Why Is Bourbon Booming?

We’ve been making a lot of noise lately about our blur of an adventure in Kentucky. We got a team of three together, flew to Kentucky, ate great food, drank at the local bars, sometimes too much, interviewed the new and the old of bourbon — politicians, brewers, drinkers — you name it, we tried do it. Our thinking was to speak with as many people as possible and see what came of it, to get a sense of the bourbon boom from the inside. Whatever that meant. We had seen the end result of the bourbon boom — the ever-widening shelves of our liquor store’s bourbon section, the rows of brown behind the bar, the trend piece articles linking bourbon and the ubiquitous “Brooklyn hipster” — but we wanted to get a look at the source ourselves.

While Ben, co-founder of GP, was a bourbon nerd long before we left, Sung and I were going in cold. We enjoyed the drink, but our interests lay outside of highly sought after bottles, Pappy and how to drink it. We wanted to know about that tipping point, about the international phenomenon that’s definitionally American. Bourbon production in Kentucky more than doubled from 1999 to 2013. Employee salaries during this same period, as measured state-wide by the QCEW and adjusted for inflation, show a 34 percent increase, during which time employment increased by 20 percent. These are numbers you’d expect out of Silicon Valley’s tech industry, but this is all in the manufacturing sector, which has been on a steady decline nationwide since the 1950s and has decreased in Kentucky from 1999 until 2013 by 26.3 percent.

In addition, bourbon and Tennessee whiskey accounted for $1 billion of the total of $1.5 billion domestic distilled spirits exports in 2013. These seem like export numbers for the service industry, not the brown liquid that’s been made from corn in the American heartland for the past two and a half centuries.

On the ground in Kentucky we saw who these people were. We met Adam Johnson, Director of the Kentucky Bourbon Trail, a position that didn’t exist until 1999. We saw some of the 20 percent that were new employees, who were more comfortable answering questions as a whiskey consumer than a whiskey producer.

The newly needed tour guides, the workers building rick houses that can hold 50,000 barrels instead of just 20,000, the distilleries that went from operating a few months a year to year round, these are real people. We aren’t talking about just a few at the top who wear hoodies and make money from lines of codes and are genius enough to predict and capitalize on social trends, or from those in suits who calculate pro forma EBITDA on their way to the 80th floor. Not in Kentucky. We were throwing guys in front of a camera and a microphone that had been struggling just decades ago to stay in business, that had drank bourbon — and they all always drank bourbon — because it was their local product, it was their history, it was on the shelf.

They drove past bed sheets tied to plywood that said “Bourbon ends lives!” on their way to work, and now they were shipping their product all over the world.

And though bottles costing more than cars proves bourbon is in a bubble, that bubble will most likely deflate rather than burst. At least, that was the feeling on the ground, and who wants to predict their own demise. “Kentucky has unique economic stability. We were able to weather the 2008 storm very well because of our large agriculture sector,” said Niki Heichelbech of the Lexington Convention and Visitors Bureau. “Sure horse racing was impacted, but it’s coming back.” For distillers, there will always be an instate market for the stuff, just like there always has been.

Nonetheless, the market is widening both at home and abroad. People are realizing bourbon is a quality local product that’s a piece of American heritage. Novices are discovering bourbon has complex tastes to explore — like craft beer — and nerds, once isolated in vodka loving cities, are cultivating their passion in online forums. And the product itself, unchanged for centuries, is being tweaked to accommodate collectors, with limited edition releases, and bartenders, with higher proof offering, perfect for cocktails. But don’t take our word for it. We asked everyone we met why bourbon was booming and this is what they had to say:

Mark Phipps

Master Brewer at Alltech’s Lexington Brewing and Distilling Co

“There’s been an interest in locally manufactured and there’s a strong link with agriculture: we’ve got great ag schools in this area. When you tie these things together — the horses, the derby, the agriculture, the industry — there’s just a magic about it that i think has drawn people. It’s got a life of its own, and it’s very different from other whiskey styles. It caused the resurgence in rye whiskeys which ironically is the whiskey of the wild wild west, which again shows a lot of dependence on what agriculture is available.”

Robert Downing III

Business Development at Barrel House Distilling Co

“I’d say a lot of it has to do with the mystique of it being America’s native spirit. All the highly publicized craftsmanship, the length of time, the limited quantities — it’s something people are very mystified by. You could see some of the early signs in Hollywood and magazines, Maker’s Mark bottles popping up in movies and TV, as opposed to gin or vodka spirits that you’d usually see.”

