Monday, October 16, 2017

Heaven Hill Is Now the World's Biggest Bourbon Distillery


Heaven Hill's humble beginning in Bardstown, Kentucky.
As reported today throughout the Louisville media, Heaven Hill's Bernheim is now the World's Biggest Bourbon Distillery. To quote Louisville Business First, "Today, at a press conference held on the premises of the Heaven Hill-owned Bernheim Distillery in West Louisville, representatives from the company, as well as local politicians and media, gathered to celebrate the latest news of the distillery�s $25 million expansion, which the company says will make it the largest single bourbon-producing site in the world."

The slight hedge is necessary because Jack Daniel's in Tennessee is larger, but Jack is not technically bourbon, and Jim Beam is larger if you count everything produced at DSP-KY-230, but that license covers two facilities, ten miles apart.

Hedges aside, this is a remarkable achievement for a family-owned company founded in Bardstown more than 70 years ago by Joe Beam and a group of investors that included Ed Shapira, father of current company president, Max Shapira.

The five Shapira brothers (Ed, David, Mose, George and Gary) were in the dry goods business, running a chain of small department stores called 'The Louisville Store,' although they had no locations in Louisville. The business was started by their father, an immigrant from Eastern Europe. The stores did well during the Depression, selling everyday necessities at bargain prices. That gave them money to invest when Prohibition ended in 1933.

Ed Shapira, who ran the Louisville Store in Bardstown, assumed it would be an arm's length investment, as the other founders were, like Joe Beam, all experienced whiskey men. After the distillery was built and in production, Beam and the others lost money in another venture. They gave Shapira a chance to buy them out. It was either that or close the doors. Ed conferred with his brothers and they agreed to take the plunge. Joe Beam stayed on as Master Distiller, along with his youngest son, Harry.

While Beams made the whiskey, the five brothers ran the business. Ed's son, Max, came on board as did David's son, Harry. They had a unique business model, in which distributors bought the whiskey when it went into the barrel, instead of when it came out. The distributors got a deal and so did Heaven Hill, because that meant less capital was tied up in aging inventory, which allowed them to grow. As with their retail business, value was the secret to their success. The objective was to make the best whiskey their customers could afford.

At first, it was a commodity business. Their first brand was a two-year-old straight called Bourbon Falls. It did okay. Old Heaven Hill Bottled in Bond, launched a few years later, did much better. Soon it was the best-selling bourbon in Kentucky.

Other bourbon brands followed, and Evan Williams Bourbon became the company's flagship. They built the brand by steadily promoting the claim that it was older and higher proof whiskey, for less money, than the leading brands. Today, Evan Williams is third in sales after Jack Daniel's and Jim Beam, and Heaven Hill is a major, international, diversified distilled spirits producer. Its actual size is unknown because the company is still private, owned by the descendants of the five Shapira brothers.

There is no 'Heaven Hill' in Bardstown. William Heavenhill was the name of the farmer who owned the land before the distillery was built. Although its distillery is now in Louisville, the company is still based in Bardstown. Its Bourbon Heritage Center there is one of the best distillery visitor centers in the world.

Heaven Hill is a remarkable and quintessentially American success story.

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