Kentucky Distillers Set New Production Records

At a time when Bourbon inventories are spiking and sales are slowing, it comes as no surprise that Kentucky’s Bourbon distillers set new records for production in 2023. According to a new report from the Kentucky Distillers Association, 3.2 million barrels of whiskey were filled in 2023, while distillers have inventories of maturing whiskey totaling 14.3 million barrels. That represents a 600% increase since the turn of the century and a 200% increase over the last ten years.

The figures are based on data from the Kentucky Department of Revenue, which requires all distillers to submit their inventory numbers on an annual basis. Those numbers are expected to grow in the coming years as more distilleries begin production, leading some to worry about a potential glut of Bourbon on the market. It’s a concern that has many within the industry nervous, including KDA President Eric Gregory.

“We certainly still have a lot of new production coming on line in Kentucky, Gregory said in an interview. “I think the thing that concerns us most right now is a lot of the production that’s been built in the last ten years has been for global growth, and with the return of possible new tariffs and retaliatory tariffs on American whiskey and Kentucky Bourbon, it’s just a disaster waiting to happen.”

The European Union’s tariff on Bourbon is scheduled to return in March unless the incoming Trump Administration and the EU can negotiate an extension of the moratorium on steel and aluminum tariffs, and if it does return, it will be at a 50% level instead of the previous 25% tariff. That tariff, in place from 2018 until 2023, decimated Kentucky Bourbon exports to Europe, the largest export market for Bourbon.

“We were growing exports at a clip of about 150% from 2009 through 2017, and from 2018 when the retaliatory tariffs were enacted, through 2023 when they were delayed, we not only lost that 150 percent growth, we went down 20 percent,” Gregory said.

Gregory also cited the state’s unique barrel inventory tax as another cause for concern. State lawmakers enacted legislation last year to phase out the tax over 20 years, but the increasing barrel inventories are making distillers pay even more in “barrel taxes.”

“We’re kind of looking at a triple threat of the tariffs, the barrel taxes in Kentucky, and the consumer trends,” Gregory said. “It’s no secret that we’ve seen a slowing in sales of not just spirits, but alcohol in general recently, and part of that is we’re just getting back to pre-pandemic levels of consumption and purchasing” he said of the headwinds facing the industry.