Demand for Kentucky bourbon propels spikes in production, work force

Economic Indicators Associated Press

Kentucky's bourbon industry is making a bigger splash in the state's economy, nearly doubling its workforce in two years and leading a $3 billion distilling sector, a study said Tuesday.

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By 2014, the number of licensed distilling companies tripled in two years from 10 to 31 — the most distilleries in Kentucky since Prohibition ended, according to the report by the University of Louisville's Urban Studies Institute.

The bourbon sector's workforce now tops 15,400, up from 8,690 workers two years ago. Payroll surged to more than $707 million, compared to $413 million in 2012. The average salary for distillery employees is $91,188.

Distilling now contributes $3 billion in gross state product to Kentucky's economy every year, up from $1.8 billion two years ago, the report said.

"We all knew the bourbon renaissance was taking this iconic industry to new levels, but this data is absolutely phenomenal," said Gov. Steve Beshear, a fixture at bourbon expansion announcements.

Kentucky bourbon and Tennessee whiskey exports shot past $1 billion for the first time in 2013, according to the Distilled Spirits Council. In the U.S., bourbon and Tennessee whiskey revenues rose by a projected 10.2 percent last year, it said.

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The bourbon industry is betting on continued strong demand. More than 5.3 million barrels of bourbon are maturing in Kentucky — the highest inventories in 40 years.

Kentucky is home to 95 percent of the world's bourbon production with brands such as Jim Beam, Evan Williams and Wild Turkey.

A warning sign noted in the study is that Kentucky ranks eighth nationally in the number of operating distilleries.

New craft distilleries in Kentucky employ 127 people with salaries totaling more than $4 million, the report showed. Those small-scale distilleries have invested $30 million and plan to spend another $25 to $30 million in the next five years, it said.

Five leading states in total distilleries have enacted new rules that relaxed regulations and lowered entry costs — Washington, New York, Colorado, Oregon and Texas, the report found.

"We are fortunate to have a thriving bourbon industry today, but what happens if our historic monopoly starts to slip away?" said David Adkisson, president and CEO of the Kentucky Chamber of Commerce.

The study cost more than $20,000. It was paid for by the Kentucky Distillers' Association and the Kentucky Agricultural Development Fund.