An increase in younger fans, marketing campaigns targeted at millennial women and a seemingly unslakable thirst for US whiskey in emerging markets such as China and India continue to boost the business. In addition, the sustained wave of popularity in Europe for a host of American whiskey brands and styles means distillers in Kentucky and Tennessee – the heart of the industry – are on a high.
Kentucky’s bourbon distilleries increased production last year and boosted the state’s overall inventory to 7.5m barrels of aging whiskey – the highest volume since 1972, the Kentucky Distillers’ Association (KDA) reported on Thursday.
Distillery expansions have the industry on a trajectory toward even more production, but an industry leader said trade disputes in key overseas markets remain a threat to bourbon producers.
The KDA released 2017 production and inventory figures, compiled from state department of revenue data.
Overall spirits production by Kentucky whiskey distillers surpassed 1.7m barrels in 2017 for only the second time since 1968. Most of the production was bourbon.
KDA president Eric Gregory says bourbon makers remain on a “skyrocketing path,” with more than $1bn in investments to increase output expected to come online in a few years.
The latest official figures were reported before bourbon got caught up in Trump administration trade disputes, resulting in tariffs imposed in some key overseas markets for bourbon, including the European Union.
EU tariffs targeting American whiskey and many other US products were a response to Donald Trump’s decision to slap tariffs on European steel and aluminum. Those duties amount to a tax, which producers can pass along to consumers through higher prices or absorb at the risk of shrinking profits.
Tariffs could have “dramatic” consequences for Kentucky spirits makers if the disputes drag on, Gregory said on Thursday.
But he added: “If you take the concern about the trade war off the table, and barring any other unforeseen obstacles, we’re on an incredible trajectory to break historical records in the next few years … meeting the growing global thirst for Kentucky bourbon.”
It’s a sustained turnaround from industry lows in the late 1990s, when Kentucky had 3.4 million barrels of aging bourbon in its inventory and overall spirits production for the year barely exceeded 455,000 barrels, KDA said. Vodka was the trendier spirit of the age, but in the early 2000s, US whiskey made a comeback with small-batch premium brands, marketing bourbon-infused cocktails and expanded exports.
The overall number of barrels holding aging spirits in Kentucky last year, including bourbon, rye, brandy and other products, reached 8.1m, the most since 1971, KDA said.