Between the years 1920 and 1930—the heyday of the Prohibition era—some thirty-four thousand Americans drank themselves to death. Two thousand gangsters and five hundred federal agents were murdered as a result of the illicit booze frenzy. The government seized more than a billion gallons of liquor during this country’s “noble experiment.”
“Good old Prohibition days,” as the drunk tank nurse says in Billy Wilder’s classic 1945 film, The Lost Weekend. “You should’ve seen the [drunk tank] then. This is nothing. Back then we really had a turnover. Standing room only.”
Now one has to wonder where all this booze was coming from. The answer is everywhere. It was made overseas and sold in America as “medicine” (Laphroaig Scotch, for example), whipped up in makeshift distilleries in the South, brewed crudely in bathtubs all over the forty-eight states.
Perhaps no one was making more money off the illicit liquor trade during Prohibition than a couple of brothers, Harry and Samuel Bronfman, the sons of Orthodox Jewish Russian immigrants living in Canada. The brothers got their start in the liquor trade selling whiskey out of the hotels they owned in Saskatchewan about 150 miles north of the U.S. border. They made poor-quality hooch with counterfeit Scotch whiskey labels and sold it to thirsty smugglers, who could make a fast buck by driving a fast car into American territory.
In Canada at the time, making liquor was perfectly legal. Running it over the border was not. The Bronfmans used the laws against liquor in their favor by making it easy for other people to break these laws. Then they sat back and skimmed the foam off the top. And there was nothing anybody could do about it. As one Bronfman biographer, Peter C. Newman, in his book King of the Castle, put it: “Sometimes it almost seemed that the American Congress and the Canadian federal and provincial legislatures must have secretly held a grand conclave to decide one issue: how they could draft antiliquor laws and regulations that would help maximize the Bronfman brothers’ bootlegging profits.”
By 1928, the Bronfmans had made enough cash to invest in a big-time legitimate liquor operation. So they bought a distillery—a small company called Joseph E. Seagram and Sons, Limited—and took the Seagram name for their own, slapping it across their stationery and their liquor bottles. Within just a few years, the family would become the largest producer of spirits in the world. They would become one of the richest families in the history of the planet—the “Rothschilds of the West,” a Jewish dynasty to rival any. (“Bronfman,” it’s worth noting, means “whiskey man” in Yiddish. You can’t make this stuff up.)
How much power did this family wield? By the 1970s, the Bronfmans had amassed a fortune of $7 billion and a staggering catalog of liquors, which included not just Seagram’s Crown Seven, VO, and Seagram’s Gin, but brands like Crown Royal, Chivas Regal, The Glenlivet, White Horse, Gordon’s Gin and Vodka, Jameson Irish Whiskey, Captain Morgan and Myer’s rums, not to mention hundreds of wine labels from France, Italy, Denmark, Germany, and Puerto Rico. Who knew they made wine in Puerto Rico? The Bronfmans did.
Today, the Bronfmans are in the news again in a big way. But this time, the story’s not about the compounding of extraordinary wealth and power, but the squandering of it. Edgar Jr., the family’s swarthy scion, who’s overseen the company since 1994, began moving the family interests away from the bread-and-butter booze industry into Hollywood during the tech boom. In his younger years, Bronfman had tested the waters as a film producer (The Border,1982, starring Jack Nicholson), and as a music lyricist (“I want to hold your body next to mine / I want to hurry love and take my time”). As CEO of Seagram’s, he purchased 80 percent of MCA, parent company of Universal Studios and a collection of music and television operations, for $5.7 billion. In 2000, Edgar Jr. made a deal with a French company called Vivendi, in essence selling his company in hopes of amalgamating a global media empire that could rival big guys like Time Warner and Disney.
In a couple years’ time, the Bronfmans would see $3.5 billion of their fortune evaporate into thin air as a result of the deal. Vivendi would post a $25.6 billion loss in 2002—the largest single-year loss ever in French corporate history. The “angel’s share”? Yeah, right. It was a “disaster,” in Edgar Jr.’s own words. The poor guy was hung out to dry. New York magazine called him “possibly the stupidest person in the media business.”
And so it goes, the trials and tribulations of the Rothschilds of the West. Even now, eighty years after the Bronfmans first started in the liquor business, the details of the family operations are still shocking—and entertaining—to say the least. If Edgar Jr. wanted to make a big earner while running Universal Studios, one wonders why he didn’t make a film about his own family. The plot would go something like this . . .
