Kentucky's Bourbon Boom is Burgeoning at $790 Million

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial Info is tracking $1.36 billion in active capital projects for distilled beverage segment. In recent months, accelerated growth in investment spending for the distilled beverage market has been noted, particularly for bourbon and whiskey.

Not surprisingly, producers in Kentucky have invested the most in new production expansion and barrel aging facilities. Clocking in at $790 million in capital spending, distillers in Kentucky plan to invest more in their facilities than the rest of the U.S. and Canada combined. Even Tennessee comes in a far second (though still very high) at $278 million. These figures do not include maintenance spending. What's more, some of the major producers have indicated they will continue to invest in expansions so long as the current boom continues.

The largest example of this trend is the expansion of the 200-year-old Buffalo Trace bourbon distillery in Frankfort, Kentucky, where the company will invest $150 million to expand barrel-aging warehouse capacity.

By and large, the major whiskey producers such as Brown-Forman (NYSE:BF.A) (Louisville, Kentucky), Beam Suntory, Incorporated (Deerfield, Illinois) and Heaven Hill Distilleries, Incorporated (Bardstown, Kentucky) have enjoyed the highest gains from this new trend. However, there has clearly been a boom among smaller producers as well. There are currently 27 states where the distilling segment is spending, or planning to spend, significant amounts of capital. The median investment level is for these states is about $9 million. Analyzing the existing distilleries in those states that are below the median level of spending, two interesting facts emerge; the age of the median distillery is only 5 years and 84% of them are classified as craft. The top four states in terms of the number of existing distilleries are Ohio at 33.3%, New York at 16.7% and Texas and Arkansas at 11% each. However, the fastest growing states for planned distilleries among states with below-median investment levels are North Carolina (which already enjoys a rich craft brewery sector), Wisconsin, Maine and Illinois. All of these states are potential targets for future spending. This could be a long run signal for a higher presence of craft distillers in the U.S.

However, the industry has had its share of busts. This includes prohibition from 1920 to 1933 as well as the bust in the 1970's, when American imports of whiskey fell so low that the number of Irish distilleries fell from roughly 400 to less than 10. But for the present, the industry segment is enjoying much greater demand.

Industrial Info's database of active capital and maintenance expenditures by the Food & Beverage Industry across North America, and the Sugar Processing Industry and Water Desalination Segment around the globe, has current expenditures of $81.94 billion and more than 6,200 active projects. The North American section, including the U.S., Canada and Mexico, comes out to more than 3,400 active projects that total more than $46 billion.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.