed to do this through the end of July. 

 

 

But at that time, we would take a look at it and if the need is still there, continue doing it. You know, I hope that the economy and everything bounces back so hard that I'm faced with a very tough decision for July, right?

 

 

Lucas: Right.

 

 

Larry: But I think we will have done, you know, a significant amount in help. And we've also helped facilitate others doing the same thing, right? Trying to get more people engaged in that way. But I hope to be faced with that tough decision here about August.

 

 

But our current plan right now is we'll do it as long as the need is there, because we weren't really planning on needing that capacity, you know, until a year or two from now. So, we'll be able to support this at some level for the foreseeable future and what I think and hope will see us through this.

 

 

Lucas: Yeah.

 

 

Larry: If you don't mind, I do want to share one quick other story during this pandemic around creativity and people coming together in companies of all sizes and nature. So, one of the other key points of PPE that we had to get enough of our hands on without putting, you know, frontline workers at risk are the right kind of face mask, right?

 

 

So, on the plant floor, what we need are not the surgical mask or N95 masks, but a cloth mask that protects, you know, really you from me, right? That's the whole idea behind.

 

 

And those were difficult to get, but one of the things we were able to do is did have to make the tough decision to close our visitor center in early March, really to protect our employees, protect the community, and just do the right thing for the brand and ensure that we were in a spot to keep that supply flowing.

 

 

But we were able to turn our home place employees – keep them employed, and we pivoted them to making face masks. So we rallied about 20 seamstresses across Lynchburg, produced a couple thousand masks, and then the creativity went a step further.

 

 

And we were able to barter hand sanitizer of whiskey with an apparel company in Tullahoma to produce face masks for us. And so they made another 10,000 face masks for us. And it allowed us to give three face masks to every production employee, give some extra for their family and keep everybody safe.

 

 

But it's those types of fun stories that make you proud of Lynchburg and these folks. And it's key to the next discussion: what about supply? What does that look like, right?

 

 

So, one of the things that we did look at, because I mentioned earlier, it's more than just what happens in Lynchburg, right? It's all of our suppliers providing us the raw materials to make the whiskey and the bottles to put it in. 

 

 

But it's also the trucking companies that have to get the product to distribution. It's the distributors around the world. So, how do you manage a hundred different things that could happen in a hundred different countries, right?

 

 

So, early on with that crisis management team and the work we did is, you know, you really have to understand, “Well, what inventory do we have around the world, right?” So, this is the three to six month window of how we manage that.

 

 

And so one of things we were able to do, and our employees were great about this, is really ramp up production. So, when we looked at, “Where do we think our greatest risk is,” let's make sure we get additional product to market around the world. And then let's also diversify how that product is stored.

 

 

So, it doesn't do me a lot of good if, for instance, I have 300,000 cases sitting in Germany and it's all in one warehouse. What if there's an outbreak at that warehouse and it's shut down for three weeks? Well, guess what? We're now not supplying the market.

 

 

So, in addition to getting additional inventory in market, we also spread out that distribution, right? So, not to have all of our eggs in one basket.

 

 

So, using that Germany example, you know, if the primary warehouse went down, we have additional inventory in another warehouse that we can continue to supply while that facility goes through a deep clean and works through getting back open again. 

 

 

We've done the same things in Lynchburg. So, our primary shipping facility – well, primary as in our only, but we did have another warehouse that could hold about 150,000 cases. So, we were able to move about 20 percent of our inventory to an alternate warehouse in Lynchburg.

 

 

Again, if we happen to have something happen at our shipping facility, we could isolate it. So, it's that type of activity that we did. And you can think of that also from our trucking company that ships most of our products out. They were at the top of our list to make sure they had the hand sanitizer and other things that they needed to keep their employees safe and comfortable.

 

 

And the same with our glass supplier and others. So, we really focused a lot of effort around, “How do we keep today's production going?”

 

 

So, the thing I'm happy to report is we, to date, have not had an actual case or positive case in the whole Lynchburg or Jack Daniel's supply chain. And we have not stopped producing for a single day.

 

 

So, from a supply perspective, we are making everything that we planned and needed to make for the next several years, and we've done a good job of getting through all the things I talked about, making sure there's adequate supply around the world. So, as economies start to reopen, Jack Daniel's is there.