Seagram’s—the King of Canadian Whiskey—first became popular in the States under the stewardship of Joseph Seagram back in the 1880s, a few decades before the Bronfmans would purchase the label. At the time, Canadian whiskey was “straight” whiskey. Northern distillers had yet to adopt whiskey blending, which was all the rage in Scotland, thanks to labels like Johnnie Walker, Chivas, and Teacher’s. Joseph Seagram was one of the first Canadian producers to make a blended whiskey.
He called his whiskey Seagram’s 83, to celebrate the year he’d founded the Joseph Seagram Flour Mill and Distillery Company, based in Waterloo, Ontario, forty miles west of Toronto. He concentrated heavily on the export market in the U.S. and in Europe. In Canada, distillers used a much higher concentration of rye to make whiskey, so it has a distinctive flavor when compared to American whiskies, which are made with a higher percentage of corn and are thus sweeter and darker. By 1911, Seagram’s 83 was the most popular Canadian whiskey in the States. That year, the company launched another brand—Seagram’s VO—to celebrate the marriage of Joseph Seagram’s son, Thomas. The name came up over a dinner conversation. VO stands for “Very Own” (it was the family’s reserve blend) rather than “Very Old,” as the cognac parlance goes.
Joseph Seagram died in 1919. Perhaps the news that booze was going to be outlawed in the U.S. was enough to kill him. After his death, the Seagram company went public. It was the whiskey’s quality and the Seagram name that first drew the thirsty eye of Samuel and Harry Bronfman.
The Bronfman brothers were the sons of immigrants who’d left Russia in the 1880s to escape the bloody pogroms. They’d landed in a pioneer settlement in eastern Saskatchewan—rugged, unforgiving territory. The family patriarch, an Orthodox Jew named Ekiel, eked out a living trading horses.
Ekiel’s horse-trading deals often went down in bars the old-fashioned way—over a drink and a handshake. According to family legend, young Samuel Bronfman once accompanied his father to the bar at a place called the Langham Hotel to watch Dad make a deal. Afterward, he looked up and said, “The Langham’s bar makes more profit than we do, Father. Instead of selling horses, we should be selling drinks.” Smart kid.
When old enough, the Bronfman brothers went into the hotel business and started selling drinks. A lot of them. Right from the start, their clientele was of dubious character. The hotels—places like the Balmoral in Yorkton, Saskatchewan, and the Anglo American in Emerson, Manitoba—benefited from the railways that were slowly snaking across Canada around the turn of the twentieth century. Workmen and traveling salesmen would come in looking for a meal, a drink, and some companionship. Female companionship. When Samuel Bronfman was questioned later in life about whether he ran glorified brothels in his youth, he would answer: “If they were, then they were the best in the West!”
The Bronfmans’ saga might be the greatest right-place-right-time story in history. When Prohibition began in the States, the demand for Canadian whiskey exploded. If you lived near the border, heading over it for a booze run was far easier than making the stuff yourself. Readers of the daily papers were consumed with exotic tales of amateur booze runs gone wrong. Smugglers ran booze over the border hidden in soda bottles, in jars of every kind of food imaginable, inside eggshells, in bottles strapped beneath the bodies of cars. Runners shipped loads in boats over the Great Lakes, having paid customs officials extra on the Canadian side after claiming the cargo was headed to ports like Havana, where liquor was legal. At one point in 1929, a media frenzy erupted after a customs official killed a man at the border because he mistakenly thought the man was transporting liquor. The innocent man was shot dead right in his car, his wife and two lads sitting next to him.
Still, the cash-only business continued. Clearly there was a demand for a well-lubricated liquor smuggling operation. Any group who could pull it off on a mass scale would be in a position to corner the market.
Recognizing the bundle of cash to be made, the Bronfmans purchased crude distilling equipment from the Brewers’ and Bottlers’ Supplies Company in Winnipeg, and started making 65 proof white grain spirit at a facility in Yorkton, Saskatchewan. They then added some Scotch whiskey and a little burned sugar for color. Voilà: Scotch whiskey. They hired a local firm to produce labels for them.
According to biographer Peter C. Newman, they poured all the hooch out of one big vat and slapped different counterfeit labels on the bottles. Johnny Walker, for example (as opposed to Johnnie Walker) went for $45 a case. Glen Levitt (after The Glenlivet, a Scotch brand the company would later own) went for a little more.
