Wednesday, July 23, 2014

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.


fussychicken said...

Is it an ironic omen that no one wants to comment on this? Everyone doesn't want to jinx things? Will this post be hilarious to read in 20 years? :)

Anonymous said...

Hello! Are the brandys being aged in Kentucky any good?

Gary A. Turner said...

Wow - only 600k (approximately) of other spirits? Do they report on that breakdown at all between corn, wheat, rye, etc? Does the 1.2 million barrels filled last year include non-bourbon as well?

I know everyone has ramped up rye production, but seems like it needs to go up even more. If half of the 600k is rye, that's still only one barrel for every 20 bourbon barrels.

Ryan said...

So does this mean we can hope that prices will normalize a bit, re-establish themselves at a level that made bourbon America's Spirit, and trending away from the scotch-like heights they seem to be aspiring to now? The cynical consumer in me thinks "no"... Some producers have become addicted to the mania the "shortage" has wrought, and I think we'll continue to see artificial scarcities keeping ultra-premium brands (in particular) at a level unattainable for the average consumer. I have no particular expertise or inside information, just my opinion...

Chuck Cowdery said...

The principal brandies aged in Kentucky are Paul Masson, Christian Brothers, and Coronet.

Anonymous said...

[re brandies]: please tell us they're aged for three years and not three months!

Chuck Cowdery said...

American brandy is typically aged for two years in used bourbon barrels.