FRANKFORT — Calling Kentucky bourbon a bright spot on the state's manufacturing landscape, Gov. Steve Beshear on Thursday touted a new study that highlights the distilling industry's growing economic impact.
The study, by University of Louisville economist Paul Coomes, found that the industry, directly and indirectly, employs about 9,000 people with an annual payroll of more than $413 million.
Beshear said that during the past three years the bourbon industry has undergone its largest expansion since Prohibition.
"During the worst economic crisis of our lifetimes, bourbon has been a very bright spot," Beshear said. He pointed to $170 million in new capital projects that distilleries large and small are working on, including several tied to tourism along the Kentucky Bourbon Trail, a collection of six distilleries.
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"We never dreamed 10 years ago that we would be responsible for $2 billion in product. And that the Bourbon Trail would become one of the state's top tourism attractions," said Jeff Conder, chairman of the Kentucky Distillers' Association, which commissioned the study.
Louisville Mayor Greg Fischer said tourism tied to the drink has become a big draw for the city, which he said produces a third of the world's bourbon.
"This is something that attracts people from all over the world," Fischer said. "It's not just a drink, it's a lifestyle."
Beshear said that to encourage growth he plans to examine the "barrel tax" paid annually on bourbon that is aging in warehouses.
"As my tax-reform task force commences, the barrel tax will be one of those taxes that we really need to look at," Beshear said. "The bourbon industry is one of our signature industries, and we need to take care of it."
Distillers' association president Eric Gregory said Kentucky bourbon is the only spirit taxed while it is maturing. He said the distillers support legislation that would give them corporate tax credits to offset the $12 million to $14 million paid in annual ad valorem taxes, which support local governments and the state.
Dave Adkisson, president of the Kentucky Chamber of Commerce, called the tax structure "burdensome" and said the chamber supported finding a way to reduce it.
"We cannot keep putting our bourbon industry over a barrel when it comes to bourbon exports," he said.
Kentucky, which produces 95 percent of all bourbon, exports it to 126 countries.