The Bourbon Boom

Kentucky Bourbon is now an industry worth $8.5 billion annually; sales have increased by $3 billion per year since 2008, and no end appears to be in sight.
Sound familiar? If you’re old enough, you remember a time when brown spirits dominated the beverage market. In the 1980’s, the situation suddenly reversed. The wine revolution hit America, and whiskey was regarded as uncool—your father’s drink. To make matters worse, the popularity of vodka reached unprecedented heights, with Absolut and Grey Goose capturing the imagination of consumers.

But then a curious thing happened:  Bourbon distillers were getting a lot of requests for a high-end product from the Japanese market. Gift-giving is a very important part of the Japanese business culture, and there was no equivalent to an X.O. Cognac or a single malt Scotch with which to impress their associates. The guys on the Kentucky Bourbon Trail had always known there were superior barrels, and they knew the precise location of those barrels, but they had never thought to isolate them—they simply mixed everything together and bottled it.

The first single barrel bourbon was Blanton’s, released by Buffalo Trace in 1984. Jim Beam followed suit with The Small Batch Collection. When the boom in the American cocktail culture occurred in the late 1990s, mixologists were looking for flavor above all. They leaned heavily toward bourbon, rye and scotch in their drink repertoire, and the new gold rush was on.

Today the Kentucky distilleries are partying like it’s fifty years ago, and you can hardly blame them: demand is so intense that they can barely keep up with it. Even better, that demand is on the high end of the scale. According to the U.S. Distilled Spirits Council, sales of bourbon below $15 have increased 13% over the past five years, while the super-premium category has surged 97.5%. Brown-Forman is putting $100 million into the expansion of Jack Daniels, and another $60 million into a new barrel-making factory in Alabama (they already own one in Kentucky).

Yet we all know that the universe is cyclical, and that an end to the good times is coming sooner or later. An unforeseen trend will appear on the horizon, and Americans will suddenly want to drink something other than brown spirits. On that day, the impact on Kentucky will be significant and perhaps catastrophic. The impact on craft distillers could be even worse. The growth in that sector has been unprecedented, from 50 U.S. craft distillers in 2005 to more than 1,000 today. Most are mom-and-pop operations rather than huge and well-capitalized public companies; if the bubble bursts, they will be the first to go.

At that moment, the distillers on the Kentucky Bourbon Trail will be hoping that they’ve become too big to fail.


Mark Spivak is the author of Iconic Spirits: An Intoxicating History (Lyons Press, 2012) and Moonshine Nation (Lyons Press, 2014); his first novel, Friend of the Devil, is now available from Black Opal Books. For more information, go to amazon.com.

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