Maker's Mark plans $67 million expansion as bourbon booms

jpatton1@herald-leader.comFebruary 27, 2014 

Wax Seal Battle

In this Wednesday, April 8, 2009 photo, a bottle of Maker's Mark bourbon is dipped in red wax during a tour of the distillery in Loretto, Ky. On Wednesday, May 9, 2012, The 6th U.S. Circuit Court of Appeals court says a liquor bottle with a red dripping wax seal by any name other than Maker's Mark would be illegal. The decision comes in an appeal brought by London-based Diageo North America and Casa Cuervo of Mexico, which used a dripping red wax seal on special bottles of its Reserva tequila. (AP Photo/Ed Reinke)

ED REINKE — AP

Maker's Mark announced a $67 million expansion on Thursday to meet booming demand for the Kentucky bourbon known for its iconic red wax top.

The distillery will add a third still — an exact replica of its existing mirror-finish copper stills — to its historic still house in Loretto, increasing capacity by 50 percent, and build new warehouses to age the bourbon.

"Maker's Mark is known and enjoyed the world over," Gov. Steve Beshear said in a news release. "This expansion will allow the company to meet that growing global demand while still continuing to handcraft the product in the same manner that it has for six decades. We are very excited that this iconic Kentucky brand continues to grow in popularity."

The project received preliminary approval for up to $5 million in various state tax incentives from the Kentucky Economic Development Finance Authority on Thursday.

The first spirits will go into the barrel in about 18 months and be ready for customers about six years after that, according to the distillery. Ground will be broken for the expansion in March.

"This expansion will ensure that every step in the meticulous, purposefully inefficient handcrafted bourbon making process remains exactly the same as it has for the past 60 years," said Maker's Mark Chief Operating Officer Rob Samuels. "Anyone can build a distillery, but we are choosing to replicate every aspect of the original to preserve the integrity of our handmade bourbon and the National Historic Landmark structure."

The news was sent to thousands of so-called Maker's Mark Ambassadors — customers so loyal they wait years for their own special bottles — in a message from Samuels.

"After a lot of hard work on the part of a lot of people around here, we're about to break ground on a third still at our historic distillery. But not just any still. The new one will be right next to the two existing stills that currently produce every drop of Maker's Mark — and it'll be identical in every way to them," Samuels wrote. "We're doing this because, as you're well aware, Maker's Mark Bourbon takes time to age to perfection, and that's left us running a bit short of supply in recent years due to the ever-increasing demand from all of you."

Last year, Maker's Mark announced plans to lower the proof slightly to stretch its supply of bourbon. But backlash from customers convinced its Deerfield, Ill.-based corporate parent, Beam Inc., to reverse course.

Instead, the distillery announced plans to increase capacity with a "barrel-rinse" process and eke out enough bourbon to ship more than 1.4 million cases last year.

Maker's Mark already has invested $50 million in preliminary steps preparing for the expansion, the company said.

For 2013, Beam reported that net sales of Maker's Mark grew by 17 percent, the most of any of the company's "power brands." Sales are forecast to top 2 million cases later this decade, according to the Associated Press.

The expansion comes as Beam is being acquired by a Japanese company, Suntory, for an estimated $16 billion, and a day after the bourbon celebrated its 60th anniversary.

Bourbon and Tennessee whiskey sales worldwide are soaring. Exports of bourbon and Tennessee whiskey were up 5 percent, to a record $1.005 billion in 2013, according to the Distilled Spirits Council of the United States.

Domestic sales topped 18 million cases, up 6.8 percent. Revenue from those sales rose 10.2 percent, to $2.4 billion. Combined, U.S. and exports topped $3.4 billion.

To meet that surge of demand, Kentucky's distilleries have embarked on hundreds of millions of dollars in expansions, including a potential $115 million in new projects that received preliminary approval for Kentucky tax incentives on Thursday.

The Maker's Mark expansion is expected to create as many as 30 new jobs over the next decade, with an average hourly wage (including benefits) of $32 an hour.

Another Kentucky distillery also is planning a major expansion, with an announcement coming soon. Buffalo Trace spokeswoman Amy Preske said the distillery's New Orleans-based parent company, Sazerac, will be announcing details for a larger investment plan in Kentucky.

On Thursday, the KEDFA board gave preliminary approval for $1.62 million in various incentives for a $20.5 million project, including building a new distribution center and improving existing buildings to expand capacity, which could create 40 new jobs with an average hourly wage of $25 (including benefits).

Earlier this month, Buffalo Trace also received preliminary approval for consideration of incentives from the Kentucky Tourism Development Finance Authority for a $2.2 million expansion of the distillery gift shop, tasting area and meeting space.

The KEDFA board also gave preliminary approval for up to $1.3 million in various incentives for a separate $23 million project that could bring an old distillery back to life and bring a new player to the Kentucky bourbon industry.

TerrePURE Kentucky Distillers Inc. is considering buying the historic Charles Medley distillery in Owensboro and renovating the facility "for the production of bourbon and other products.

The project could create as many as 70 jobs with an average hourly wage of $17 (including benefits).

TerrePURE is owned by Terressentia Corp. of Charleston, S.C., which makes bulk spirits and uses a patented process to rapidly age and improve them. The company does not have any brands but creates spirits for retail chains.

CEO Earl Hewlette said Thursday that the approval for the tax incentives "encourages us to do something in Kentucky." He said the deal might be finalized in the next few months.

The Medley distillery has been mothballed since United Distillers closed it in 1992; it was built in 1901 and changed hands several times. The Medley brands were sold off to various companies, including Sazerac.

Janet Patton: (859) 231-3264. Twitter: janetpattonhl.

Lexington Herald-Leader is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service