Bourbon Industry

Brown-Forman plans $36 million expansion at Woodford Reserve

Freshly filled barrels of Woodford Reserve were rolled along the barrel rail to be placed in warehouses at the distillery near Versailles. The warehouse was built circa 1890-1892.
Freshly filled barrels of Woodford Reserve were rolled along the barrel rail to be placed in warehouses at the distillery near Versailles. The warehouse was built circa 1890-1892. Herald-Leader

Brown-Forman will double production capacity at its Woodford Reserve Distillery in Versailles.

The Kentucky Economic Development Finance Authority board gave preliminary approval Thursday for $3 million in tax incentives for the $36.25 million project.

The Louisville-based distiller will add three more copper pot stills as needed (in addition to the three it already uses) and double its bottling line. Both will go in existing historic buildings. Also coming are three new barrel warehouses that can hold 55,000 barrels each.

The three-year construction is scheduled to begin in the fall; once all is completed the number of bourbon barrels stored there will skyrocket to 165,000 from about 8,000.

"As a 142-year-old Kentucky company, Brown-Forman is proud to expand the Woodford Reserve Distillery, allowing us to meet the growing global demand for Woodford Reserve and continue to invest in our community," said Chris Morris, master distiller at Woodford Reserve. "The world's growing taste for premium North American whiskey is driving record exports of these U.S. spirits. Woodford Reserve experienced a record volume of nearly 250,000 nine-liter cases and grew net sales by 28 percent globally in fiscal 2013. We believe strong consumer interest in bourbon will continue and we're expanding our production capacity in an effort to meet this demand."

Woodford Reserve will continue to be batched, or blended, with bourbon produced at Brown-Forman's column still in Shively, outside Louisville, except for the Master Collection, which is all produced on its pot stills in Versailles.

The announcement is the latest in Kentucky's recent bourbon boom: Large and small distilleries around the state have announced more than $300 million in investments in recent years, including expanded distilling capacity, new warehouses to hold more than 1 million new barrels a year, and visitor centers to capitalize on burgeoning fan interest in all things bourbon.

Kentucky produces about 95 percent of all bourbon. More than 8,600 jobs are connected to the distilling industry, with a payroll of $413 million, according to a 2012 University of Louisville study.

The Brown-Forman expansion will add about 15 jobs, with an average hourly wage, including employee benefits, of $22. The distillery currently employs about 29 people, according to KEDFA.

"We're proud of Brown-Forman's rich heritage at the Woodford Reserve Distillery, which is an integral part of Kentucky's world-famous bourbon industry," Gov. Steve Beshear said in a statement. "This expansion, including 15 new jobs and more than $35 million in investment, will help grow sales and exports for a Kentucky product that is increasingly in demand across the globe."

In addition to Woodford Reserve, Brown-Forman Corp. produces Jack Daniel's Tennessee Whiskey, Southern Comfort liqueur, Finlandia vodka, Herradura tequila and Early Times and Old Forester bourbons. The company was founded in 1870 by George Garvin Brown in Louisville. Today, the company employs nearly 4,000 people worldwide.

"We are very excited Brown-Forman decided to expand its Woodford Reserve operations in our community," Versailles Mayor Fred Siegelman said in a statement. "The beauty of this distillery, along with its rich history, continues to attract many tourists to Kentucky and Versailles."

Kentucky lawmakers hailed the expansion in a news release from the state.

"Woodford Reserve's expansion in Versailles, adding 15 additional jobs, is great news," said state Sen. Julian M. Carroll, D-Frankfort. "The company's more than $35 million investment will allow Versailles and Woodford County to keep reaping the rewards of good jobs, as well as to continue to stimulate the economic growth and development of our area."

Woodford County Judge-Executive John Coyle said: "This expansion not only brings new jobs to our community, but also increases the tax base, which allows us to better serve our citizens."

Earlier this month, the company announced in its year-end earnings call that it anticipates spending $130 million to $150 million in 2014 and 2015 on continued expansions, mostly at the Jack Daniel's distillery in Lynchburg, Tenn.

Included in the capital expenditures will be construction of new bourbon rickhouses in Woodford County.

On June 1, Brown-Forman closed on the $1.1 million purchase of 48 acres next to the Woodford Reserve distillery on McCracken Pike and filed a conditional use permit request for plans to build as many as five maturation warehouses over the next few years.

KEDFA preliminarily approved tax incentives of as much as $2.5 million through the Kentucky Business Investment program, a performance-based incentive that allows a company to keep a portion of its investment over the term of the agreement through corporate income tax credits and wage assessments by meeting job and investment targets.

Brown-Forman also received preliminary approval for tax benefits of as much as $500,000 through the Kentucky Enterprise Initiative Act, which allows approved companies to recoup Kentucky sales and use tax on construction costs, building fixtures, equipment used in research and development and electronic processing equipment.

Related stories from Lexington Herald Leader