Is the World Really Running Out of Bourbon-Whiskey?

By Mai Bantog

With the news of an impending bourbon and whiskey shortage to happen in the next few years, it has been reported that bourbon enthusiasts have resorted to hoarding large stockpiles of their favorite drink inside their basements in order to protect themselves from the expected dearth.

They might have good reason to do so, of course, as domestic sales of bourbon from Kentucky alone, home to 95 percent of the world’s bourbon production, have increased by 36 percent in the last five years. The US Distilled Spirits Council also noted a rise in exports by 56 percent from 2010. Though bourbon suppliers have so far been able to keep up with demand, fears of scarcity continue to persist because of bourbon’s required years of aging—at least four years for regular bourbons, longer for premium ones.

The demand from the international market is also driving the prices up for this whiskey variant that was once dubbed as a ‘Southern gentleman’s drink.’ According to The Guardian, Maker’s Mark has considered watering down its bourbon in 2013 to meet rising demand, though the management eventually changed their minds. Even industry experts from Tennessee remarked that bourbon sales were outpacing production by two to one. Based on these facts alone, the feared bourbon shortage seems, from the outside, to be imminent and inevitable.

Bourbon producers have a reason for monitoring production closely. In the 1970s, the industry ramped up production, only to have demand suddenly drop and leave unsellable bottles of bourbon in their warehouses. It took decades for them to recover, so that when sales started to pick up at the turn of the millennium, bourbon and whiskey makers have learned their lessons.

In spite of the caution bourbon makers are exercising, many craft distilleries are entering the market to sell artisanal liquors, helping curb demand in the spirits industry. A prime example is Portland-based Eastside Distilling, Inc. (OTCQB: ESDI), which recently went public and produces two award-winning bourbons called Burnside Bourbon and Burnside Oregon Oaked Bourbon. Eastside’s 96-proof Burnside Bourbon won a gold medal in the MicroLiquor Spirit Awards. The company takes their award-winning Burnside Bourbon and continues the aging process for another 60 days in a brand new 59-gallon heavy-charred Oregon oak barrel, adding new and subtle flavors to an already great-tasting bourbon.

Both large and small distilleries are also investing in various measures to expand production and meet growing bourbon and whiskey demands. In August 2014, spirit giant Diageo increased its stake in the bourbon sector by making its Bulleit bourbon and rye whiskeys at a new Kentucky distillery slated to start production in late 2016. Expansions have also occurred at Jim Beam, Wild Turkey, Evan Williams, Maker’s Mark Woodford Reserve, and Buffalo Trace.

Eastside Distilling is also planning to expand its operations, moving to a new 41,000-square foot state-of-the-art facility in the Distillery Row area of Portland, Oregon. The modernized location is planned to have 27,000 square feet of operating space to meet growing demand. “This new distillery and tasting room will reflect our passion for creating premium, master crafted spirits,” stated Steven Earles, CEO of Eastside Distilling. “It will provide the additional capacity needed for continued growth, as well as deliver favorable economies of scale as we expand.”

While whiskeys that take more than 20 years to age, like Pappy Van Winkle 23 Year Old, might disappear from the market at what might be expected to be exorbitant prices, this shortage may be speculative and will likely not affect the mid-range bourbon suppliers, as they ramp up production and invent new ways to improve the flavor profiles of younger bourbon.