Bourbon Inventory Tops 7.5 Million Barrels for First Time in 40 Years

According to a press release yesterday from the Kentucky Distillers' Association (KDA), more than 5 million barrels of bourbon are aging in Kentucky warehouses. It's the first time bourbon stocks have reached that level since 1977.

Kentucky’s bourbon distilleries filled 1.2 million barrels last year, the most since 1970. Production has skyrocketed more than 150 percent in the last 15 years, resulting in 5,294,988 aging barrels at the end of 2013. Add to that 2.2 million barrels aging at Jack Daniel's in Tennessee, for a total of 7.5 million barrels.

Other key facts from KDA:

• Bourbon isn't the only spirit aging in barrels in Kentucky. When you include brandy and other whiskies (e.g., rye, wheat), the state’s total barrel inventory was 5.9 million at the end of 2013, the highest total since 1975.

• The tax-assessed value of barrels aging in Kentucky is $1.9 billion this year, an increase of $81 million from 2013. Since 2006, the value of barrels has nearly doubled ($1 billion to $1.9 billion). 

• Kentucky distilleries paid $15.2 million in ad valorem tax last year to the state and local communities. Ad valorem tax receipts (a tax on the value of whiskey in storage) have increased 52 percent since 2006. A new law enacted earlier this year gives distilleries a corporate income tax credit against the amount of ad valorem taxes paid, if they invest that money in their Kentucky operations. (Tennessee doesn't have an ad valorem tax.)

• The KDA’s Kentucky Bourbon Trail and Kentucky Bourbon Trail Craft Tour experiences logged more than 630,000 visits in 2013, a new record for the tours that showcase KDA-member distilleries. 

Hidden in the 1970, 1975, and 1977 dates is a cautionary tale. American whiskey sales began to trend down in the late 1960s after growing steadily since Prohibition's end. Although production began to decline after 1970, it didn't decline as much as sales, so inventories kept growing until 1977. This created a whiskey glut that lasted for approximately 20 years.

That was a painful experience producers would like to avoid this time around, so don't be surprised if the current ebullience is tempered with caution. Still, it's a great time to be a bourbon fan.