The Bourbon Boom: Kentucky and Bourbon Country

Bourbon is having a moment. And, it hasn't had a moment like this since the 70s. Back then, the market was at its all-time high selling millions of cases annually. But, vodka came in and within a decade depleted whiskey and bourbon case numbers by a considerable amount.

In 2019, the bourbon boom is back on, and the pendulum is swinging fast. Kentucky, also known as bourbon country, is experiencing an influx in both tourism and production thanks to its popularity.

A Quick Look Back

It's worth putting this "renaissance" into perspective by taking a look at bourbon sales in the 20th century. Since 2017, bourbon sales have hit and exceeded 20 million cases. But, is that substantial?

In 1970, the sale stood somewhere around 36 million cases. The population was about 205 million people at the time compared to 325 million today. It's worth noting that at the time, exporting sales were almost non-existent, which means the sales of bourbon were predominantly domestic. The huge market we see today has a lot to do with the new demographics. Back in the 70s, whiskey and bourbon eventually lost out to vodka. And, the sales of cases dropped to around 13.3 million. Considering the statistics, it's fair to say that Bourbon country is booming again.

Changes in Bourbon Drinking

It's a lie to say that the upswing had a lot of momentum. Mostly, it was a gradual progression. It wasn't until 2010 when the sales started to climb higher and reached around 15 million. From 2010 to 2017, there was a growth rate of 30% that just kept on rising. The sales of bottles that average about $25 and considered "high-end" grew 141% from 1.85 million to 4.45 million in one year alone.

Meeting consumer demand can be tricky, and some distilleries are opening warehouses at a rapid pace. The Wild Turkey distillery in Lawrenceburg, Kentucky built a warehouse in 1993.

"At the time, it was the first one built in Kentucky in over 25 years. Today, I'm getting a new warehouse every year, and there have probably been 30 built in Kentucky over the last seven or eight years," said Wild Turkey's master distiller Eddie Russell.

And, those warehouses are filling quickly. As of 2017, Kentucky was home to 6.7 million barrels. In 1967, there were only 1.99 million.

The Expanding Production of Bourbon and Whiskey

Exponential growth at this level requires distillers to keep up with the market requests.

Wild Turkey

In 2011, the company invested $50 million to double the output by building a 134,000 square-foot distillery. The new facility will help them produce and an additional 6 million proof gallons a year.

Beam Suntory

The distillery Maker's Mark, owned by Beam Suntory, started a $67 million project in 2014 that added new warehouses and a third still. These additions have boosted capacity by 50%. Other distilleries under Beam Suntory receiving attention include Jim Beam who is getting new warehouses to increase production by 20%.

Jack Daniel's

The whole of Jack Daniel's is getting a face-lift as a result of the bourbon boom. $140 million was invested in improving the visitors center, add new barrelhouses, and create larger bottling operations.

Buffalo Trace

Buffalo Trace is setting a lot of plans in motion to increase production. The last peak production was in 1973, and they surpassed it in 2018. Now, they are building new warehouses on 200 acres of farmland. It's one of the distilleries first major builds since it opened in the early 1950s.

Craft Bourbon Players

We can't talk about the bourbon boom without mentioning the craft distillers. There is a lot that bigger names are doing to help lift the sector, but it would be an incomplete analysis without discussing the smaller craft brands.

"Ten years ago, Kentucky only had about six distilleries in the entire state. Today we have 52 distilleries from 39 different companies, and many more are on the way," said Eric Gregory, president of the Kentucky Distillers Association.

Most of these new players are from craft distillers trying to find their position in the sector. And, retailers love it. Quite a few retailers are trying to keep the product offering wide.

"In terms of space, we're now 50-50 craft versus mainstream. In terms of sales, it's still about 80-percent traditional brands. But, a year ago that sales ratio was 90-percent traditional and 10-percent craft, so the craft increase has been dramatic," said Brett Pontoni. He's a spirits buyer for Chicago-based retailer Binny's Beverage Depot.

There are quite a few craft names who are joining the scene that you should look out for:

Getting in the Bourbon Game

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Article source:

“Bourbon Rolls On.” Market Watch. April 2017

Horton Admin