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Michter’s Firing On All Cylinders, As Demand Outpaces Supply

March 2, 2018

Louisville-based Michter’s Distillery has emerged as a cult favorite in recent years, with the brand’s core US*1 range among some of the Bourbon category’s most sought after labels. Despite steady increases in production, Michter’s ran out of its flagship US*1 Bourbon before the end of 2017, and stocks of its US*1 Kentucky Straight Rye expression also ran dry earlier this year.

“We’ve been in a situation where we’ve had nice growth, and we’ve been planning for more of the same. But even as aggressively as we did plan, we still didn’t project for enough production,” says Michter’s Distillery president Joe Magliocco, adding that the brand has been self sufficient—doing 100% of its own distillation and bottling in-house—since 2015. “Obviously, in the whiskey business you have to plan years ahead, which makes it hard. We’re playing catch-up on our Bourbon bottling.”

In addition to a Bourbon and rye—Michter’s top-selling labels—the core US*1 range ($50 a 750-ml.) comprises American Whiskey and Sour Mash expressions. At the higher end, Michter’s offers limited production whiskies, such as a 10-year Rye and Bourbon ($120-$150). Special editions are also part of the mix, including recent rollouts like a Toasted Barrel Finish Rye, which retails at $75, and a batch of 25-year-old Bourbon—released in November—that soon resurfaced on the secondary market for well over its suggested retail price of $800. The distillery likewise produces a pair of satellite brands—Shenk’s Kentucky Sour Mash Whiskey ($45) and Bomberger’s Kentucky Straight Bourbon ($55).

Michter’s is in the process of building a second distillery, this one located in downtown Louisville. Slated to open in the second half of this year, the new facility is located in the historic Fort Nelson building on Eighth and Main Street in Louisville, and will feature two copper stills as well as offer tours and tastings. It will join the brand’s current 78,000-square-foot production center, which is based in Louisville’s Shively neighborhood and has a capacity of 1 million proof gallons annually.

Michter’s is also expanding through its real estate affiliate Kentucky Springwater Realty, which closed on 145 acres of land in Springfield, Kentucky in December. The distiller has partnered with local farmers and will use the acreage to grow grain for use in distillation, as well as for barrel maturation facilities. According to Magliocco, the brand will look to release new products showcasing the estate-grown grains.

With M&A activity rampant within the craft whiskey sector, it stands to reason that Michter’s would make for an attractive takeover target. Magliocco, however, dismisses the idea of a potential buyout. “We’re family-owned,” he says. “We have a talented next generation working in the business, so a sale is not something we’re thinking about.”—Christina Jelski

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