Friday, May 4, 2018

Who Makes America's Whiskey?


Beam-Suntory's Booker Noe Distillery - Boston, KY
In 2014's Bourbon, Strange, I wrote, "the industry is very concentrated, with just eight companies distilling all of America’s whiskey at thirteen distilleries."

When the question was revisited in 2016, it was ten companies and 15 distilleries.

In both cases, the list was limited to distilleries that produce at least 500,000 proof gallons of whiskey per year, about 10,000 barrels. Yes, there are hundreds of smaller distilleries that make whiskey, so it can't be 100 percent, but it is at least 99.

In 2016, the newcomers were Michter's and New Riff. Since then Bardstown Bourbon Company, Lux Row, O. Z. Tyler, Bulleit, Angel's Envy, Willett, Rabbit Hole, and Castle & Key have joined the club. Coming soon are Old Forester and Wilderness Trail. All are in Kentucky.

That makes 18 companies and 25 distilleries.

Those numbers are misleading. All of the new plants are at the small end of the range. Most of them have the ability to produce about one million proof gallons per year. Meanwhile, producers at the top have been expanding on a grand scale.

In fact, the concentration at the top is staggering. Four companies produce 70 percent of the whiskey made in the USA. Brown-Forman, led by Jack Daniel's Tennessee Whiskey, is biggest. Beam-Suntory is second, Sazerac is third, and Heaven Hill is fourth. Nothing about that appears likely to change unless through merger or acquisition.

Sazerac, for example, is in the midst of a 10-year, $1.2 billion expansion project at Buffalo Trace, that will culminate in the addition of a second 84-inch diameter beer still at the Frankfort distillery.

Although several of the new distilleries are already expanding, the number of new projects on that scale seems to have slowed. Although the number of distilleries in the more-than-500,000-proof-gallon range has doubled, the industry remains very concentrated.

The more things change, the more they stay the same.

5 comments:

Anonymous said...

As one of those small distilleries responsible for the marketing bonanza that has allowed literally millions of bottles of bulk produced same old tired spirits to be sold at prices previously unheard of by claiming they are "craft" , you're welcome.

Those big 15 should compile a slush fund and write a check for a million a year to each of the real craft distillers the US, that continue to make the bulk ethanol "craft scam" viable.

Crown Point Marc said...

If those 15 haven't been pounding out high quality, consistent, long aged whiskey for the past 70 years or so, you'd still be making bathtub beer in your Mom's basement.

Shane Campbell said...

Yeah, mister "one of those small distilleries" I don't believe you can take credit for this bourbon marketing bonanza. That would be one Robert Parker, the wine critic, and one Antony Bourdain, the celebrity chef who anointed Pappy Van Winkle the thing people should want...and then people wanted it. The big guys took it from there.

I'm going up to New Riff to pick up a bottle of their first 4year old bourbon in August. I don't expect it will be better than anything I get from the long established distillers. You new guys are standing on tall shoulders and your arrogance adds nothing to make me think I want your fledging whiskey. Stay humble, work hard and maybe one day you will be so good as those who've established the art of making whiskey.

Anonymous said...

I am always glad to see craft distillers succeed, but let us not forget that craft distillers aren't responsible for the bourbon boom. They got into the business because of it.

They would not exist for very long, if at all, if not for large producers selling them aged quality whiskey at a low price allowing them to make a profit while they wait on their own product.

No question as to which came first with this chicken and egg.

James Melo said...

Kudos to the passion and commitment craft distillers put into their products. And in time hopefully this country will have quality regional craft producers in every state. That said, I have spent so much money on craft whiskey and to date found precisely one producer that made something better than a standard mid-shelf Kentucky bourbon.

They all have great stories, fun and often strikingly beautiful labels, and high aspirations. I wish them all success. However, I have swallowed down too many bottles of turpentine, all while being told that the horrible taste was in fact an indicator of unique craftsmanship. I simply cannot accept that craft distillers are the engine instead of the caboose of the whiskey boom when I know what their products currently taste like and see the reactions when the average person tastes them.

Credit to craft brewers (not distillers) in developing an approach to marketing that the alcohol industry has cribbed across the board. But it is the marketing together with the product generated by the bigger players that has won hearts and minds for whiskey.

If you want to create lifelong whiskey hater give a newbie a massively overpriced glass of no age statement, poorly integrated craft firewater and watch a vodka/gin/tequila drinker be born.