Business

Bourbon distilleries see an amber-colored future

To Wild Turkey master distiller Jimmy Russell, the piercing sounds of a warehouse rising in the Kentucky countryside are the sounds of prosperity.

“As long as you see work going on – and the construction, and increasing your size – you know your business is doing well,” said Russell, who started working for the bourbon maker in 1954.

Distillers are expanding their bourbon production and storage and dispatching sales teams around the world. Surging exports, the weak U.S. dollar and rising popularity among younger Americans are driving the boom.

“It's an exciting time to be in the bourbon business,” said Max Shapira, president of Heaven Hill Distilleries Inc., a family-owned liquor company based in Bardstown. “Most of the time that I've been in the business – up until about the last 10 years – everybody was trying to consign the bourbon category to that great liquor store in the sky.”

Heaven Hill recently spent nearly $4 million boosting capacity 50 percent at its distillery in Louisville, where it makes Evan Williams and Elijah Craig bourbons.

Wild Turkey, part of beverage company Pernod Ricard SA, based in France, sold more than 1 million cases worldwide last year for the first time. Its $36 million expansion near Lawrenceburg will nearly double its production.

The distillery at Jack Daniels Tennessee Whiskey in Lynchburg, Tenn., is about to undergo a nearly $6 million addition to install nine more fermenters.

Maker's Mark is preparing for a second expansion. And Jim Beam, the world's biggest bourbon maker, is in the midst of a $70 million expansion in Kentucky. Beam and Maker's are part of Fortune Brands Inc.

International expansion in this quintessentially American segment is more than offsetting rising grain and fuel costs. Grain accounts for a fraction of the overall cost of making bourbon, even though it's made from a mix that must be at least 51 percent corn.

Eric Schmidt, research director at Beverage Information Group, formerly known as Adams Beverage Group, said much of the sales growth has been in higher-priced small-batch and single-barrel products.

According to Beverage Information Group, a market-research firm tracking the liquor industry, 14.7 million 9-liter cases of straight whiskey sold in the United States last year. Up about 1 percent from 2006, the figure still lags behind vodka and rum in sales and percentage growth but is outpacing Scotch whisky, the firm said.

But Maker's Mark U.S. sales rose 8 percent last year, while Evan Williams sales grew 5 percent and Wild Turkey 4.6 percent, Beverage Information Group said. There are no figures tracking international bourbon sales.

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