Kentucky Ag Connection - Study: Bourbon Industry Doubles Economic Impact in 10 Years

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Study: Bourbon Industry Doubles Economic Impact in 10 Years
Kentucky Ag Connection - 02/15/2019

Ten years ago, leaders of Kentucky's signature bourbon and distilled spirits industry poured whiskey on the Capitol steps to protest the latest tax hike on spirits.

This past week, tthey poured bourbon inside the Capitol to toast the industry's epic turnaround.

Bourbon barons joined elected officials and key business executives to unveil a new study that shows the homegrown industry now provides twice as many jobs, payroll, capital investment and tax revenue than a decade ago.

Kentucky bourbon now pours $8.6 billion each year into the state's economy, generates more than 20,100 well-paying jobs with an annual payroll topping $1 billion, provides $235 million in local and state tax revenue, and is in the middle of a $2.3 billion building boom.

Also, the number of distilleries in Kentucky has more than tripled to 68 in that time; the number of counties with a distillery has quadrupled to 32; and there are now nearly two barrels of spirits for every person in the Commonwealth -- valued at $3 billion, three times more than 2009.

Eric Gregory, president of the Kentucky Distillers' Association, applauded state and legislative leaders for their work to modernize archaic alcohol laws, reform outdated tourism restrictions and tackle the discriminatory tax that only Kentucky levies on aging whiskey barrels.

"What a monumental success story," Gregory said. "By working together to remove unnecessary and artificial barriers to business, we have transformed Kentucky bourbon from an industry once viewed as 'sin' to one that truly defines signature impact, expansion and global image.

"This is the epitome of how a public-private partnership works."

Gregory said the industry continues to work with state Commissioner of Agriculture Ryan Quarles to increase usage of Kentucky corn. More than half of all distiller's grain purchases are made from Kentucky farm families, the study showed.

"As agriculture commissioner, I have the great benefit of being an ambassador for bourbon, which could go by its other name: distilled corn," Quarles said. "I applaud the KDA members for purchasing more than 9 million bushels of corn and other grains from our farmers.

"In an era of low commodity prices, Kentucky farm families appreciate their willingness to source local."

Gov. Matt Bevin said distilleries -- from craft startups to multi-national players -- create jobs and investment throughout the state. The industry also draws related businesses, such as cooperages, marketing, retailers and restaurants while spurring tourism and economic vibrancy statewide.

"The Commonwealth has a long, proud history of distilling, and the economic impact made by our Bourbon and spirits producers is recognized at national and international levels." Gov. Bevin said.

"As a signature industry, Kentucky embraces with open arms any business looking to build on the growing momentum of the Bourbon industry."

Senate President Robert Stivers, R-Manchester, who boldly led the charge in 2014 against barrel taxes, said, "The tremendous economic expansion of Bourbon is testament to what a true signature industry means for this state.

"Every time we pass legislation that takes the regulatory shackles off this legendary industry, our Commonwealth sees record investment, jobs and growth. That's a return on investment that makes for sound public policy."

House Speaker David Osborne, R-Prospect, said, "The success of Kentucky Bourbon is a perfect example of how lawmakers can facilitate job growth and capital investment. We simply got government out of the way and let the industry thrive under less regulation and red tape."

Speaker Osborne and Rep. Chad McCoy, R-Bardstown, were instrumental in the last two major pieces of legislation to benefit Bourbon tourism: House Bill 100, which authorized vintage spirits sales in 2017, and HB 400 in 2018 that gives visitors the ability to ship bottles home.

Rick Robinson, chairman of the KDA's Board of Directors and vice president of Product Supply Chain at Campari America, also highlighted Senate Bill 11 from 2016 and thanked its sponsor, Sen. John Schickel, R-Union.

"The impact of Senate Bill 11 has been enormous by giving distilleries the simple ability to sell cocktails," Robinson said. "It has spurred tens of millions in investment and allowed our distilleries to offer a more robust, immersive tourism experience."

Bill Samuels Jr., one of the Bourbon barons who poured whiskey on the Capitol steps a decade ago, credits the Commonwealth for partnering with the Bourbon industry during this time of tremendous growth. Samuels is Chairman Emeritus of Maker's Mark Distillery.

"Kentucky and its citizens have been the big winners since the General Assembly reversed course and began reducing taxes and eliminating Prohibition-era regulations on the spirits industry," he said. "This new economic impact study proves that conclusively."

Dave Adkisson, president and CEO of the Kentucky Chamber of Commerce, noted how Bourbon's explosive growth helps all Kentuckians.

"It's not just an industry sector that is succeeding, it's additional jobs for Kentucky families, additional income for tens of thousands, and additional tax revenue that will benefit schools and other services that serve all Kentuckians," he said. "This is a win for all of us."

The biennial study was conducted by renowned economists Dr. Paul Coomes and Barry Kornstein, formerly of the University of Louisville, in conjunction with the Kentucky Distillers' Association.

In the study, Dr. Coomes noted that their analysis is based on data collected before retaliatory tariffs on whiskey exports were imposed by the European Union, China, Canada, Mexico and Turkey. Therefore, the impact on Kentucky distilling is not yet detectable in this report.

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