 

 

Now, it hasn't been through this initial thing. One of the things that did happen is folks seemed to turn towards familiar brands and large format brands and I think large format sizes like the 1.75 liter bottle. Sales of that size in Tennessee whiskey were up 40 percent, right?

 

 

As you can imagine, the on-premise stuff has kind of a commensurate decline, but overall the business is strong.

 

 

And I think part of what drives that – once you're at home and you can't go to the bar, if your cocktail making skills aren't at a high level, there's one very reliable cocktail you can make or two, right?

 

 

Lucas: Yes.

 

 

Larry: Jack and Coke and Jack and ginger. So, that seemed to really fuel the business during this period of high volatility and just not knowing where things are going.

 

 

Lucas: Yeah. And if people are wanting to, again, expand their cocktail making skills, they can reach back a couple episodes and listen to our friend ET talk about new things to do, especially with the Jack Apple. So, we're all – again, creativity is the key to getting through this whole situation.

 

 

We've talked a little bit about the impact on Lynchburg itself, and we're thankful that, you know, no cases have been reported through there, but obviously the town has changed with the lack of people coming through on a daily basis.

 

 

I know nobody can commit to a date as far as when things might be reopened as far as that goes, but do you know what kind of contingency plans have been put into place about how to adapt the visitor experience when things do finally reopen?

 

 

Larry: Yeah, so that's probably been the most challenging thing for Lynchburg from a community perspective, because all the businesses around the square rely on the tourists that we bring to town.

 

 

And we have a little over 300,000 visitors a year. So, that pretty much was switched off with the flip of a switch. And so we've done a few things to help. So, we own a fair amount of the real estate on the square, and so we've completely forgiven rent during all of this. So, nobody has to pay rent to try to help folks get through.

 

 

And then, you know, really working through, “How do we safely start back up and bring some, you know, tourism back to town when it's right?” And we're – right now, haven't finalized it, but we have tentative plans to at least look at opening retail on the square sometime in June.

 

 

And there's a fair number of people still coming to Lynchburg. And so, you know, we want to kinda be there, start to open back up, kinda test the demand and people's comfort. And then from that learning, we'll kind of start thinking about what the next steps are.

 

 

And in terms of bringing visitors back on site, you know, we'll keep that separated from production for the foreseeable future. But we're working on, “How can we adapt that, right? How can we give a worthwhile experience and talk and teach about Jack Daniel's, which is our favorite pastime, while still keeping people safe?”

 

 

So, we're working on those things right now. And really I see that over the next two to three months we'll be back to what the new version of normal might be.

 

 

Lucas: Right. When we got started talking, you were kind of going through the list of things that go into even just making a single bottle of Jack Daniel's.

 

 

What do you think would be the most surprising thing – for people not involved in global supply chaining as a profession, what's the most interesting element that you have to make available for creating a bottle of Jack Daniel's?

 

 

Larry: So, I've got a couple of different things, right? So, one thing that when it comes to making whiskey – and it's a particular challenge if you also choose to make your own barrels and own your own mills and do that type of thing.

 

 

For most businesses, when you think about forecasting and sourcing, you're doing that on, you know, demand indicators that might be a week out or two weeks out. And most supply chains are pretty tight in that way.

 

 

We are today sourcing logs that, ultimately, the whiskey derived from the barrels that those logs make is up to 8 years out, right? So, we're sourcing and buying and producing to a number 8 years from now.

 

 

Lucas: Right.

 

 

Larry: And when you look at – especially for when you're the best selling whiskey in the world and in the scale that you get with that, if you're off by a percent or two, you multiply that over 8 years. It can be a couple hundred thousand barrels, right?

 

 

And so I think it's the complexity of that, the ability to be able to adapt to that. And when you look at how quickly that can swing, I think that would surprise most people, right? I can't think of too many other industries where you have that kind of horizon.

 

 

It would be some type of whiskey, a few wines here and there, but it really falls into whiskey world, you know? So, what that brings to the business I think would be new, interesting and well, to me fascinating, but maybe not to a lot of people.

 

 

But that's a particular challenge. The other thing – I think when you look at a brand like Jack that goes to 170 plus different countries around the world, that’s the best selling whiskey in the world and the sheer scale of it, it's a very complex supply chain in that sense even beyond the wood supply chain piece I just talked about.

