Bourbon business booms
Spirits are high among U.S. distillers –- they're expanding production to meet surging demand overseas and among a new generation of American drinkers.
By The Associated Press
To Wild Turkey master distiller Jimmy Russell, the piercing sounds of a warehouse rising in the Kentucky countryside are the sounds of prosperity.
"As long as you see work going on -- and the construction, and increasing your size -- you know your business is doing well," said Russell, who started working for the bourbon maker in 1954.
Distillers are expanding their bourbon production and storage and dispatching sales teams around the world, bullish for a traditionally Southern beverage gaining popularity worldwide. Surging exports, the weak U.S. dollar and rising popularity among younger Americans are driving the boom.
"It's an exciting time to be in the bourbon business," said Max L. Shapira, president of Heaven Hill Distilleries, a family-owned liquor company based in Bardstown, Ky.
"Most of the time that I've been in the business -- up until about the last 10 years -- everybody was trying to consign the bourbon category to that great liquor store in the sky."
Heaven Hill recently spent nearly $4 million boosting capacity 50% at its distillery in Louisville, where it makes Evan Williams and Elijah Craig bourbons.
Wild Turkey, part of beverage company Pernod Ricard of France, sold more than 1 million cases worldwide last year for the first time. Its $36 million expansion near Lawrenceburg will nearly double its production. The distillery at Jack Daniels Tennessee Whiskey in Lynchburg, Tenn., is about to undergo a nearly $6 million addition to install nine more fermenters.
Maker's Mark is preparing for a second expansion. And Jim Beam, the world's biggest bourbon maker, is in the midst of a $70 million expansion in Kentucky. Beam and Maker's are part of Fortune Brands (FO, news, msgs).
International expansion in this quintessentially American segment is more than offsetting the pinch of rising grain and fuel costs. Grain accounts for a fraction of the overall cost of making bourbon, even though it's made from a mix that must be at least 51% corn.
Eric Schmidt, research director at Beverage Information Group, formerly known as Adams Beverage Group, said much of the sales growth has been in higher-priced small-batch and single-barrel products.
"Younger consumers are interested in drinks that were, you might say, their grandfathers' drinks," Shapira said.
Originally Posted by proud gonzo
