Is Stoli Building a New, $150M Distillery for Kentucky Owl Bourbon?

Janet Patton, the best bourbon reporter in Kentucky, has a story in today's Lexington Herald-Leader headlined, "Stoli plans $150m Bardstown distillery for Kentucky Owl Bourbon."

The gist is that the Kentucky Economic Development Finance Authority (KEDFA) has approved $2M in tax incentives for the project.

These KEDFA announcements usually are the first we hear of new distillery projects in Kentucky. The tax incentives are 'if come,' meaning that they only receive the benefits if they actually do the project. This is just a proposal at this point, by no means a done deal. Incentive recipients don't appear to be under any time pressure. Angel's Envy, for example, received its KEDFA approval several years before the distillery was actually built.

Although they are now doing some contract distilling at Bardstown Bourbon Company, everything Kentucky Owl has released to this point has been sourced from an undisclosed Kentucky distillery or distilleries. Earlier this year the brand's creator, Dixon Dedman, sold Kentucky Owl to the parent company of Stolichnaya Vodka. It is Stoli's only brand in the American whiskey space.

Although well-aged bulk bourbon has been in very short supply for the last decade or so, small caches can still be had for the right price. That is why most new non-distiller producer (NDP) brands are very limited availability and super premium. The main way Kentucky Owl differs from other NDP bourbons is it debuted at a price about twice what similar brands charge. That was their bold innovation and it succeeded. Each release has sold out quickly and Kentucky Owl commands a high price on the underground secondary market.

Why? The product is good, too woody for my taste, but many people like that sort of thing. Equally as good bourbons are available for much less, but Kentucky Owl has developed a cachet.

Although the new Bardstown distillery is just a proposal at this point, it is no doubt a serious one. For that kind of money, it will be a plant on the order of Bardstown Bourbon Company or Lux Row. It will join those two newcomers plus Barton 1792, Heaven Hill, and Willett as tourable bourbon facilities in the immediate Bardstown vicinity, with Jim Beam and Maker's Mark each about a half hour from town. All of these new distilleries are a huge deal for the economy of Bardstown and Nelson County.

One assumes Stoli will pay particular attention to the international market for bourbon and whether or not they pull the trigger will depend on continued strong export growth. Stay tuned.

'Tales of the Cocktail' Does It Again

Here is my take on the whole Tales of the Cocktail controversy, as an interested but very much outside observer.

If you are unaware of this controversy, you might want to keep it that way. If not, Tara Fougner gives a good account of it on the 'Thirsty' blog.

The news that has the hospitality industry roiling is the announcement that Ann and Paul Tuennerman are 'stepping down' from their role in Tales, but no one seems to know what 'stepping down' means.

Although Tales is ostensibly produced by the not-for-profit New Orleans Culinary & Cultural Preservation Society (NOCCPS), the Tuennermans are sole owners of a for-profit entity, Mojo 911 LLC, that owns valuable intellectual property such as the names 'Tales of the Cocktail' and 'Spirited Awards,' without which Tales cannot be produced. Mojo 911 also is paid a large fee to run the event. Although the announcement said Melissa Young will become president of Mojo 911, it was silent about the entity's ownership. If the Tuennermans continue to have a large financial stake in Tales, it is hard to see how their 'stepping down' changes anything.

Although the NOCCPS is required by law to file an annual tax return, called a Form 990, which reveals some financial information related to Tales, and which is public, Mojo 911 is under no such obligation. The way Tales is actually funded and run, who benefits, and how much, is a closely guarded secret.

Whoever controls Mojo 911 controls Tales, regardless of titles. Everything else is smoke and mirrors.

This controversy stems from the notorious blackface incident from earlier this year. The behavior of the Tuennermans then was so tone-deaf it appeared that Tales might collapse, but Paul Tuennerman 'stepped down' and Tales created a 'Diversity Council,' moves that induced many people of good will to give them another chance.

The events of this past weekend look to many like the Tuennermans have been simply and clumsily engaged in cynical damage control intended to protect their personal financial interest in Tales, and these 'resignations' are more of the same.

