Ageing Bourbon barrel numbers hit 8.5m

A total of 8.5 million barrels of Bourbon are maturing in Kentucky – equivalent to two barrels for every person living in the state, according to the Kentucky Distillers’ Association (KDA).

Distilling is the highest taxed of all 532 industries in the state, according to the Kentucky Distillers’ Association

In total, 9.1m barrels of spirits were filled in 2018, of which 8.5m barrels were Bourbon, with more than 2.1m barrels of Bourbon filled last year. In total, Kentucky distillers set the highest barrel inventory for at least 52 years, when KDA records began.

“This is a historic day that cements Kentucky’s rightful title as the one, true and authentic home for Bourbon and distilled spirits,” said KDA president Eric Gregory. “It’s also further proof of Kentucky Bourbon’s monumental economic impact and ever-increasing demand.”

The tax-assessed value of all ageing barrels currently sits at US$3.4 billion, double the rate since 2009.

The figures include all distilleries compiled from Kentucky’s Department of Revenue data from 1 January.

The number of distilleries in Kentucky has more than tripled in 10 years, with Bourbon production contributing US$8.6 billion to the state’s economy annually, according to a report earlier this year.

However, Gregory warned there is still more work to be done to address issues such as taxes, tariffs and safety.

According to the KDA, Bourbon production has increased by more than 350% since the turn of the century, sparking a US$2.3 billion building boom.

Distilling is the highest taxed of all 532 industries in Kentucky, with distillers this year paying a “record US$25 million in barrel taxes, a discriminatory tax that hampers growth and investment” says Gregory.

“Kentucky needs to protect its signature industry and not let it become economically uncompetitive and disadvantaged for tax and regulatory reasons,” Gregory said. “Kentucky cannot afford to lose its historic distilling monopoly.”

The Bourbon Barrel Reinvestment Credit was passed in 2014, which aims to offset the barrel tax by giving distilleries a credit against their corporate income taxes and requiring the money to be reinvested in their Kentucky facilities.

However, while the credit has “helped spur tremendous growth”, Gregory said the higher barrel taxes were “now far outpacing the amount of corporate income tax credit that’s allowed, particularly since the legislature lowered the corporate rate last year”. The KDA reiterates its call for the credit to be refundable.

‘Collateral damage’ 

When it comes to tariffs, Gregory added that distillers hope the trade dispute would be a “short-term challenge”.

The EU’s 25% retaliatory tariff on US products was imposed in July 2018, and resulted in an almost 21% sales decrease for American whiskey exports. EU exports, which had been averaging 38% growth, have dropped 1% through August compared to the same time last year, the KDA noted.

“Kentucky Bourbon is collateral damage in a trade dispute that has nothing to do with us,” he said. “While we remain hopeful for a resolution soon, the impact on our industry, our partners and our farm families is significant and growing.”

As the number of barrels continues to grow, Gregory said KDA members were developing ‘warehouse best practices’ as a model for distilleries around the country.

The KDA board of directors has implemented a detailed warehouse maintenance checklist for members and a tourism guide to ensure the safety of guests visiting sites on the Kentucky Bourbon Trail.

Bourbon tourists made a record 1.4m distillery stops in 2018 – a 370% rise over the past decade. The trail tour alone logged one million visits for the first time since its creation in 1999.