While brother Harry managed the production, Sam traveled through the U.S. to make connections with bootleggers and illegal importers. (This foreshadowed the split in the family later; part of the burgeoning empire would stay in Canada while the more powerful part would move to New York. Today, you can purchase Seagram’s VO, which is a Canadian whiskey, and Seagram’s Crown Seven, which is American corn whiskey.)
In no time, the Bronfmans’ operation was up and rolling. Harry started a shipping company called the Trans-Canada Transportation Limited. Smugglers could then slip over the border more easily by flashing work papers at customs officials. The ride was a good 150 miles from the border, through rural Saskatchewan. The smugglers’ automobile of choice was called the Studebaker “Whiskey Six.” As Newman described the car in King of the Castle:
Fully stripped down, with reinforced springs and upholstery removed, it could carry forty cases of whisky, worth $2,000. In case he might be missing some business, Harry [Bronfman] opened up the City Garage next to his booze palace in Yorkton so that the American bootleggers could get their automobiles serviced while they were waiting for a new load. He also kept a stock of used cars, filled with booze, in the front of his hotel and sold them “ “as is” to adventurous Saskatchewan farmers anxious to engage in a little moonlighting.
To make the smuggler’s job even easier, the brothers later opened “satellite warehouses” closer to the border, some of them less than a dozen miles from U.S. territory. In Canada, none of this activity was illegal. It was all straight up, as far as the Bronfmans were concerned. And there was nothing the law could do about it. The boys also started importing legitimate Scotch whiskey from across the pond around this time—Dewar’s, Black & White, Johnnie Walker. By 1922, they were controlling the booze industry in all of midwestern Canada.
Cash was rolling in by the barrel. But there were changes looming over the border. The Bronfmans knew that Prohibition wouldn’t last forever, and in order to keep their business healthy and their customers loaded, they’d have to go legit. The market over the border would someday open up like a raw wound, and the Bronfmans were poising themselves to clean it out with pure 86 proof Canadian whiskey.
In 1924, the Bronfmans opened a large distillery in Ville La Salle outside Montreal and started pumping out liquor. They named their company Distillers Corporation Limited. Four years later, they purchased the Seagram distillery, married the two companies, and went public—250,000 shares at $15 a shot—while maintaining a majority ownership. Seagram’s as we know it was born.
The local market proved lucrative. But the Bronfmans were really interested in the States. Distilleries all over America had been closed and padlocked since 1919, and good whiskey takes years to make, with the aging process and all. In contrast, the Bronfmans had a huge stock of aging mellowed whiskey ready to roll.
On December 5, 1933, the Eighteenth Amendment was repealed. The Bronfmans invaded the States. For sale in stores nationwide: Seagram’s VO, Seagram’s 83, Seagram’s Gin, Seagram’s Bourbon, and Seagram’s Rye. American liquor companies couldn’t possibly keep up. Thirsty boozers guzzled the Bronfmans’ liquor and stumbled gleefully back to the store to buy more.
Within sixty days of the end of Prohibition, as Sam Bronfman would later say, “We were able to tell the public that the Seagram whiskeys were outselling all others throughout the country.” In less than two years, the company was selling more than a million cases annually, leading the U.S. in distilled spirit sales.
Having conquered the American market, the Bronfmans then decided to move in the ground troops. They bought out the Rossville Union Distillery in Lawrenceburg, Indiana, and the Calvert distillery in Relay, Maryland. “Mr. Sam,” as he became known to his employees, began importing aged casks of Canadian whiskey into the States and blending it with the American stuff. He opened new headquarters at the shiny Chrysler building in the financial capital of the world—Midtown Manhattan—in October 1934.
Mr. Sam was ready to launch some new brands. He would oversee the blending of these new whiskies himself. (“Distilling is a science,” he was known to say. “Blending is an art.”) These liquors, he assured his colleagues, would conquer the world.
THE WIDE WORLD OF WHISKEY
The Irish say they invented whiskey. The Scots say they did. One thing’s for sure: the Canadians and Americans did not, though both have added their distinctive touches to the art. And never mind Japan and India. Though they make good whiskey over there (try Suntory from Japan), the stuff isn’t widely available in the States. So what gives each whiskey its unique flavor?
