The number of bourbon barrels in Kentucky reached a record 11.4 million earlier this year, according to the Kentucky Distillers’ Association (KDA), a non-profit trade association.
This comes as the state’s distilling industry marked its fourth consecutive year of filling more than two million barrels.
Including other aging spirits, the state’s total inventory is now almost 12 million barrels.
Kentucky bourbon has seen tremendous growth since the turn of the century. Production skyrocketed 475% since 1999, according to KDA research. The state’s aging bourbon inventory has more than tripled during that time, while the tax-assessed value of all barrels is now $5.2 billion, a $780 million increase over 2021.
The new production numbers are based on inventories reported as of Jan. 1, 2022, submitted to the Kentucky Department of Revenue for tax purposes. The numbers include all distilling companies in Kentucky:
- Total barrels of bourbon: 11,406,135
- Number of bourbon barrels filled in 2021: 2,619,633
- Total inventory including bourbon and other spirits: 11,982,965
- Assessed value on all barrels for tax purposes: $5,207,221,744
The Bluegrass State continues to benefit from this brown spirits boom. The movement now pours $9 billion each year into the Kentucky economy, sustains more than 22,500 jobs with an annual payroll topping $1.2 billion a year and draws millions of tourists from around the world to Kentucky Bourbon Trail experiences.
However, the number of Kentucky distilleries has not matched this growth. Since the beginning of the year, Kentucky has fallen to 12th in the country in the number of distilling operations, according to federal Tax & Trade Bureau (TTB) statistics. There are now more than 2,300 distilleries in all 50 states. Kentucky contains fewer than 100.
In the last year, Kentucky ranked 29th in the country in the rate of adding new distilleries.
Kentucky’s share of distilleries nationwide has plummeted from a high of 24% to now just 6%, according to the KDA. Kentucky’s percentage of distilling jobs has dropped from 43% down to only 30%, even though the state makes 95% of the world’s bourbon.
Representatives for the state’s industry point to Kentucky taxes as holding back further growth. For filling those two million barrels, distilleries paid $40 million in discriminatory barrel taxes, the highest amount in history. The tax-assessed value of all barrels in the state also hit an all-time high this year of $5.2 billion.
“We’re thrilled that our homegrown and historic industry continues to flourish, but these numbers could have been much higher if Kentucky didn’t have a major barrier to entry for new distilleries in the form of this barrel tax,” says Eric Gregory, president of the KDA. “We are only asking to be treated like every other manufacturer in Kentucky — and possibly the world — whose goods are not taxed during the production process. Barrel taxes hamper growth, punish success and jeopardize the state’s ability to attract new distillers in the birthplace of bourbon.”
“It’s time for solutions. We must protect our distilling dominance. The future is in our hands,” he adds. “It’s critical that distillers, community partners and elected officials work together to attract more distillers and investment to the Commonwealth, because there will come a day — hopefully not in our lifetimes — when bourbon is not as popular as it is right now.”
Feature photo by Josh Collesano on Unsplash.
