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Bourbon Distillers Pour Investment Into Kentucky Operations

March 4, 2019

As the thirst for American whiskey continues to grow, Bourbon makers are expanding production capabilities and enhancing their tourism facilities to meet consumer demand for experiential learning opportunities. According to a recent report from the Kentucky Distillers Association (KDA), the state’s distillers are in the midst of a $2.3 billion building boom that will continue through the beginning of the next decade.

There were a record 1.4 million visitors to Kentucky Bourbon Trail distilleries last year—up more than threefold from a decade ago, according to the KDA—and the state is working to give consumers even more incentives to visit. Last month, Kentucky state Rep. Matt Koch introduced a bill to give distilleries the ability to sell certain bottlings exclusively in their gift shops. (Currently, distilleries’ “souvenir packages” must also be offered to any Kentucky retail licensee).

Among the significant recent investments in Kentucky, Diageo is allocating $130 million over three years to build a new distillery in Lebanon, Kentucky that will have an initial capacity of about 10 million proof gallons. The facility will include a distillery, dry house, and warehouse, and will have the capability to distill a variety of Diageo Bourbon and American whiskey brands. The site will supplement the Bulleit distillery in Shelbyville, which opened in 2017 on a $115 million investment, and has capacity of around 1 million cases.

Meanwhile, Brown-Forman recently opened the Old Forester Distillery on Louisville, Kentucky’s historic Whiskey Row. The $45-million, 70,000-square-foot facility can produce 100,000 proof gallons annually and has warehouse space for about 900 barrels. It also includes an immersive tourism and tasting experience. Old Forester is offering tours seven days a week, with Bourbon production taking place Tuesday through Saturday. Old Forester also continues to be produced at Brown-Forman’s Shively, Kentucky facility.

Last year, Beam Suntory received approval from the state of Kentucky for tax breaks related to a plan to expand Jim Beam’s distillation and storage capacity. The proposed upgrades and expansions total over $150 million in investments from the company. “We expect to invest more than $1 billion to make Bourbon in Kentucky, including grains, barrels, and capital expenditures, over the next five years,” says Rob Mason, director of whiskey at Beam Suntory.

Heaven Hill, meanwhile, is investing $65 million to bolster its capacity and its visitor experience. The outlay includes a $17 million renovation, expansion, and rebrand of the distillery’s Bourbon Heritage Center. The newly renovated visitor center will focus on Heaven Hill’s history and current portfolio, as well as the founding Shapira family’s legacy. Immersive educational experiences, including one where guests can bottle their own Bourbon, are set to accompany a new rooftop bar and enhanced retail space. In addition to the visitor center expansion, Heaven Hill is investing $47.5 million in barrel warehousing, bottling line and equipment upgrades, and increased holdings of aging Bourbon.

On January 31, Michter’s opened its Fort Nelson Distillery and tourism center. The facility is located on Whiskey Row, across the street from the Louisville Slugger Museum and Factory, and a block down from the Frazier History Museum, which serves as the Kentucky Bourbon Trail Welcome Center. The new site joins Michter’s existing Shively, Kentucky distillery.—Shane English

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