Will there be a Tales 2018?

Should there be?

Bourbon Distilleries, Ranked by Capacity

To understand this post, it is a good idea to read the two previous ones. Last Monday, we learned that the area of a beer still is the critical metric for determining capacity, that is the area of one of its plates. Although many factors contribute to a distillery's actual capacity, beer still area is something that can be compared across distilleries that use column stills for their first distillation, as virtually all large bourbon distilleries do.

Until last week, I was under the impression that still diameter was the key metric. It is when comparing still to still; larger diameter, more capacity. But since the largest distilleries use more than one beer still, you have to use area to compare them. You can't just add up the diameters. I know this is elementary to many of you, but math has never been my strong suit.

The other post, from September 6, was the announcement that one of Kentucky's newest bourbon distilleries, Bardstown Bourbon Company (BBC), is planning a major capacity increase. In their press release, they claimed it would make them "one of the largest bourbon distilleries in the world." I did some back-of-the-envelope calculations and decided they were about sixth. At an event during last week's Kentucky Bourbon Festival, they picked up on that number.

Based on what I subsequently learned about still area, I decided to revisit the numbers and do better calculations. BBC may be disappointed by what I found.

Since BBC made its claim based on planned future capacity, I have done the same, using stills I know about that should be in operation by the end of 2018.

So here is how America's whiskey distilleries rank, by the capacity of their beer still or stills. I did it by distillery, not company, although Brown-Forman, which owns Jack Daniel's as well as some Kentucky plants, ranks first either way. These are the kinds of choices, though arbitrary, that you have to make with this sort of thing. One could consider Beam's Booker Noe and Clermont plants as a single facility, since they operate under the same registration number (DSP-KY-230) and make the same products, but they are autonomous, and ten miles apart, so I count them separately.

Coming in at No. 1, then, is the Jack Daniel Distillery in Lynchburg, Tennessee. It has six beer stills, two at 72 inches (diameter) and four at 54 inches. That gives them more than twice the capacity of any other U.S. whiskey distillery.

No. 2 is Heaven Hill in Louisville, with three 60 inch stills.

No. 3 is Beam's Booker Noe plant in Boston, Kentucky, which has two 72 inch stills.

No. 4 is Buffalo Trace in Frankfort. They have just the one still, but it's a monster at 84 inches.

No. 5 is the Brown-Forman Distillery in Shively. 

No. 6 is a tie between the Jim Beam Distillery in Clermont and the Barton 1792 Distillery in Bardstown.

No. 7 is Four Roses in Lawrenceburg.

No. 8 is Maker's Mark in Loretto.

No. 9 is Wild Turkey in Lawrenceburg.

No. 10 is O. Z. Tyler in Owensboro.

No. 11 is Bardstown Bourbon Company in Bardstown. They're 11th, not 6th, but they are the largest new bourbon distillery in the world.

No. 12 is MGP in Lawrenceburg Indiana. This is an estimate. I have seen their still, but they refuse to tell me its size, so I estimate that it is 48 inches. (They are the only whiskey distillery in America keeping that information secret.)

No. 13 is a tie between the two Diageo distilleries, George Dickel in Tullahoma, Tennessee and Bulleit in Shelbyville, Kentucky.

No. 14 is Wilderness Trail in Danville.

No. 15 is Lux Row in Bardstown.

No. 16 is Michter's in Shively.

No. 17 is Angel's Envy in Louisville

No. 18 is where we will end this list. It is a six-way tie among Old Forester (Louisville), Castle & Key (Frankfort), Willett (Bardstown), New Riff (Newport), Rabbit Hole (Louisville) and Fulton County (Hickman). Of these only two, Willett and New Riff, are actually producing now. 

So what? Mostly it is just interesting. I was surprised that, figured this way, Heaven Hill is second only to Jack Daniel's but I guess I shouldn't be. Heaven Hill's top bourbon, Evan Williams Black Label, ranks third behind Jack Daniel's Old No. 7 and Jim Beam White Label.

