Bourbon barrel shortage to last two years, distillers warn

The current shortage of American oak blighting the Bourbon industry will be “short lived”, but is expected to last up to two years, distillers have warned.

The American oak shortage may continue to affect the Bourbon and Tennessee whiskey industry for two years

A shortfall in the amount of lumber delivered to cooperages over the past six months has heavily impacted the number of new American oak barrels available to distilleries.

While some larger distilleries claim to be able to secure enough barrels to maintain supply, the pressure is being felt across the entire industry, with some distillers predicting the plight to continue for between 12-24 months.

“There is definitely a shortage of barrels on the marketplace,” said Paul Hletko, founder of Few Spirits in Evanston, Illinois. “I have friends that have had to spend US$100,000 on new stainless steel tanks to put their new make spirit into while they wait for new barrels. People have been talking about it for a few months, but the full pain is just starting to be felt.”

An especially harsh, wet winter in the States has caused difficulties for the logging industry, which in turn, has impacted the number of barrels produced by the country’s cooperages. The situation has exasperated an existing shortage caused by swift and strong global demand for Bourbon and Tennessee whiskey.

Harsh winter was “bad timing”

While several cooperages contacted by The Spirits Business refused to comment on the issue, many distillers predicted an end to the crisis in the short to medium term.

“It will change this year now we’re coming out of the winter,” said Jeff Arnett, master distiller of Jack Daniel’s in Tennessee, which despite owning its own cooperages, has also felt the impact of the wood shortage.

“There’s a lot of active logging going on around us here, and while we’ve seen our inventory of wood at our stave mills reduced down to a minimum pile, we’re beginning to regain inventory there. Even though people aren’t getting their orders satisfied right now, it’s a very short lived issue.”

Meanwhile Darek Bell, founder of Corsair Distillery in Nashville, Tennessee, believes the deficiency will continue for up to two years, “so long as there’s not another harsh winter again”.

“The barrel shortage has ramped up over the last 4-5 months; it just happened to be bad timing, as we had an especially harsh winter. It will clear itself up. It will take a while to sort out but it will. Loggers will now over-harvest the wood as prices have shot up, then next year there will be too much and prices will tank.”

The shortage has prompted discussions over the use of rejuvenated casks in the Tennessee whiskey production process, which Diageo claims would help new craft distillers enter the market.

For a more in-depth review of the American oak shortage, and its effect on the Tennessee whiskey industry, see the May issue of The Spirits Business.