Kentucky distillery numbers triple in a decade

The number of distilleries in Kentucky has more than tripled in 10 years, with Bourbon production contributing US$8.6 billion to the state’s economy annually, according to a recent report.

The Economic and Fiscal Impacts of the Distilling Industry in Kentucky report was prepared by Dr Paul Coomes and Barry Kornstein, formerly of the University of Louisville, in conjunction with the Kentucky Distillers’ Association (KDA).

The biennial report notes that there are now 68 distilleries in the state – a 258% increase since 2009. The number of counties with a distillery has also quadrupled to 32, up from only eight in 2009.

Distilling contributes US$8.6bn to Kentucky’s economy annually – a 60% increase since 2009.

The study shows that the Kentucky Bourbon industry has generated more than 20,100 jobs with an annual payroll topping US$1bn, provided US$235 million in local and state tax revenue, and is in the middle of a US$2.3bn building boom.

The report noted that if the industry continues to grow at this rate, economic output would surpass US$10bn by 2020, with employment at more than 24,000 and payroll reaching more than US$1.2bn.

There are now nearly two barrels of spirit for every person in the state – valued at US$3bn, three times more than a decade ago.

Kentucky exported more than US$450m worth of Bourbon and other spirits in 2017; the export value has tripled in the last 20 years.

However, the new figures were reported before several countries enacted retaliatory tariffs on Bourbon.

Eric Gregory, president of the KDA, applauded state and legislative leaders for their efforts to “modernise archaic alcohol laws, reform out-dated tourism restrictions and tackle the discriminatory tax that only Kentucky levies on ageing whiskey barrels”.

More work to be done

Despite the successful figures, Gregory said there is still more work to be done.

Kentucky state representative Matthew Koch filed the House Bill 200 last week, which would allow Kentucky distilleries to sell exclusive bottlings in gift shops – a benefit that other distilleries, wineries and breweries already have.

Koch said the bill will “increase visitors” to the Kentucky Bourbon Trail tour.

Gregory also claimed that the industry’s non-refundable Bourbon Barrel Reinvestment Credit passed in 2014 needed to be updated.

“Distillers can’t realise the full benefit of the barrel credit, which means less money they can reinvest for future growth,” Gregory said. “We should not have a tax structure that penalises increased production and investment. The barrel credit needs to be refundable or transferrable.”

He also added that the industry must “continue to work with state commissioner of agriculture Ryan Quarles to increase usage of Kentucky corn”.

The study showed that more than half of all distillers’ grain purchases are made from Kentucky farm families.


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Author: Nicola Carruthers {authorlink}