Predicting Bourbon's Future, 13 Years Ago

 

The digital version.

On Christmas morning of 2011, the front page of Section BU of the New York Times featured a 2,500-word article about a phenomenon it called "the bourbon boom."  

"...today’s bourbon boom represents a triumph of salesmanship," wrote reporter Mickey Meece. "At a time when many American industries are struggling, distillers here are thriving, hiring and expanding. They are cashing in on an American renaissance in whiskey-based cocktails, as well as a growing thirst for bourbon around the world."

The lengthy article quotes Larry Kass of Heaven Hill, Mike Keyes of Brown-Forman, Fred Noe of Jim Beam, and many others, but it gives me the last word.

"...many distillers in Kentucky have been expanding. In five to 10 years, will their products be in such high demand? The industry is banking on big growth in India and China, said Charles K. Cowdery, author of Bourbon, Straight: The Uncut and Unfiltered Story of American Whiskey. 'If those markets develop as has been anticipated, no one will have made enough,' he said. 'If they don’t, everyone will have made too much.'”

I have remembered that quote often over the years, each time some industry analyst or executive waxes earnestly about the potential for export sales. Inevitably, their optimistic predictions feature India, China, or both.

"There’s still a big world out there for us to grow the industry in,” said Greg Hughes, president of Suntory Global Spirits, maker of Jim Beam and Maker’s Mark, at Monday's James B. Beam Institute industry conference at the University of Kentucky, as reported in today's Lexington Herald-Leader. 

“India’s a huge opportunity market for the spirits industry," said Hughes. "... there’s a bunch of beer markets out there ... that we can source volume from. ... If we can get 5 (percent) of the Scotch market in India, we’ll have all the distilleries in Kentucky full.”

On the Leadership Panel with Hughes was Kate Latts, co-president of Heaven Hill Brands. “We’ve all increased production to catch up with demand and now we’ve caught up," said Latts. "So now we’re ready. We’re ready. And when these tariffs go away we’re ready to experience ... the unknown demand that exists across the entire world. If we could just get, as Greg said, a little bit of that Scotch and beer consumption, we’re going to be in a place where we don’t have enough. So first we need to get rid of the tariffs and then we can make that all happen.”

The point of this walk down memory lane? Massive international sales to India, China, and other undeveloped bourbon markets have been predicted and touted for at least the last 13 years. While exports have increased, the top five export markets for American whiskey today are the European Union, Australia, Japan, the United Kingdom, and Canada, in that order. That's about how it looked in 2011 too. Then as now, India is essentially closed to distilled spirits imports. Why? Because of tariffs, up to 200 percent, but those tariffs have nothing to do with the current government in Washington. They have been in place forever. China is even more restricted. 

Those markets can't develop if they don't open up and there is nothing to suggest that will happen anytime soon. As the Herald-Leader article's always astute reporter, Janet Patton, put it, industry leaders, "may not agree on everything but they agree on this: There is no whiskey glut. Or at least there wouldn’t be if they could sell more bourbon overseas."

So, in other words, there's a whiskey glut.