CANADIAN: According to Canadian law, the whiskey produced in that country has to be 90 proof or lighter, must be aged at least three years, and must be distilled from grain. Most Canadian distillers use a much higher content of rye, with smaller percentages of corn and barley. The flavor is less sweet and perhaps a touch more sour, with a lighter body and color. These whiskies are blended (not single malts), and damn it, they taste good. Because of the colder climate, more like that of Scotland than that of Kentucky, Canadian whiskey ages more slowly. Bestsellers in the States: Crown Royal, followed by Seagram’s VO.
As then–company vice president Frank Schwengel later remembered:
There was a period of several months during 1934 when we had daily sessions, sometimes lasting far into the night. We’d try twelve, fifteen, sometimes two dozen samples. They were numbered consecutively and nobody knew what was in the blend. Finally, we all agreed on sample number seven, and someone said, “Well, you can’t just call it number seven. . . .”Mr. Sam suggested adding the word “ “crown,” meaning that this was to be the crowning product in the history of Seagram.
In 1934, happy drinkers were introduced to three new American whiskeys: Seagram Crown, Seagram Five Crown, and Seagram Seven Crown. Within a decade, two would bite the dust in favor of Seven Crown, a blend of whiskies aged at least four years, made from corn, rye, and barley grown in the Midwest. The liquor was aged in new and used charred white oak barrels. Few would call Seven Crown great whiskey by today’s standards. But there was nothing on the market at a comparable price that could match it at the time.
In 1939, the Bronfmans also launched Crown Royal, a blended Canadian whiskey, created in honor of George VI and Queen Elizabeth’s visit to Canada that year. Crown Royal is today the bestselling Canadian whiskey in America.
Once World War II started and alcohol production in the States was restricted by the government, the Bronfmans began investing in overseas ventures, especially rum distilleries in the Caribbean. The firm would later buy Captain Morgan’s Original rum in 1983 (today, the second-largest rum brand behind Bacardi). They also bought the Chivas Regal label in Scotland for a mere £80,000. Mr. Sam pushed the Chivas brand particularly hard as the Rolls-Royce of Scotch whiskies. But it was good old Crown Seven that would lead the company’s portfolio.
In 1946, the Seagram company sold 2.5 million cases of Crown Seven. A year later, they sold 4.5 million cases. By 1948, the number hit eight million. It was the undisputed heavyweight champion, the Joe Louis of whiskies, packing that KO punch that hit the spot if you were a drunk or an insomniac. In those days, a good dinner was a steak and a Seagram’s whiskey, unless you were a Martini man or you’d traveled to Europe and knew the lure of a good Scotch or cognac.
The Bronfmans’ company was growing at an astonishing rate, adding liquor brand after liquor brand to the portfolio. The brothers were quickly becoming two of the richest men in the world. By the end of the 1950s, Samuel Bronfman—who was by then leading the company—was paying himself $351,042 a year, back then a phenomenal sum. He was a short man, five foot and change, with a little meat-and-potatoes gut and a head of thinning hair. But he was an intimidator—tough, little, Jewish. Like other moguls of the time, he began to indulge himself.
To house the company’s headquarters, the Bronfman clan hired famed architect Ludwig Mies van der Rohe to build a Seagram’s tower in Manhattan. The Seagram Building opened in 1958—a trendsetter in high-rise urban architecture, thirty-eight glorious shimmering stories right on Park Avenue. Next, the Bronfmans started shopping around for a few things to hang on the walls. They began investing in what would become one of the most remarkable art collections in the world, with works by Picasso, Joan Miró, Rodin, Alfred Stieglitz, Mark Rothko, and any number of other major artists. The collection alone would be worth over $15 million by the century’s end.
Right around the time the Seagram Building opened, the cocktail craze was taking hold of America. Bartenders all over the country were whipping up Vodkatinis and Moscow Mules as quickly as their hands could move. Most of the drinks called for clear spirits like gin and vodka. Luckily, Seagram’s had money invested in both. And in 1965, the company kicked off a series of ads promoting what has since become one of the world’s most popular cocktails—7&7—Seagram’s own American blended whiskey over ice with 7 Up. If you’re in a nice joint, the barman might throw in a lime. A year later, the company would ship their 150 millionth case of Seven Crown.