 

 

But the thing that I do like the most is when you then step, you see this great iconic brand grown into this big distillery. It's still all made right here in Lynchburg. But I really boil it down and look at the things that you go, “What really makes Jack Daniel's, Jack Daniel's?”

 

 

So, you know, it's the grain recipe we use for certain, but a big contributor is the yeast that goes into the product. And unlike most people, we still propagate our own yeast right here in our own labs. And we've propagated that since post-prohibition, right? We can't quite trace it before that.

 

 

We bring some technology into it and, you know, we do DNA fingerprint it, maintain frozen cultures to make sure it doesn't drift. But that is something that we pay very close attention to. And we have a couple of people responsible for that.

 

 

Another that makes Tennessee whiskey, Tennessee whiskey is charcoal mellowing. And we still have two guys that more or less hand-make all the charcoal we use.

 

 

And that's what I always share with people. Despite that scale, despite that complexity, despite that global reach, when you really focus down on those components and you think about what in your mind is craft or art, those are things that really are unchanged.

 

 

You know, they're supported by technology, they're enhanced by technology, but we still essentially do them the same way we always have. And we guard that very closely.

 

 

So, I also think that's a surprise, right? You walk into the distillery control room. It looks like you're in NASA. We can run the whole distillery 24/7 with two or three people a shift. But we're hand-making charcoal. We have a couple people in lab propagating our yeast.

 

 

So, I think that's another one that oftentimes when I talk to people, they're a bit surprised by it. Because that's important to us and because it's part of our heritage and history and we know what matters, you know, those are some things that we do that very few people do or are in a position to do.

 

 

Lucas: Yeah. And then, finally, you're a Kentucky boy. You grew up in Kentucky. Is there some conflict among family members that might still be in the state, that might be part of bourbon country, for you shepherding so much of the growth of Tennessee whiskey?

 

 

Larry: Every once in a while, right? I used – one of my early, early projects in the company was the refurbishment of the Woodford Reserve distillery in Kentucky and really setting up and learning to run those pot stills.

 

 

And I used to – the person that hired me was Lincoln Henderson, one of Brown-Forman's first master distillers. And I would often go do these tastings with him, right? I'd set him up and do tastings and we would try to do Jack and we would do Woodford.

 

 

And I have to say, people in Kentucky get a little hostile, right? I think it's – I personally have grown to believe it's jealousy, but we'll let you see where it falls. But no, there's still occasional, you know, folks that wonder what I'm doing.

 

 

But I've always been a little bit different in that regard, but it's been fun to be in Tennessee. You know, being from eastern Kentucky is not that different than, you know, being in and around Lynchburg.

 

 

And it’s certainly helped me – you know, I've led all of Brown-Forman's operations around the world, but come from this tiny little town. So, it's actually been a big advantage for me to be able to connect to the folks here.

 

 

I've grown to love Tennessee. In fact, I probably don't plan on leaving it unless somebody kicks me out or drags me out of here. But it's been a pretty straightforward transition. And being a Kentucky boy and a country boy in particular has made it a pretty smooth one.

 

 

Lucas: Yeah. Larry, again, thank you for your time. Thank you for what you've shared with us as far as what the present looks like for production and distribution of Jack Daniel's and various other things. Anything else we need to touch on before we let you go?

 

 

Larry: No, I think that covers it.

 

 

Lucas: What's your message to fans of Jack Daniel's in this moment?

 

 

Larry: Oh, what I would say is, look, our team and our folks are – they love this brand. They love this product. It's part of our life.

 

 

And they're absolutely committed to, like we say, “Everyday we make it, we make it the best we can.” And our plan is to keep on making it and at the same time help everybody around us the best. And we look forward to welcoming everyone back, hopefully here in the not too distant future.

 

 

Lucas: Larry Combs, thanks for joining us Around the Barrel.

 

 

Around the Barrel is the official podcast of the Jack Daniel Distillery. Follow the podcast on the web at jackdaniels.com/podcast.

 

 

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Your friends at Jack Daniel’s remind you to drink responsibly. Jack Daniel’s and Old No. 7 are registered trademarks, Copyright 2020 Jack Daniel’s. Tennessee whiskey, 40% alcohol by volume, 80 proof, distilled and bottled by Jack Daniel Distillery, Lynchburg, Tennessee. Around the Barrel is intended for listeners 21 years of age and older.