Bourbon Industry Study

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The Lexington Herald-Leader, Ky., Tom Eblen column: Tom Eblen: Bourbon industry study might surprise you

By Tom Eblen, The Lexington Herald-Leader, Ky.

Jan. 18--Bourbon is one of Kentucky's oldest products, and distillers have always cloaked themselves in nostalgia.

Even a century ago, distillers promoted their whiskey with images of log cabins and white-suited "colonels." Brands included Old Crow and Old Barbee, which was made by a long-gone Woodford County distillery run by my wife's great-grandfather.

Today's brands include Old Forester, Old Fitzgerald and Old Weller. A glass of Pappy Van Winkle is about as good as bourbon gets.

But beneath this antique image is an innovative and growing industry.

The Kentucky Distillers Association last week released its first-ever economic impact study, prepared by University of Louisville economist Paul Coomes. Its findings may surprise some Kentuckians.

While other Kentucky manufacturers cut 20 percent of their jobs over the past decade, distilling employment grew by 6 percent.

The 19 distilleries in eight Kentucky counties employ 3,200 people with an annual payroll of $244 million, plus benefits. They represent 43 percent of all distilling workers in the United States.

Each distilling job creates more than twice as many spin-off jobs as other Kentucky "signature" industries such as horse breeding, tobacco farming and coal mining.

More than $1.5 billion worth of bourbon is produced in Kentucky each year. It accounts for 26 percent of the value of all distilled spirits produced in the United States. Kentucky bourbon is exported to 126 countries.

Kentucky now makes 95 percent of all bourbon, although it is seeing new competition from micro-distilleries elsewhere.

Bourbon's fortunes have improved considerably since the 1970s, when "brown" spirits declined in popularity and many young adults saw bourbon as an "old people's" drink.

Innovations such as super-premium brands in the 1980s and fresh marketing made bourbon popular again and fueled an international following that has caused exports to soar.

In the past decade, distilleries have invested millions to turn their factories into successful tourist destinations on the Kentucky Bourbon Trail. Distilleries have recorded more than 1.5 million tourist visits during the past five years.

"The best thing we can do is bring a tourist to Kentucky and give them a pleasant experience," said Louisville hospitality consultant Peggy Noe Stevens, who comes from a famous bourbon family and worked 17 years in branding for Brown-Forman. "We create, in essence, ambassadors for Kentucky."

The economic impact study was commissioned last year after the bourbon industry was slapped with yet another tax in the General Assembly's scramble to balance the state budget.

The study notes that Kentucky spirits production and consumption produce $125 million each year in state and local taxes.

Kentucky has the highest distilled spirit taxes of any open-market state except Alaska. About 60 percent of the price of a bottle of bourbon bought in Kentucky is some form of state, federal or local tax.

"With the legislature actively talking about comprehensive tax reform, we would like to have a seat at the table," said Eric Gregory, president of the Kentucky Distillers' Association. "We think we've earned a seat at the table."

Reach Tom Eblen at (859) 231-1415 or 1-800-950-6397, Ext. 1415, or at teblen@herald-leader.com. Read and comment on his blog, The Bluegrass & Beyond, at Kentucky.com.

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