This list should be good for the next year or so, since all of the construction underway or on the books is factored in. After that, who knows? These are crazy but exhilarating times to be a bourbon enthusiast. 

Beer Still Diameters and Distillery Capacity; It Is Not That Simple

The beer still at the new Bulleit Distillery is 42" diameter.

With all of the new distillery construction and existing distillery expansion going on, it is hard to get a handle on how much new capacity is coming into the industry. Distilleries can produce below their capacity, of course, but these days bourbon distilleries are making as much as they can, so questions of capacity matter.

Although not quite the same as the beer we drink, the fermented grain mash that goes into a still like the one pictured above is called beer, and the still itself is called the beer still. This still strips all of the alcohol from the beer. That vapor, which is still 20 to 30 percent water, goes to a second pot-type still called a doubler for a second distillation, to remove more water and 'polish' the spirit.

Many factors affect how much a distillery can produce. One of them is the size of its beer still. A beer still doesn't have to be a column (i.e., continuous) still, but that is what most bourbon makers use. Because they are so tall, still height is the dimension that seems to impress people, but the dimension that matters is girth, the diameter of the still.

In trying to assess the capacity of different distilleries, I have tried to base it entirely on still diameter but, of course, it is not that simple.

"The diameter of the column is a very important part of the maximum throughput, but it’s not the only thing," says Mike Sherman, Vice President of Vendome Copper & Brass Works, the primary manufacturer of stills and other equipment for America's whiskey makers. "Tray design (amount of open area in the perforation) and downcomer size (the pipe that takes the beer down the column from one tray to the next) play a huge part." Other factors include beer thickness, condenser size, and fermentation yield.

It is also not correct, as I had assumed, that two 36" columns would have the same capacity as one 72" unit, for example. "It is not the diameter of the column, it is the area of the column" that matters, says Sherman. (A=𝜋r²) A 36" diameter column has an area of 7.06 ft², so 14.12 ft² for two columns. A 54" diameter column has an area of 15.9 ft². So, technically, the 54” column can run more than two 36” columns as long as everything else is sized correctly.

It also matters how each distillery uses its equipment, in terms of hours per day, days per week, and weeks per year. Some run one shift per day for five days and have a six-week shutdown versus another that runs round the clock for six days per week and only shuts down for two weeks per year.

So still area is a better metric than still diameter for comparison purposes and it is only roughly comparable, since it doesn't factor in those other considerations.

There are no easy answers, dammit.

Bardstown Bourbon Company to Add Capacity, Become Major Producer

Bardstown Bourbon Company (BBC) announced today that it will expand its capacity to allow production of up to six million proof gallons per year. To accomplish this, the distillery will add a second 36-inch beer still, a 12.5k gallon mash cooker, and up to 16 additional fermenters. They expect the expansion to be complete by July of next year. This means more maturation warehouses also will be needed.

The press release claims this expansion will make BBC "one of the largest bourbon distilleries in the world." That's a stretch, but it certainly puts BBC into the major league, probably at number six, which is amazing for a distillery that has only been in operation for a year.

BBC is in direct competition with MGP of Indiana as a contract producer and will be bigger than MGP in terms of whiskey capacity when this expansion is completed. (MGP also produces neutral spirits.)

“The Bardstown Bourbon Company’s rapid growth is extremely exciting,” said David Mandell, President & CEO. “We’re truly helping to reshape the American whiskey market, and the success of our Collaborative Distilling Program demonstrates the massive demand for custom-made, authentic, Kentucky whiskey, bourbon and rye.”

In related news, the Distilled Spirits Council announced today that the value of U.S. distilled spirits exports rose a robust 10.6 percent—up more than $67 million—to a total of $698.5 million in the first half of 2017 as compared with the same period in 2016. In dollar terms, the growth was led by the largest category: American whiskeys including Bourbon, Tennessee Whiskey and American Rye, which rose nearly $27 million to $464.6 million up 6.1 percent. The U.S. also exports small amounts of brandy, vodka, and rum.

These two announcements are related because much of the expansion taking place in the American whiskey business, especially among the majors, is predicated on robust, long-term export growth.