Kentucky's Bourbon Industry Booming

Oct 21, 2014

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Kentucky’s Bourbon industry has nearly doubled its workforce in the last two years, employing more than  15,000 people. It now contributes $3 billion in gross state product to the economy each year, up 67 percent from 2012, according to a new report on Kentucky’s distilling industry.

Bourbon barrel inventories are also at their highest levels in 40 years at 5.3 million, meaning there are about 1 million more Kentucky bourbon barrels than Kentuckians. The state is responsible for the production of 95 percent of all Bourbon in the world with production levels up 53 percent in the last two years and 150 percent in the last 15 years.

President of the Kentucky Distillers’ Association Eric Gregory said the bourbon industry took a dive in the 1970s and 1980s as consumers became more interested in clear spirits like vodka, tequila, and gin.

“Bourbon just wasn’t cool. It was your dad’s drink or, even worse, your grandfather’s drink. And a lot of that has changed in the past fifty years as our consumers are looking for more of an authentic drink and they’re also looking to the new cocktail culture.”

Gregory said growth in the distilling industry is having a positive impact on Kentucky’s agriculture industry.

“It’s a win-win for Kentucky. You know, if our distilleries can use more local grains it helps our local farmers, and in turn, distilleries, most of them produce a byproduct called spent grain that we turn around and then give, mostly free of charge, to local livestock farmers to feed cattle and swine and a lot of other things,” Gregory said.

The report indicates there is a specific interest in organic and non-GMO corn. Gregory said KDA wants to work with the governor’s office of agricultural policy and the Kentucky corn growers association to increase the use of Kentucky grains in the state’s distilleries, which already source 40 percent of their grain from Kentucky farms.

Gregory said the growth in the industry can be attributed to an uptick in consumer interest, new bourbon products from spirited entrepreneurs, and new international markets.

“As we’ve opened up new free trade agreements to places all around the world and merging on markets like China and Taiwan and even Russia,” Gregory said. “Those have been predominantly scotch markets, historically, and now they’re getting their first taste of bourbon and they like it.”

The report also finds that distilleries expect to make $630 million in capital investments in the Kentucky operations over the next five after being approved to apply for a corporate tax credit from the state, which is projected to create an additional 1,500 jobs and $43 million in payroll and $5 million in tax revenue.