Craft Bourbon Brewers Ride The Boom, Prepare For A Bust

Craft bourbon distillers have been growing for the last several years as drinkers rediscover heritage and new styles of brown liquor drinks. Some might call it a boom. But many distillers have seen the boom and bust cycle of liquor popularity before, and are exploring ways to hedge their bets against another bust.

Andrew Buchanan walks through Hartfield & Co. Distillery, a small, relatively new operation located in a former seed storage warehouse in Paris, Ky.

"These are the two small stills I started with," he says, gesturing across the concrete slab floor. "These are 26-gallons a piece."

For reference, most of the big pot stills you see on distillery tours hold 500 to 1,000 gallons. Buchanan, Hartfield's founder, has one of those — but it hasn't been used yet.

"It got delivered in January, and literally we're days away from running it right now," Buchanan says. "This one will run kinda day-in and day-out with bourbon."

And since the distillery opened in 2014, bourbon has been Hartfield & Co.'s signature spirit.

"So we are the first distillery actually in Bourbon County since 1919," he says. "It's crazy that no one was actually making bourbon here" for so long.

Buchanan got into bourbon at a good time since the industry is in the midst of what spirits professionals are calling a "bourbon boom."

"We're definitely on an upward trajectory," says Maggie Kimberl, a whiskey writer and historian. "There are a lot of people who have opinions about whether we're at the bottom of the upward trajectory, the middle, the top — but most people feel like we're somewhere in the middle."

But with booms come busts, and the bourbon industry is historically cyclical.

The first big bust was during Prohibition. "There was a city called Tyrone, Ky., which is near Wild Turkey, that was basically wiped off the map by Prohibition," Kimberl says. "It was a very small town that had two or three, maybe four bourbon distilleries in it and when Prohibition came about, that town ceased to exist."

Then American whiskey boomed again between 1945 and about 1970.

After that, "people were starting to turn to wine, beer and clear spirits," Kimberl says. "Bourbon was not especially popular at that time."

Then in about 2000, bourbon distilleries started seeing renewed interest in their products. In 2016, bourbon and American whiskey sales topped $3 billion.

"But there are always people saying this can't last, it's going to end soon, the bubble's going to burst," Kimberl says.

That's especially the case lately, as national media has started turning its focus to other spirits. For the past few years, outlets — ranging from Forbes to — have been predicting the "rise of rum."

Kimberl says this alone isn't an indicator that people are going to put down their bourbon bottles.

"It does bear out a little bit in consumer spending, I think," she says. "But it's not something where somebody is going to say bourbon is out and rum is in and the bourbon industry's bottom's going to fall out."

But, Buchanan points out that many of the big beverage conglomerates are set up to weather changes in consumer tastes.

"They all own a rum, or several rums; they all own bourbon, or several bourbons — Scotch, tequila, vodkas, all of these things," he says. So they're not worried about the next thing. "They have the next thing."

He says the small distillers can take a lesson from this.

And that's where those two small stills — the 26-gallon ones — at Hartfield & Co. come in.

The distillery will use those to make a few different spirits — rum, an agave-based spirit, and a single-malt whiskey. This isn't unusual for other craft distillers, especially since bourbon has a multi-year aging process.

Castle & Key, another new craft distillery in Versailles, Ky,, is in the midst of developing a gin and vodka while their bourbon is barreled.

But, Buchanan acknowledges that a big bulk of his company's profit will always be bourbon; they are based in Bourbon County, Ky., after all. Buying rum from there is a harder sell. So Hartfield & Co. needs an additional safety net in the event of a bust.

And that may come in the form of exports.

"In the 80s and the early 90s, we saw a lot of consumership of bourbon in Japan," says Kimberl. "We're starting to see Australia come on pretty strong. We're starting to see India come on pretty strong."

Bourbon consumption in Europe and Great Britain are up too, she says.

"In the worldwide market, Scotch has always been the 800-pound gorilla, and now bourbon is starting to take off in some places," Kimberl says. "So there's been this feeling historically that even if the bust happens in America, there is going to be a market outside of America for bourbon."

However, the recent threats over trade wars with China are throwing a little more uncertainty on the picture.

Buchanan says he's been working with the Liquor Control Board of Ontario, and just submitted a proposal to a buying group for Sweden, Norway and Finland. But for now, he's going to enjoy his special place in the bourbon boom stateside.

"And honestly, any anxiety I feel about the future, it really just makes me want to work even harder on our products," Buchanan says.

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