Jonathan Haddix

Tour Guide at Wild Turkey

“Well, something Jimmy Russell is always talking about, and he’s been 60 years on this job, is his generation. The parents of his generation drank bourbon and therefore it wasn’t cool anymore for their kids. Now that’s worked its way out and our generation is looking for something and we are trying to pave our own trail and that’s what’s making it work — the younger drinkers out there.”

John Rhea

Chief Operating Officer at Four Roses

“I started in this business in 1976 and the first thing I was told, ‘Be prepared, brown goods are going down 3 percent a year.’ I saw that until the very late 80s. From 1976, bourbon went down 45 percent in that time period. It was tough times; we were only operating 6 months every 2 years for Seagrams. Then, in the late 80s, because of Four Roses position overseas, the phenomenon was that the Japanese decided they liked bourbon and because we were already there they really liked us, so we went back to a 6 day schedule 7 to 8 months a year. Then comes 1990 and for some reason the Europeans said, ‘Hey this is good, we like this too.’ So we went from operating 6 days for 7 months a year, to a 24/7 operation 10 months a year in 1996. So our resurgence started in the early 90s, and the rest of the country’s distillers took note. (We actually had no American sales at the time.) Other companies started seeking overseas opportunities. I don’t know if that’s why the boom happened, or if it’s baby boomers going back to their father’s drink. I think it has more to do with the quality of the bourbons that are being made, and the baby boomers are appreciating that. Before it was scotch, scotch does a good job advertising everywhere. So bourbon took note and started promoting throughout the world. Global availability has come and caused this resurgence, and the more people that drink the more people that like it. It’s like coffee, it’s an acquired taste. As far as bursting, I think it’ll be 2040 until we slow down at all.”

Drew Kulsveen

Master Distiller at Willet Distillery

“Well I think people are gravitating toward it because it’s authentic. You can’t do a whole lot to it: it’s a grain-water-yeast beer that you distill and put in a barrel, the only thing you can do is filter it and add water. There’s a strict set of limitations that you have to adhere to, and as people become more educated and understand that this barrel was filled at the same time as that one and they were put next to each other but taste completely different, that’s when people taste it and it sets off a light bulb in their head. It just becomes more interesting. So in 2006 or 2007 you saw this huge change, but I don’t know if any one company is responsible for it. Everyone’s doing interesting things to get bourbon to where it is today. I think it’s definitely going to die off, but who knows what’ll happen next. I think the foundation is here to stay. People respect that it’s American made and been around for a long time in this country. It’s more blue collar than white collar but it’s something anyone can drink and get enjoyment from.

Chris Morris

Master Distiller at Woodford Reserve

“I started working 1976. I started the first year the decline began, but we didn’t know it at the time. And it declined and declined. At the time there weren’t many new brands in the industry. In 1959 Maker’s Mark had come along, but that was pretty much it. Everything was old labels. There was no excitement in the industry. Then in the late 80s, single malt scotches started — higher prices, drinking them neat, drinking them with tradition. Cognac and crazy imported vodkas went off too. That meant americans were drinking high price deluxe imported luxury spirits products. For us it was Early Times, Old Forrester, Jack Daniels and it was a very boring, out of date, out of touch industry. Give credit: in 1989, we see Booker Noe introduced, followed by Elijah Craig 12 year single barrel, and the the small batch collection in 1992. And the bourbon heritage. And Heaven Hill with single barrel. And now we have excitement but nothing quite happening. And then in 1996, Brown Foreman introduces Woodford Reserve — new package, new home site tours. You could only tour Maker’s and us and one other. Then other distillers followed suite and started attracting new consumers. We went into cocktails, championed the Manhattan, Old Fashioned. No one had been talking cocktails and now its cool to make cocktails again. At about 2004, it really starts to move.”

Hunter Davis

Jim Beam Tour Guide

“There’s a cyclical nature to it…but I think bourbon has benefitted from people’s general interest in where their food takes from. You see this all the time on the bourbon trail: people come here and are generally interested in answering ‘Where does that bottle come from?’ and ‘How does it make it to where I am?’ They can connect with it and understand it, instead of just a generic food product. And certainly for us here, we’re drinking local.”

“We’re seeing over 100,000 people a year here at the distillery. I’m a proud Kentuckian, so I love being able to share this state with people all over the world. Australia, Germany, South Africa, and for me that was just today.”

Sheila Osbourne

General Manager at Bourbon Heritage Center Heaven Hill Distilleries

“Strictly from a visitors center point of view, we are seeing more and more people from international waters, more guests from Australia, Japan, England, Europe, a lot of our bus groups are from Sweden. People are very interested in our bourbons. Bourbon is a native spirit to Americans so they are very anxious to get their hands on something that we take for granted.”

“I think some feel it’s an answer for a generation of what they see as sell-outs.”

