‘Perfect storm’ means Kentucky Castle distillery is on hold, but the venue is safe
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- Owner Wes Henderson paused planned Versailles distillery indefinitely amid legal suits.
- The Kentucky Castle remains open and is seeing about 80% summer occupancy.
- True Story bourbon brand remains active and is distributed in about 20 states.
Wes Henderson, owner of The Kentucky Castle and founder of True Story bourbon, said that plans to build a distillery are on hold indefinitely, but the Versailles landmark and the spirits brand associated with it are not in jeopardy while his companies face lawsuits.
Henderson spoke with the Herald-Leader a day after news broke of two lawsuits filed against his companies over unpaid debts of nearly $1.5 million related to the planned distillery.
Henderson said he could not address specifics of the cases involving architects Luckett & Farley, and Peggy Noe Stevens & Associates.
But he was candid about the situation, saying the bourbon industry changed significantly since his purchase in 2023 of the Woodford County landmark.
“We’re in the middle right now of the perfect storm, globally, in the bourbon industry,” he said. “My vision, from the very beginning, was to take The Kentucky Castle, make it more bourbon centric, and we are still doing that ... the castle itself is a successful wedding venue, successful restaurant, successful spa.”
On a Wednesday in June, guests were in the lobby of the hotel, sitting in the restaurant, checking into and out of the hotel. Henderson said the restaurant would be full at lunchtime and that occupancy remains strong, around 80% in the summer. He said they remain focused on cultivating the still-booming bourbon tourism business.
“The castle is continuing operation, the castle is making money and the castle’s team is incredible,” Henderson said. “Everything here is business as usual. ... It is still an iconic destination and will continue to be an iconic destination for people all over the world,” he said.
He said plans to do more with the castle also are on hold, for the same reason that the distillery is paused.
“We’ve had to pour all of our resources into supporting the brand, which at the end of the day the brand is what pays the big bills,” Henderson said.
Plans for Versailles distillery
He’d originally thought to put a distillery on site, but quickly realized that wasn’t a realistic option. It would change the atmosphere of the venue to put in an industrial operation, he said. That wasn’t something the neighbors on picturesque, rural Pisgah Pike, which is home to multimillion-dollar Thoroughbred farms, were going to embrace.
He said they were able to purchase acreage nearby from the county and planned to put in a $95 million distillery to support the growing True Story bourbon and rye whiskey brand, but then the financial picture shifted.
“Once we saw the direction the industry was turning, we paused production on the distillery in Versailles. There’s no reasonable person in the world who would have wanted to invest the amount of money we were looking to invest in that property, considering where we are right now,” he said.
Having built Angel’s Envy, now a billion-dollar brand, from his basement to a brand that sold for a reported $150 million to Bacardi, Henderson knew he had a road map for success, but it will have to wait.
Downturn in whiskey industry
A downturn in the price of whiskey barrels has been a big factor for many other struggling start-up distillers, Henderson said.
Like other brands that source bourbon produced by other distillers, Henderson’s True Story had invested significantly in barrels to be blended into products, he said.
“I grabbed as much whiskey as I could get my hands on,” he said.
He has sourced from many different distilleries and declined to say which ones he is using currently.
“To me, the smartest thing we could do was to secure as much inventory as we could,” he said. “The same positive thing that we did, at the end of the day is coming back (to) impact us, and others. We financed that whiskey. And there’s interest, there’s insurance, there’s storage due on all of these barrels. ... And we didn’t see an end in sight as far as the price going up.”
As long as the inventory was appreciating, it was a resource that could be borrowed against safely.
“Those barrels are collateral. When the value of those barrels drops by 70%, then (the) bank’s looking at you, like, ‘ok, look at your collateral base. You guys need to pony up a million dollars to bring your collateral base up,’” Henderson said.
That impacted other operations, he said.
Henderson said he’s lucky enough to have lenders and investors who have been willing to work with him to find solutions. But he said he doesn’t know for sure there won’t be more legal battles.
“It’s definitely a juggling act,” he said. “We were only able to raise about 70% of the money we needed to raise, and when the economy started going south in 2024, a lot of that money went on the sidelines.”
He said other factors that impacted his brand included overproduction and too many brands on the shelf in general.
“Three or four years ago you started seeing a glut of whiskeys on the market from non-producers and these whiskeys were $100-$150 a bottle. And the only thing driving that high a price was the fact that they paid $4,000 to $8,000 a barrel for their whiskey and the only way to make the model work was to charge that much,” he said.
Consumers “just aren’t paying that anymore,” he said.
Plans for the castle, True Story
Selling the distillery property remains an option, he said.
“Right now we’re just focused on the castle and True Story, that’s where all of our energy is focused right now,” he said.
“We have a sound brand, the core business is strong, but we have to get over this other stuff.”
True Story’s parent, Saga Spirits Group, also includes other brands. There’s a Kentucky Castle Bourbon, which sells well in the gift shop, he said, and Brothers of the Leaf, which is at a slightly higher price point. The company also imports the tequila brand Doce Casas, which Henderson said helps to balance the portfolio.
Henderson said he is focusing on building the brand by getting out on the road every weekend and selling his whiskey, which is now in about 20 states and distributed by Southern Glazers.
“You can sell your way out of a lot of problems,” Henderson said.