In 1971, Mr. Sam died. But the Seagram’s empire didn’t. Edgar Bronfman Sr. took over, and during his reign, the company thrived. Edgar Sr. was president of the World Jewish Congress, a fearless political mogul who, with the aid of his high-powered cronies, was responsible for, among other things, outing former United Nations secretary general Kurt Waldheim as a onetime Nazi. Edgar Sr. could handle himself in business as well. By the end of the seventies, he owned or marketed five bourbons, seven blended American whiskies, twenty-five Canadian whiskies, five Irish whiskies (including Jameson and Bushmills), sixteen Scotches (Chivas, Glenlivet, White Horse), fourteen gins, twelve vodkas, thirty-one rums, and four tequila brands. The company’s signature Seven Crown and VO were the numbers one and two whiskey brands in the world. This, not to mention dozens of liqueurs, vermouths, and cognacs, cocktail mixes, and 358 wine, sherry, and port labels. The company also owned oil and real estate interests in twenty-three states and the District of Columbia.
During his twenty-three years as CEO, Edgar Sr. watched the company’s sales rise from $1.5 billion to $5.2 billion. But he would retire too, leaving the reins of this massive conglomerate to a third generation of Bronfmans. It was Edgar Jr.’s turn, and this made a lot of people very, very nervous. Even Mr. Sam himself was quoted way back in 1966 (when Edgar Jr. was just eleven years old) expressing doubt about the family’s future.
“You’ve heard about shirtsleeves to shirtsleeves in three generations,” Mr. Sam had told Fortune magazine in 1966. “I’m worried about the third generation. Empires have come and gone.”
Edgar Jr. first took the reins of Seagram’s in 1994, amid a swirl of press over whether he was the right man for the job. Edgar Jr. had skipped college, eloped with an actress, done everything that a rebellious rich kid is supposed to do. The question was, could he run a company the size of Seagram’s?
A dark-skinned man with brown hair combed back, a prominent nose, and a penchant for facial scruff, Edgar Jr. sported the Hollywood-executive look. During the gravy years of the bull market, alcohol consumption was on the decline in the States, so the new CEO started moving investments into the entertainment business. Edgar Jr. bought up MCA (which owned Universal Studios), plus a couple big-time record labels—in particular, Polygram NV, the world’s largest label, for $10.4 billion. Instead of focusing on whiskey and gin, the Bronfmans were now selling Snoop Dogg albums. (“Now that I got me some Seagram’s gin / Everybody got they cups, but they ain’t chipped in.”)
From 1995 to 2000, Seagram stock appreciated 71 percent. But then again, everyone’s stock was going through the roof during those years. Was Edgar Jr. a shrewd financial wizard, or was he just a flashy rich kid? The world was soon to find out.
On June 20, 2000, Edgar Jr. stood proudly with Jean-Marie Messier, the clownish-looking CEO of Vivendi—a French TV, Internet, and wireless communications firm—at a press conference in Paris to announce the merger of the two companies. Both men beamed as if they’d just won the lottery and they were announcing their good fortune to the world.
Vivendi had purchased Seagram’s for $34 billion, they explained. To save the Bronfmans from tax burdens, Edgar Jr. had accepted payment in Vivendi stock. A colossal mistake.
Soon after, the Bronfman clan watched helplessly as Jean-Marie Messier began to make a series of bizarre financial deals that didn’t quite square on the books. Messier was a player, but not a good one. When tensions arose between the two honchos, Messier lashed out, shocking the global business community.
“I think Edgar feels better being number two than number one,” Messier was quoted saying. “He is free to say anything, knowing he doesn’t make the final decision. So for me it’s a perfect fit.” Then, against the Bronfman clan’s protestations, Messier took a favorite Mark Rothko painting from the Park Avenue Seagram Building and hung it in his New York apartment.
Meanwhile, reports began to surface that Vivendi’s numbers didn’t add up. Indeed, by October 2002, the company was $19 billion in debt. The stock dropped from $83.43 per share when the Seagram/ Vivendi deal was made to $13.15. The Bronfmans were out $3.5 billion.
French and American investigators have since moved in, hunting for any legal wrongdoings. Jean-Marie Messier has been ousted. While the Bronfmans certainly aren’t eating out of dog food cans, the loss was devastating. At press time for this book, Vivendi was selling off the famed Seagram art collection. “I’m heartbroken,” Mr. Sam Bronfman’s daughter, Phyllis Lambert, was quoted as saying in the New York Times. “This is part of a whole Greek tragedy.”
Slapped with the task of picking up the pieces, Edgar Jr., now forty-eight years old, has been crucified by the media. And it has fallen to him to write the next chapter of this story, a weighty task to say the least. Unlike other power moguls who’ve been publicly humiliated in the last couple years, this one has one thing going for him: a liquor cabinet to rival any in the world.