Jerod Smith

Marketing Manager at Wilderness Trail

“I’ve only been employed in the industry for a year, so I’ve just experienced the boom as a customer and as an enthusiast. I used to get Pappy off the shelf in 2008! So, from that perspective, what I think really sustained it is the internet. You’re able to sit there and get online and talk to a bunch of people with your same passion. It keeps you fresh and interested. If you’re at home and you don’t have anyone, you can’t sit and smoke a cigar with a glass of Kentucky’s finest with someone else. And if it pops, well, we aren’t really worried about that because we will always have that Kentucky base. I actually hate the bourbon boom because I can’t get what I want as an enthusiast.

Tom Fischer

“Oh, wow. I think it’s several different factors. I think that, first of all, it’s good. It’s good stuff, and somehow there’s been enough buzz that’s it’s become acceptable like, you know, among all people to try it. I think 20 years ago there was a thought that it was more of an older person’s drink, and now there’s this acceptance that probably came partly from the ability to spread the word on social media and through mass media. I mean, we’ve been doing bourbon [on our site] since about 2004 or 2005. So we really have seen the conversation pick up, and we really feel, you know, lucky to have had facilities to be part of it. But we’ve really watched it grow in a huge way. So I think it’s the ability to learn through social media to know that it’s good, to know that it’s mixable.

Secondly, it’s so far—hopefully, this will stay the same way, Travis—but it’s fairly inexpensive. I mean, we have seen some price hikes, and we hope there won’t be many more for a while, but you know, you can get a good bourbon for, a really good one, for like $40, $50 bucks. If you can find it to buy, you can get an amazing one for $100. You know? And you can get one that I’d be proud to drink for $20 or $30. It’s not that tough to find a good one at a decent price. So it’s price—so it’s social media, great juice, price, return to classic cocktails, it’s…and pre-prohibition cocktails have become more popular. So I think bourbon has played on the backs of those, and you know, making cocktails a culture again. And I think just maybe the last reason is, you know, a pride in America. I mean, it’s truly an American spirit, and whether you’re American or whether you’re someone overseas who just happens to love America then you can drink bourbon and you can say you know it was made in America, and there’s a real strong pride that we took after 9/11, you know, in American-made products because, let’s face it, anything that’s sitting around you you’re going to look at the bottom of most of it and find that’s not made in America, right?”

As everyone narrated, a synergy came together from multiple forces and a little luck. Bourbon is — as magazines are apt to say — having a “moment”. We spent five days in Kentucky driving 500 miles and driving each other insane, but we can’t say we’re any closer to understanding the bourbon boom than when we started. Sure, we’ve gathered many more facts that can support its presence, and show you direct correlations with a sudden sales increase in the mid 2000s that doesn’t seem to be slowing down, but this isn’t a story about bourbon.

It’s really a story about people. Kentuckians sticking to their guns and making the same juice, adhering to the same rigid acceptable methods, trying to improve without losing that identity. It’s a story of people wanting to give themselves a new drinking identity, something different from their parents, something they could spend their hard-earned money on that had personality, a drink in their hand that could be an extension of themselves, like the suit on their back. It’s a story of a Kentucky large family.

Of the bourbon produced in the world, 95 percent comes from Kentucky. We joked at Evan Williams that the wife of Charlie Downs — who’s worked at the distillery for 38 years — works press relations at Jim Beam. And at Jim Beam we joked that at a distiller’s wedding, everyone drinks everyone else’s bourbon, and they do so by the caseload. And while it’s easy to think that a high tide raises all ships and everyone is just happy to be a part of it, the lack of shit talking was refreshing. It was immediately evident and extremely foreign for the outsider. No one would badmouth another distillery, because they very likely knew some of the guys and gals who worked the stills.

Maybe big companies will come in and swallow the industry — the British giant Diageo has already moved into the old stomping grounds of Stitzel-Weller, one of the most iconic names in bourbon — and turn into into a more profitable, better-advertised but hollow industry. A shell of American heritage. But there are great new craft distilleries opening daily — grab some Breckinridge from Colorado if you need some convincing — and a general aura of something wholesome that ironically comes from a spirits bottle.

We’ll end our bourbon coverage with a quote from Sheila Osbourne, General Manager of the Bourbon Heritage Visitors Center at Heaven Hill Distilleries. While it’s literally her job to promote bourbon, this exact same phrase was on the lips of everyone we saw — whether it was Drew at Willet, quickly and fiercely rising in the industry, Charlie at Evan Williams, secure in his distillery’s history, or Robert at Barrel House, distilling bucket by bucket.

“Our goal here is to educate you. We want you to drink a good bourbon. Doesn’t necessarily have to be ours, but if it is, then that’s wonderful.”

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