Tuesday, August 8, 2023

Will Blue Run's Magnificent Distillery Ever Be Built?


An architect's rendering of Blue Run's proposed
$51 million distillery in Georgetown, Kentucky.

Beermaker Molson Coors announced today it is purchasing Blue Run Spirits. Terms were not disclosed. The deal was reported in the Lexington Herald-Leader.

Despite the usually-reliable Janet Patton calling them one, Blue Run is not a "distillery." Blue Run is a non-distiller producer. The rendering above is just that, an architect's illustration for a proposed distillery in Georgetown, Kentucky. This "preliminary design," released in March with much fanfare, is by the Bjarke Ingels Group, designers of Google's headquarters and the Lego museum.

Will it ever be built? The record is not good. 

In 2017, Stoli Group announced its acquisition of Kentucky Owl, a small, luxury bourbon brand. Later that year Stoli said it would build a $150 million distillery in Bardstown, Kentucky. Land was acquired and some site preparation was done, but the distillery remains unbuilt. Two years ago, they predicted construction would begin in 2024. The Kentucky Owl brand continues to thrive using liquid distilled by Bardstown Bourbon Company and other sources. 

Other examples include Nelson's Green Brier and High West. Although both have distilleries, their acquisitions by major companies were predicated on the success of brands made with sourced liquid. Both companies have house-made products, and High West has transitioned to a blend of sourced and house-made for its top brands. 

The reasoning is simple. If your brand is built on sourced liquid, and a sufficient supply of suitable sourced liquid continues to be available, you have no reason to build a distillery. Sourced brands tend to stay sourced brands until and unless their sources dry up, then they reluctantly become distillers, as happened to Michter's and Luxco. At last report, Blue Run is a 50,000-case brand, and its products are all limited releases. That is part of their appeal. This Forbes article (from 2022) explains what Blue Run is about and what Molson Coors is really buying.

Their first release, the 14-year-old  $169 Kentucky Straight bourbon that made their reputation, was 2,600 bottles. You don't need your own distillery to create releases like that. Their business model has "independent bottler" written all over it.

Jim Rutledge, formerly of Four Roses, is part of the Blue Run team. He is having whiskey contract-distilled for the brand at Castle & Key in Frankfort. 

All of this doesn't mean, of course, that the Blue Run brand might not benefit from a tourism "homeplace," but that doesn't need to be a distillery, doesn't need to be in Georgetown, and doesn't need to cost $51 million.


Anonymous said...

Bourbon castles in the air. Do you believe some of these numbers being thrown around? $600 million for warehouses in Laurel County? $100 million or more for Penelope? Seems that getting into the bourbon business is an even more surefire way to become a billionaire than hip-hop.

Patrick Skvoretz said...

You mention Jim Rutledge. I recall he announced plans for a distillery back in 2020 or so, so similar phenomenon, why would he need to invest in the building of a distillery considering his status in the bourbon industry and the various projects he's been involved with over the past years.