Bourbon  on the rise

Bourbon on the rise

Bourbon is booming and the reverberation is likely to be felt for decades to come

Travel | 13 Jul 2018 | Issue 153 | By Maggie Kimberl

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Since 1999 Bourbon production in Kentucky has risen 250 per cent, according to the Kentucky Distillers Association, and more than $1.1 billion in capital projects had been completed or announced as of 2017.

Since that report was generated Suntory has announced a $904 million investment in its Bourbon brands in the next five years, Stoli has announced a $150 million Kentucky Owl Distillery and park complex in Bardstown, Buffalo Trace is on track to spend $1.2 billion during the next 10 years, and Louisville’s Frazier History Museum has partnered with the Kentucky Bourbon Trail to construct a visitor’s centre for tourists seeking an official starting point for their journeys along the Kentucky Bourbon Trail.

The industry is responding to Bourbon obsession

Perhaps one of the most interesting phenomena we’ve seen in the Kentucky Bourbon industry in recent years is the elevation of Bourbon to an obsession with a veritable cult following.

This is evident driving by liquor stores on Friday nights and seeing chairs lined up outside the door for allocated and limited releases on Saturday mornings. That’s right, people camp out to get Bourbon and other whiskeys that are in limited supply and it’s not just Pappy anymore.

BTAC, as enthusiasts refer to the Buffalo Trace Antique Collection, is always a hot ticket item, but so too are regular Buffalo Trace products like Elmer T. Lee and Blanton’s, which are also becoming harder to find. Heaven Hill’s Elijah Craig 18, various Barton’s 1792 releases, almost anything by Willett, and many bottles which were once widely available now draw crowds or have to be raffled off.

Distilleries are catering to this increased demand by reviving old labels, creating new ones, and releasing special bottlings at an astronomical pace. Brown-Forman is not only releasing new old label Bourbons such as Old Forester President’s Choice and Brown-Forman King of Kentucky, but they are also heeding consumer demand for revival of American malt whiskeys with the release of Woodford Reserve Kentucky straight malt whiskey. Wild Turkey has released Longbranch in collaboration with Matthew McConaughey, touted as a nod to McConaughey’s Texas roots.

On the craft distillery front, Kentucky Peerless head distiller Caleb Kilburn released his Single Barrel Rye series, while craft producer Wilderness Trail finally released its first bonded Bourbon. Even liquor stores are responding by ramping up private barrel selections.

“The continued growth of Bourbon in our stores is easy, and it’s hard,” says Liquor Barn senior director Brad Williams. “It’s easy because there is a major thirst for all things Bourbon, so if you’ve got it, it will sell, liquid or Bourbon-themed gifts or food. The hard part is two-fold. The first part is the 24/7 search for hard to get Bourbon.

The shortages remain, the hunt for these bottles never stops, so sometimes customers are let down when they cannot obtain what they are after. The second part is that the Kentucky Bourbon consumer has always been somewhat advanced, comparatively.

That continues to happen with our customers here in Kentucky. Store single barrel selections from the distilleries were shopped by the advanced guys, then it became the somewhat advanced guys, now, the average Bourbon consumer in Kentucky is on the hunt for barrel picks. Novices now know to hunt for 'store picks'. We can barely keep these items on the shelves these days, some only last an hour or two.”

Bourbon flow is increasing across the entire state

“When I started with the company in 1995,” said Buffalo Trace master distiller Harlen Wheatley in a recent press release, “We filled 12,000 barrels a year. Today the growth seems moderate, but when you think about how far we’ve come, it’s actually phenomenal, considering when we’re on track to produce 200,000 barrels this year.” Buffalo Trace is also on track to build one new warehouse every four months for the next several years to keep up with consumer demand.

Across the state, the Bardstown Bourbon Company has already quadrupled capacity from 1.5 million proof gallons in September of 2016 to three million proof gallons in July 2017 to 6.8 million proof gallons in July of 2018, and that is only in its first two years of operation.

Last year the distillery ran 22 different mash bills, this year it is running 24 for 22 different customers. The idea of this distillery is to bring together collaborators from across the distilling industry to learn from each other and to create new products, according to President and CEO David Mandell.

“We are a celebration of the whole craft of making whiskey in this community. Bringing the community of whiskey lovers together is what is at the core of our distilling,” says Mandell. “The knowledge transfer that is taking place here, we are all learning from each other. It’s all happening in one place and that has never happened before.”

Producing 24 different mash bills in the midst of quadrupling in size is no small task. Mandell and executive director John Hargrove point to the wealth of industry talent located in Bardstown, Kentucky as the secret of their success, there is an average of 15 years experience among the Bardstown Bourbon Company’s employees.

If you ask any distiller in Kentucky what they are planning for the future, you are likely to hear them talk about growth and more growth. The Bourbon industry in Kentucky has been gaining steam for quite some time, and it’s showing no signs of slowing down any time soon.

“It came down to planning for us: people planning and process planning, says Hargrove. “We doubled our staff headcount two months ago. They really get to work side by side with people who have been here from the beginning. When we shut down that’s really where we execute the training program. The most important part of this process is the planning stage. If you do your planning right the execution will be flawless. When it comes back on line the management team will be out there on the floor working with operators side by side.”

