Bourbon Industry

There are now almost 2 barrels of bourbon for every man, woman and child in Kentucky

Barrels of bourbon, such as these aging barrels at Buffalo Trace in Frankfort, hit a tax-assessed value of $3 billion in Kentucky in 2017. The industry paid $23 million in taxes. Another 1.7 million barrels were filled last year.
Barrels of bourbon, such as these aging barrels at Buffalo Trace in Frankfort, hit a tax-assessed value of $3 billion in Kentucky in 2017. The industry paid $23 million in taxes. Another 1.7 million barrels were filled last year. teblen@herald-leader.com

Kentucky’s distilleries have been busy: There are now 8.1 million barrels aging in warehouses across the state, nearly two for every Kentuckian. That’s the most since 1971.

“More than a billion dollars in investment is scheduled to come online in the next few years, so we hope to hit that mark pretty quickly,” said Eric Gregory, president of the Kentucky Distillers’ Association.

Almost all of it — 7.5 million barrels — is bourbon. A smattering is brandy and other spirits, according to the KDA, which releases the figures annually based on data from the Kentucky Department of Revenue as of Jan. 1, 2018, before retaliatory tariffs were put in place this summer by several countries.

“We are still working to understand the actual impact of those tariffs and remain hopeful that it’s a short-term issue that will be resolved soon,” Gregory said.

According to the state, 1,715,541 barrels were filled in 2017, an increase of 219,000 barrels over 2016.

The tax-assessed value of the barrels hit a record high of $3 billion, up $456 million over the previous year, according to the state.

Besides the value of the bourbon to Kentucky’s dozens of distilleries, the barrels are worth millions annually to the state. This year, the distilleries paid $23 million in barrel taxes, which support local schools, public safety and other community needs, according to the KDA.

Distilleries that are expanding — which is basically all of them — also can apply for tax credits from these payments.

However, KDA president Eric Gregory said that bourbon’s growth has been so explosive that the barrel taxes are outpacing the amount of corporate income tax credit that’s allowed. The KDA is lobbying state lawmakers to make the tax credit refundable or transferable, arguing that the tax structure “penalizes increased production and capital investment,” Gregory said.

The distilling industry is an $8.5 billion economic and tourism engine, according to the KDA, that generates 17,500 jobs with $800 million in payroll. The KDA’s Kentucky Bourbon Trail and Kentucky Bourbon Trail Craft Trail draw hundreds of thousands of visitors who made 1.2 million stops at participating distilleries last year, according to the KDA.

A video made with high-tech imaging cameras captures work on the ruins of Col. E. H. Taylor's first distilleries that made Old Fire Copper whiskey more than 130 years ago. The "bourbon Pompeii" has since been opened by Buffalo Trace Distillery, a

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