This Meme Is Both Wrong and Right (Sort of)

 

The meme is wrong but raises an interesting point.

Earlier this week, I posted the following on Facebook.

"There is a meme making the rounds that says Canada is the largest purchaser of Kentucky bourbon. That is false. The largest purchaser of Kentucky Bourbon is the United States, but among export markets Canada is only fifth, after the EU, Australia, Japan, and the UK. Export is about 20% of total sales and Canada is about 5% of the export market. So, yes, Canada is an important market and tariffs are bad, but those are the actual facts."

The meme in question is reproduced above. It's still wrong and my statement above is still correct, but in conversations about the meme and my response, I learned something interesting. Canada is, in fact, Kentucky's largest export market for distilled spirits products of all types. That means whiskey but also other things, such as vodka, gin, liqueurs, brandy and tequila.

Wait a minute! Brandy and tequila? I know Kentucky has a small grape crop and a few wineries, some of which also make brandy, but that's very small volume. Tequila! That has to be made in Mexico, so that can't be right.

Some Tequila can be shipped in bulk, be bottled in the U.S., and still be called Tequila. If that happens in Kentucky, as it does at several producers, then it counts as a Kentucky export. Brandy is an even bigger part of the equation. Of the five best selling California brandies, three are distilled in California from California grapes, but the distillate is shipped to Kentucky where it is aged in used bourbon barrels, then bottled. That, too, becomes a Kentucky product and a Kentucky export. 

The source for this statistic is the Kentucky Distillers Association (KDA), specifically KDA's annual report on "The Economic and Fiscal Impacts of the Distilling Industry in Kentucky," Prepared for the Kentucky Distillers’ Association by Paul Coomes, Ph.D., Economic Consultant and Emeritus Professor of Economics, University of Louisville, and Barry Kornstein, Economic Consultant. This is from the 2023 report. The 2024 report hasn't been released yet. 

The page you want is #68 in the printed version, #70 in the PDF. Although it mentions "liqueurs and cordials," it's also those other things. If it gets bottled in and distributed from Kentucky, it's a Kentucky product. If it's then shipped out of the country, it's a Kentucky export.

Heaven Hill and Sazerac, especially, produce full lines of value brands in virtually every distilled spirits category. If you're the LCBO (the liquor distributor for the Canadian province of Ontario) and you're buying a few pallets of bourbon and rye, why not throw in a few pallets of triple sec, coffee liqueur, or peppermint schnapps? Canada produces some of that stuff too, but Kentucky's big producers make so much of it they can compete favorably with Canada's smaller producers. 

If you look at the graph, you will see that only in exports to Canada are the two segments, whiskey and "all other spirits" roughly equal. And that makes Canada #1 for spirits exports from Kentucky. 

Although some Canadian whisky is bottled in Kentucky, I believe that is only for the U.S. market. It's not exported back to Canada. Likewise, U.S.-bottled Tequila isn't exported back to Mexico, but some of it goes to Canada. All that will, of course, change if there's a trade war. 

So, if the meme had said "the largest export market for Kentucky distilled spirits is Canada," it would be correct.

Kentucky is a small state, and because it produces so much whiskey, distilled spirits are one of its largest industries. Except for its Democratic governor and the representative from Louisville, all of its major elected officials are Republican. The legislature has a veto-proof Republican majority and Trump won Kentucky by 26 points.