Friday, May 4, 2018

Who Makes America's Whiskey?


Beam-Suntory's Booker Noe Distillery - Boston, KY
In 2014's Bourbon, Strange, I wrote, "the industry is very concentrated, with just eight companies distilling all of America�s whiskey at thirteen distilleries."

When the question was revisited in 2016, it was ten companies and 15 distilleries.

In both cases, the list was limited to distilleries that produce at least 500,000 proof gallons of whiskey per year, about 10,000 barrels. Yes, there are hundreds of smaller distilleries that make whiskey, so it can't be 100 percent, but it is at least 99.

In 2016, the newcomers were Michter's and New Riff. Since then Bardstown Bourbon Company, Lux Row, O. Z. Tyler, Bulleit, Angel's Envy, Willett, Rabbit Hole, and Castle & Key have joined the club. Coming soon are Old Forester and Wilderness Trail. All are in Kentucky.

That makes 18 companies and 25 distilleries.

Those numbers are misleading. All of the new plants are at the small end of the range. Most of them have the ability to produce about one million proof gallons per year. Meanwhile, producers at the top have been expanding on a grand scale.

In fact, the concentration at the top is staggering. Four companies produce 70 percent of the whiskey made in the USA. Brown-Forman, led by Jack Daniel's Tennessee Whiskey, is biggest. Beam-Suntory is second, Sazerac is third, and Heaven Hill is fourth. Nothing about that appears likely to change unless through merger or acquisition.

Sazerac, for example, is in the midst of a 10-year, $1.2 billion expansion project at Buffalo Trace, that will culminate in the addition of a second 84-inch diameter beer still at the Frankfort distillery.

Although several of the new distilleries are already expanding, the number of new projects on that scale seems to have slowed. Although the number of distilleries in the more-than-500,000-proof-gallon range has doubled, the industry remains very concentrated.

The more things change, the more they stay the same.

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