Booming the future: Kentucky bourbon production soars

Kentucky’s Bourbon Industry Is Showing It’s Booming on Its Future

FRANKFORT, Ky. Kentucky’s bourbon industry is showing signs that it is bullish on its future after reaching new production heights despite the COVID-19 pandemic and trade disputes in key overseas markets.

Bluegrass State bourbon producers filled nearly 2.5 million barrels in 2020, setting a new production record, the Kentucky Distillers Association said Monday. This is the third year in a row that Kentucky distilleries filled more than 2 million barrels of bourbon.

And for the first time in the modern era of American whiskey, 10 million barrels of bourbon are aging in distillery warehouses near Kentucky, it said. According to the latest figures, the state of 4.5 million people has more than 10.3 million barrels of mature bourbon.

Massive inventory is a bet on the future because most bourbons are typically aged four to eight years before reaching their market. Bourbon gets its flavor and golden brown color during aging. The new production numbers are based on reported inventory as of January 1, 2021, which has been submitted to the state for tax purposes.

Kentucky Distillers is in the midst of a $5.1 billion capital investment campaign that includes expanding production facilities and warehousing to satisfy a global thirst for Kentucky bourbon.

Production continues to increase despite some industry constraints at home and abroad.

American whiskey makers have been embroiled in a trans-Atlantic trade dispute since mid-2018, when the European Union imposed a 25% tariff on American whiskey and other American products in response to then-President Donald Trump’s decision to impose tariffs on European steel and aluminum Was. .

The Kentucky Distillers group has joined a coalition of 50 American liquor-related trade unions pressing President Joe Biden’s administration to secure the suspension of tariffs on American whiskey.

“Our industry is collateral damage in trade disputes that have nothing to do with bourbon,” Gregory said.

Meanwhile, Kentucky distillers are calling for relief from barrel taxes on aging whiskey.

Distillers will pay a record $33 million in aging barrel taxes in 2021, a production cost that distillers in other states don’t face, putting Kentucky producers at a competitive disadvantage, the Distillers Association said.

Most of the barrel tax revenue goes to local school districts. Under a plan launched by the Distillers Group, distillers would continue to pay a barrel tax, to maintain revenue for schools, and the state would return distillers an equal amount from the General Fund, Gregory said. He said the distilling industry would be committed to reinvest the money back in its operations.

“The bourbon industry is investing more than $5 billion in this state to increase production, create innovative tourist centers and create thousands of new jobs,” Gregory said. “But punitive barrel taxes are penalizing this growth and hurting our chances of landing new furnaces.

Kentucky lawmakers passed a corporate income tax credit in 2014 to offset barrel taxes, but the growing number of barrels — and therefore taxes — far exceed the amount of debt that distillers can take, Gregory said. said. Some distillers now realize only 30% of the credit, he said.

The association stated that Kentucky is home to 95% of the world’s bourbon production. It is said that the $8.6 billion bourbon industry creates more than 20,100 jobs with an annual payroll of $1 billion.


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