Bloomberg News

Jack Daniel’s Draws Scrutiny From Consumer Regulators in Russia

August 22, 2014

Jack Daniel’s Tennessee Honey

Jack Daniel’s Tennessee Honey. Photographer: Yuriko Nakao/Bloomberg

Jack Daniel’s and Jim Beam whiskeys are facing criticism from consumer-safety officials in Russia, adding to mounting scrutiny of American brands in the country.

Traces of benzyl benzoate, a compound used in insect repellents, were found in Jack Daniel’s Tennessee Honey, the consumer agency Rospotrebnadzor said on its website. The offending batches, found in Russia’s Sverdlovsk region, will be barred from sale, Interfax reported, citing Rospotrebnadzor head Anna Popova. Regulators also said Jack Daniel’s and Jim Beam whiskeys violate rules by not being labeled properly.

Earlier this week, Rospotrebnadzor shut down four McDonald’s Corp. (MCD:US) restaurants in Moscow, including the largest and oldest one in the country, after a probe into ingredients and wastewater. The move to close more than two restaurants at once raised concerns about political motivations, according to Gene Grabowski, a senior strategist for the Washington-based firm Levick who has handled crisis management for food safety.

The U.S. and European Union imposed sanctions on Russia following its annexation of Crimea from Ukraine this year, leading to escalating tensions. President Vladimir Putin retaliated this month with a ban on $9.5 billion worth of imports, affecting a range of food items from countries that imposed sanctions. The situation is the worst standoff between Russia and the West since the Cold War ended in 1991.

Brown-Forman Corp. (B:US), the Louisville, Kentucky-based company that makes Jack Daniel’s, said it hasn’t been contacted by any Russian agencies about the allegations.

Checking Records

“We have been selling Jack Daniel’s Tennessee Whiskey in Russia for 15 years and have been in compliance with all regulatory and labeling requirements throughout this period of time,” Brown-Forman said in an e-mailed statement. “Regarding Jack Daniel’s Tennessee Honey, we have checked our records for product shipped to Russia and vehemently deny the presence of harmful substances in any of our products.”

Beam Suntory Inc., the Deerfield, Illinois-based maker of Jim Beam, said it was investigating the matter.

‎“We comply with the label requirements wherever we operate, so our local team is seeking clarification from the relevant agency to resolve this matter,” the company said in an e-mail.

The Sverdlovsk region, located in the Ural mountains about a two-hour flight from Moscow, is a large industrial center. Its main city, Yekaterinburg, is the fourth largest in Russia.

Coca-Cola Hellenic Co. distributes Jack Daniel’s in Russia. Petro Kacur, a U.S. spokesman for Atlanta-based Coca-Cola, didn’t have an immediate comment.

To contact the reporters on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net; Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland


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