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VT Mike

The slow recovery from the last crash

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VT Mike

I was doing some research tonight and was reading through the National Register of Historic Places registration form for Buffalo Trace. It listed the dates of when they produced their various millionth barrels. They hit 2 million in 1953, 3 million in 1961, 4 million in 1971, 5 million in 1981 and didn't get to 6 million until 2008. It's kind of crazy to think that even though things started to rebound in the 1990's that it took them that long. I know barrel entry proof is higher than is used to be, which means less barrels used for a given amount of whiskey produced, but still, that's a long time!

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T Comp

Outstanding research and historical perspective Mike. 27 years contrasted with the prior periods of 10, 10 and 8, a telling fact on the depth of the bourbon depression. Also great  details, comments and photos in your blog on Four Roses, Maker's and Buffalo Trace visits. Been to them several times but you sure keep track of it all a hell of a lot better than me. 

 

The Heaven Hill tour has a board display on their incremental barrel production milestones. Even took a picture of it, but the photo along with my memory, disappeared into the cloud ;).

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JoeTerp

That's pretty interesting. Given the current spike in demand, it will be interesting to see when 7 million occurs 

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Richnimrod

Wasn't that distillery dormant or nearly so for a period of time?    I seem to recall (and this is before me becoming so interested in all things Bourbon) reading something about that. 

Col. Chuck may be able to shed light, as would many here, I expect.     I seem to remember hearing about the distillery being renamed BT after that time, and coming off that hiatus with several brands including BT

Didn't it used to be called Ancient Age Distillery?

Maybe I'm mis-remembering all or part of this. 

Anyone who can, please shed light. 

Thanx.

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Paddy
6 hours ago, Richnimrod said:

Wasn't that distillery dormant or nearly so for a period of time?    I seem to recall (and this is before me becoming so interested in all things Bourbon) reading something about that. 

Col. Chuck may be able to shed light, as would many here, I expect.     I seem to remember hearing about the distillery being renamed BT after that time, and coming off that hiatus with several brands including BT

Didn't it used to be called Ancient Age Distillery?

Maybe I'm mis-remembering all or part of this. 

Anyone who can, please shed light. 

Thanx.

Thought you might enjoy this little refresher Rich.  It's amazing how much has occurred in just a few short years!

 

http://ellenjaye.com/buffalotrace.htm

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Richnimrod

Thanx, Paddy.     Your link to the trip down memory lane was much appreciated.

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VT Mike
On 11/5/2016 at 0:29 PM, JoeTerp said:

That's pretty interesting. Given the current spike in demand, it will be interesting to see when 7 million occurs 

 

I was thinking the same thing. When I took the tour they told me current production is 800 barrels/day. Assuming they're going 5 days a week and 44 weeks a year (2 month summer shutdown), that works out to 176,000 barrels a year. But given the shortages now, they certainly weren't making that much 6, 7 or 8 years ago.

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Paddy

^^^^Thanks for the link Mike. 

 

I just read through your BT and 4R tour reviews and highly recommend that our new members (especially those planning a visit) do the same. 

 

Mr. Veach, as always, very well done! 

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Flyfish

From the mid-'70s to mid-'90s I worked for a couple electric utilities when they were engaged in the "nuclear wars" and "environmental wars." From the end of WWII until the late 60's, business grew at a steady and predictable 7% a year. They could build a new power plant in a couple years and the new plants were far more efficient than the old plants so utilities could look forward to decades of prosperity--and still reduce prices. (I know. That sounds impossible but you could look it up.) But inflation and a plethora of new regulations, including mandates to promote conservation instead of consumption, destroyed the business model. By the '70s it could take 7-10 years to build a coal-fired plant and 10 years to infinity to build a nuclear plant. No responsible CEO would bet his company that they could build on budget, on schedule, and get an operating license after investing a $billion or more. So they quit building coal and nuclear and replaced old plants with natural gas because it was easier to build and much easier to license. Then another round of regulations insisted that utilities include XX% of "renewables" in their generating capacity. In other words, shifting political winds, so to speak, could make it impossible to accurately forecast either the demand for your product or the probability that you would recover the cost of your investment.

Decisions made in the bourbon industry are roughly parallel. (Roughly.) What would happen to your bourbon business if you invested a boat load of money in expanding production capacity at your distillery in 1919? Suppose, hypothetically speaking, protesters in the streets led to some new government regulation that made it difficult or impossible for you to continue. Then, after the regulation was finally repealed, you were still told how you could market your product. Instead of "Drink all you want, we'll make more" you might be required to remind everyone to "Please drink responsibly." Or, the state government might become your "partner" and determine what you could sell and how much you could charge for it.  

It takes time to bring a new distillery on line and then several years after that before product is ready for market. What will be the demand for bourbon 5, 10, or 15 years down the road? You'd better have a pretty good idea before you commit to an investment that could bankrupt you. The history of the bourbon industry suggests that many companies lost this bet and closed their doors.

On the other hand, what if, heaven forbid, demand for your product exceeds supply so you are forced to raise prices? Not only that, but what if you are forced to add more water and/or send your product to market a little sooner than optimal? As CEO of Any Old Bourbon Distillery, Inc. would you rather face a glut or a shortage? And how much of a hurry would you be in to raise capacity from 6 million to 7 or 8 million barrels?

Edited by Flyfish

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