Friday, December 18, 2009

Bourbon Is Good For Kentucky In So Many Ways.

I don't know Kentucky Governor Steve Beshear, but he has been smart to support the state's whiskey producers like he did yesterday. Obviously, distlleries provide jobs and are good for the commonwealth's economy, but the full scope of those benefits isn't always obvious.

Straight whiskey is just one of the types of distilled spirits you can find in a liquor store. There are many others. To be labeled 'Kentucky Straight Bourbon Whiskey,' the whiskey has to be distilled and aged in Kentucky, which in addition to distillery and warehouse jobs, means they buy corn locally too.

You can't make Kentucky bourbon anyplace except Kentucky. You can make bourbon anywhere in the United States, but Kentucky bourbon is what people look for and want.

You know, like California raisins or Wisconsin cheese.

Kentucky bourbon does not have to be bottled in Kentucky. When the industry was struggling, a lot of it was not. When the industry is strong and the Kentucky business environment is positive for beverage companies, there is an incentive to bottle the bourbon close to the distilleries. Bottling is the most labor-intensive part of the process, so that means lots of jobs.

It makes sense for the big, international companies that control the worldwide beverage industry to consolidate their bottling as much as possible. If there are good reasons to bottle your bourbon in Kentucky, you might as well bottle other things there too. Typically the bottled and cased goods go into an adjacent finished goods warehouse, then are shipped from there to distributors. That means even more jobs, as well as business for local trucking companies.

Brown-Forman and Heaven Hill Distilleries have their headquarters in Kentucky and their bottling is there too, even for products not made in Kentucky or even the United States, such as Canadian Mist Canadian Whisky, which is bottled in Louisville.

Like bourbon, brandy is usually aged, but it is usually aged in used barrels, and since bourbon makers only use new barrels, they always have a lot of used barrels to sell. Heaven Hill brings its Christian Brothers Brandy in tanker trucks from the distillery in California to be aged in Kentucky, rather than shipping empty barrels out there. When it's ready to be bottled, that happens in Kentucky too. Constellation, which used to own the Tom Moore Distillery in Bardstown, does the same thing with its Paul Masson Brandy.

Sazerac Inc. is technically headquartered in New Orleans and the company has major operations there, but Mark Brown, Sazerac's President, lives and works in Kentucky. Earlier this year, Sazerac bought a large bottling house in Owensboro, Kentucky, along with several bourbon aging warehouses there. The company has three bottling houses in Kentucky. The others are in Frankfort and Bardstown.

When Beam Global acquired National Distillers in 1987, two of the assets it got were a distillery and bottling house in Frankfort and a rectification and bottling plant in Cincinnati. Cincinnati primarily made the company's DeKuyper Liqueurs line. Making liqueurs is relatively simple. You're mixing together ethanol (i.e., vodka), sweetener, and flavoring concentrates, then bottling the result.

Beam closed the distillery in Frankfort back in '87, but the site had a modern bottling house and good access to the interstate highway system. Beam still uses the aging warehouses there and has steadily expanded the bottling capacity.

It was recently announced that Beam will close the Cincinnati plant and those operations will move to Kentucky. Beam Global has three bottling plants in Kentucky. Cincinnati is its only bottling facility outside of Kentucky. 

The change, which is expected to be completed sometime in 2011, will add 21,600 square feet to Frankfort. It is expected to create about 120 new jobs in Kentucky. Beam Global is headquartered in the Chicago suburb of Deerfield but its roots are in Kentucky and its biggest product is still Jim Beam Kentucky Straight Bourbon Whiskey. So, sorry Ohio.

Kentucky is a socially conservative state and about half of its counties prohibit the sale of alcoholic beverages. You'll probably never persuade someone who believes alcohol comes from the devil that it is nonetheless good for business, and therefore good for the state, but that has always been the uphill struggle Kentucky's whiskey-makers face. In recent years it has gotten better. Let's hope it continues.


kymooseman said...

Chuck: As always, appreciate your thoughts. Congratulation on your election to the Bourbon Hall of Fame.

Kelly said...

Last year, everyone associated with bourbon in Kentucky opposed the added tax on liquor, while Governor Beshear supported it. If his actions last year are indicative of his "support", I'd hate to see what constitutes his opposition.