This is far from the only Bourbon expansion happening in Kentucky right now. Old Forester just opened its distillery and visitor’s centre on historic Whiskey Row, Main Street Louisville, Kentucky. Brown-Forman offices and warehousing occupied this same spot at the turn of the last century before moving to a larger and more modern facility and the block slowly started to crumble. It was at risk of being torn down in 2007 when Marianne Zickuhr founded Preservation Louisville to save the historic area, paving the way for Old Forester’s return.

Also in Louisville Rabbit Hole Distilling Co. opened on Derby Day in the trendy NuLu neighbourhood of Louisville, while Michter’s is set to open its Fort Nelson visitor’s experience a few blocks down Main Street from Old Forester. Four Roses is undergoing a huge capacity expansion that is expected to be complete this Fall, while Lux Row began producing Bourbon in its brand new 18,000 square foot Bardstown distillery in January. Most distilleries are either expanding or planning to expand to meet future projections as Bourbon’s popularity continues to soar worldwide, despite the threat of tariffs.

Antiquated laws are changing

After Prohibition the United States ended up with a series of artefacts from 'The Noble Experiment' in the form of blue laws. There were laws about who could sit at a bar and who could be a bartender (hint: not women), whether you could buy cold beer in certain states, and whether you could buy beverage alcohol in your county at all, to name just a few.

Until 2016 Kentucky distilleries could not sell you a souvenir bottle when you visited or make you a cocktail; they were limited to only giving you a one ounce sample of their wares during your tour. Now distilleries in Kentucky can sell up to 4.5 litres of beverage alcohol per day per consumer and are able to apply for bar licences to sell beverage alcohol by the drink.

Many Kentucky distilleries have taken advantage of this change by installing bars where consumers can stop by for a drink. The Jim Beam Urban Stillhouse serves craft cocktails on Friday and Saturday nights, Maker’s Mark now has a full-service restaurant and bar onsite called Star Hill Provisions, and Copper & Kings just opened ALEX&NDER, a rooftop bar at the Butchertown, Louisville distillery.

The folks at Bardstown Bourbon Company have taken things a step further, combining the local food movement, the ability to now sell beverage alcohol by the drink, and another recently-enacted law that allows for the sale of vintage spirits. Bottle & Bond Kitchen just opened on-site and features a full menu of craft beer, wine, cocktails, and more, as well as an extensive collection of vintage Bourbons curated by Fred Minnick.

Across the Bluegrass state, the ‘Vintage Spirits Law’ as it is known has also led to the creation of a unique destination called Justins’ House of Bourbon, which is part whiskey retailer and part vintage spirits museum.

“It was hard to forecast what the reception would be,” said co-founder Justin Thompson, “but seeing all these bottles from all these different decades from pre-Prohibition to the last ten years, folks are just fascinated to see it.

"It ties together some of the stories they've heard. It’s a good visual storytelling of that history.”

Thompson notes that about two thirds of their customers come in from out-of-state, making this another way for Bourbon tourists to connect to their passion, and get their hands on bottles.

“A lot of people ask us how long we’ve been open. They assume we’ve been around five to 10 years, and they’re surprised when we tell them we just opened in February. We tell them the law was put into effect for tourism. It was the missing link of the ultimate Bourbon experience, being able to sample or to go home with something that isn’t being produced anymore. We can do that now,” says Thompson.

This growth and optimism is what makes every sip of Kentucky Bourbon and every visit to Bourbon Country unparalleled.

Liquor Barn’s Brad Williams is also working to integrate the Vintage Spirits Law on a larger footprint retail scale: “The vintage spirits law change in Kentucky has also been big for the industry. We’ve got consumers trying to sell us vintage bottles, we’ve got consumers asking us to try and find vintage spirits for them. We are building a vintage strategy for our stores. We have taken our time, because we want to do it right, so we are dotting our I’s, crossing out T’s, separating our Ps from our Qs.”

A third new law in Kentucky has opened up even more possibilities for Bourbon lovers worldwide.

On June 1, Kentucky’s Governor signed House Bill 400, or ‘Bourbon Without Borders’, into law, giving Kentucky distillers and liquor store owners the ability to ship Bourbon to other states that have reciprocity, seven so far, as well as internationally.

“With the shipping laws, we haven’t been able to take advantage of that yet. It’s going to take a couple of years before it makes a difference because of the limited number of states we can ship to. Right now there are only seven and it might take a few years," says Thompson, adding that Justins’ House of Bourbon will be the first store to be able to ship vintage spirits to customers internationally.

“We’re actually allowed to ship internationally, there are more places we can ship to worldwide than inside the United States right now.”

Visitors to Liquor Barn will also be able to take advantage of the new ‘Bourbon Without Borders’ law if they reside in one of the states that already has reciprocity, according to Williams.

“We’re also working on some e-commerce platforms through our website that will also allow a customer in a valid state to have something shipped. We believe the delivery and shipping piece are transformational for our business.”

Growth is challenging, but Kentucky is up to the task

If you ask any distiller in Kentucky what they are planning for the future, you are likely to hear them talk about growth and more growth. The Bourbon industry in Kentucky has been gaining steam for quite some time, and it’s showing no signs of slowing down any time soon. This growth and optimism is what makes every sip of Kentucky Bourbon and every visit to Bourbon Country unparalleled.
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