Wednesday, January 6, 2016

Luxco to Build Major Bourbon Distillery in Bardstown This Year


According to Luxco President David Bratcher, the company is very close to "putting a shovel in the ground" for its first distillery, a bourbon distillery in Kentucky. Similar in size to the one Diageo is building for Bulleit in Shelby County, it will add significant new bourbon production capacity to Nelson County, which already claims the title of 'Bourbon Capital of the World.'

If all goes according to plan, Luxco will break ground in March. The new distillery will be on E. John Rowan Boulevard (KY 245) at County Road 1001, northeast of downtown Bardstown. Locals will know the location as the Ballard property. It is not far (as the crow flies) from Bardstown's other big, new distillery, the Bardstown Bourbon Company, which is in the Nelson County Industrial Park, east of the Martha Layne Collins Bluegrass Parkway. That plant is nearly complete.

Joseph & Joseph is designing. Buzick will build it. Vendome will make the stills.

The maximum potential capacity of a bourbon distillery is determined by the diameter of its column still, which in the case of Luxco's new place will be 36 inches. Typically, a new distillery will build up to its maximum still capacity by gradually increasing its milling, cooking, and fermentation capacity, until it operates virtually around the clock except for maintenance breaks. Luxco will follow that pattern, so it may be years before it maximizes its still at about two million proof gallons a year.

Luxco intends to build seven warehouses on the site, each with capacity for 20,000 barrels.

Luxco is not a newcomer to the bourbon business. The St. Louis-based rectifier and bottler has been a non-distiller producer (NDP) of bourbon for more than 50 years. It owns several significant if not major national bourbon brands such as Yellowstone, Ezra Brooks, and Rebel Yell. "We really believe in bourbon," says Bratcher. "Bourbon is here to stay."

With bourbon booming and every existing distiller operating at or very near capacity, it is becoming more difficult for NDPs such as Luxco to acquire even new make in sufficient volume to fuel growth. Luxco needs to control its own destiny if it wants to grow its bourbon business. It needs its own distillery. Similar to another Nelson County distiller, Willett, Luxco has been buying bourbon for many years. Luxco presently owns about 75,000 barrels of aging bourbon, now in storage at its various producers. This inventory has allowed it to create Blood Oath, a super-premium bourbon that combines 12-year-old and 7-year-old stock, and also to upgrade the Yellowstone brand with the new Yellowstone Select release.

Although there is still some of it in the pipeline, the bottom shelf Yellowstone expression was discontinued in May of last year. The revitalized Yellowstone brand is being run by Steve and Paul Beam out of Limestone Branch in Lebanon. Luxco acquired a 50 percent interest in Limestone Branch about a year ago.

Bratcher originally envisioned a modern, top quality production facility without any frills. He cared about making bourbon, not entertaining visitors. He was persuaded otherwise and now the plan calls for a first class visitor experience, membership in the Kentucky Distillers' Association, and participation in the Kentucky Bourbon Trail. The property already includes a beautifully restored historic home built in 1806.

It has been clear for a year or more that Luxco wants to expand its bourbon footprint, but building a distillery is a huge step.

In 1992, when Diageo (then the United Spirits division of Guinness) rebuilt the Bernheim Distillery in Louisville, several company executives opined that it would be the last new bourbon distillery ever built in the United States. That seemed plausible in 1992 but it only took 20 years, a blink in bourbon time, for that prediction to fail.

How much capacity is too much? That depends a lot on India and China, and continued vitality here at home. Bratcher and the Lux family, which owns Luxco, are betting on Kentucky, Bardstown, and bourbon. Good for them.

4 comments:

C Rink said...

Fascinating, and surely a boon for the Bardstown economy. Bardstown has an interesting history. It was the seat of the first Catholic Diocese west of the Allegheny Mountains, a diocese that included modern day Kentucky, Ohio, Tennessee, Missouri, Indiana, Michigan and Illinois. It was the metropolis of the "West" at the time, and it's Cathedral still stands, a gorgeous glimpse back to a simpler time. It's worth a visit by anybody on the Bourbon Trails.

Chuck, what is it about Bardstown that causes it to thrive in modern times as the epicenter of American Whisky? Why is this old Catholic Metropolis now ground zero for new distilleries? As a Catholic, myself, I wonder if my spiritual ancestors knew good Whisky when they tasted it.

Anonymous said...

Question, more than anything else. I would guess that for the existence of Luxco, they had a good relationship with distillers, but that - what? - changed - because? - why? If there is any comparison to Scottish distillers, and the independent bottlers, could Luxco have continued on, since it does not appear to have that big a market share, without having to expend millions. Or is it about Luxor wanting to expand its market share, by changing its image from "what exactly is Luxco, anyway?" to, "oh, Luxco, they have a distillery now, so they must be legitimate."

Chuck Cowdery said...

What's changed is simple. You can't sell more than you make. Luxco's relationship with distillers is fine, but all of the distillers except MGP primarily produce for their own lines. If capacity is limited, house brands have priority. Diageo is building a distillery for the same reason. They both would have been happy to remain NDPs, if their distiller partners could sell them enough liquid, but they can't.

Anonymous said...

Thanks for your comment on my - questions. I had a professor in a business law class who said, watch out for the word "however." However, from what I see, Luxor products have in my area been relegated to the bottom shelf. And there, the bottles seem to collect dust. I guess the information must relevant is Luxor sales figures, to which I am, of course, not privy to. In the past several years, I have seen in the Great Commonwealth of Virginia a flood of NDP bourbons, none of which really is that interesting. But (like the word however) I guess it really comes down to market research, and the confidence that the American consumer will pretty much buy anything.