Is the United States Poised to Run Out of Bourbon?

[Photo: Shutterstock]

by Jake Emen

Examining both sides of the bourbon shortage debate.

The hot debate in the world of bourbon right now is whether or not there is a “bourbon shortage” threatening to cut off supply from thirsty, whiskey-loving consumers across the United States. Is it time to stockpile that favorite brand before it’s too late—if it’s not already too late—or is the bourbon shortage just another case of media-inspired frenzy?

Everyone has their own argument to make. On Whisky Advocate’s online blog, for instance, the publication recently presented dueling arguments between two whiskey writers, with one reducing much of the hoopla surrounding the bourbon shortage to “clickbait,” while the other countered that the bourbon shortage is real, and is already evident with the disappearance or unavailability of certain brands.

Why There is a Bourbon Shortage

The demand for bourbon is overwhelming. In the past decade, there has been a nearly 40 percent growth in sales of bourbon and Tennessee whiskey in the United States, according to the Distilled Spirits Council of the United States (DISCUS).

“We’re growing so dramatically that we’ve outgrown any reasonable expectations,” says Jim Rutledge, Master Distiller of Four Roses, one of the iconic, major Kentucky bourbon distilleries. “It’s just out of sight.”

The problem is that distillers cannot simply snap their fingers and churn out more whiskey. Getting your favorite bourbon on the shelf is a lengthy process, with years spent patiently waiting for that whiskey to mature in the barrel. What you’re drinking right now, sitting at home and reading this article, may have been placed in a new charred American oak barrel five years ago, a decade prior, or even longer.

New stills must be produced to make more bourbon, new warehouses are required to store more barrels, which themselves have been battling scarcity issues due both to demand and inclement weather, and then that bourbon must sit, and sit, and sit. “It will be several years before we have any extra inventory over and above demand,” explains Rutledge.

Meanwhile, an IWSR survey commission by Vinexpo projects that global bourbon sales are predicted to increase nearly 20 percent more in the next five years. Not everyone has faith in those numbers though, and plans based upon future growth have come back to hurt distillers in the past.

“Long-range findings in this business is really long-range guessing, and I wouldn’t even call it educated guessing,” explains Rutledge. “It’s very difficult to determine consumer trends, and looking back at previous years and what’s been happening, that obviously didn’t work.”

The only thing worse than not having enough whiskey to sell to people is having vast rickhouses lined with whiskey-filled barrels that nobody wants to buy. It happened in the 1970s as many American consumers shifted away from whiskey, instead turning toward vodka and rum. This led to the demise and consolidation of brands, and it’s a hard-learned lesson which remains in the back of everyone’s mind even in today’s bullish bourbon market.

Meanwhile, a trip to the local liquor store will reveal a different bourbon selection than perhaps expected. “Bad news, there is absolutely a bourbon shortage,” says Brett Pontoni, spirits buyer at Binny’s Beverage Depot, a Chicago-based chain and one of the more prominent online retailers.“The demand is far outstripping existing supplies,” concurs Joe Riley, the Fine Spirits Manager of Ace Beverage, Washington, D.C.’s oldest wine and liquor store.

The 2,000 liter hybrid pot still at One Eight Distilling in Washington, D.C. [Photo: Jake Emen]

“Many distillers have taken age-statements off of their products,” he says, referring to NAS, or No Age Statement whiskey. “The benefit of not listing an age,” explains Pontoni, is that “if they choose they can feed younger whiskey into the batching process.” NAS whiskey has risen in prominence as certain distillers look to conceal the fact that they’re blending whiskey which has been aged for shorter periods of time. While NAS whiskey isn’t new, and it’s not necessarily bad, it is a more common practice today than ever before.

“Other [brands], such as Jim Beam, have allowed short-term shortages of product,” says Riley. “Namely on Maker’s Mark and Knob Creek, and taken actions like cutting back production on 1.75 liter bottles to stretch the supply of 750ml and 1 liter bottles.”

In February 2013, Maker’s Mark also infamously tried to lower its proof in an attempt to increase supply, and had to change course after public outcry. “Maker’s Mark was looking at their supplies and saying we don’t have enough to meet the needs of sales,” says Mike Raymond, co-owner of Reserve 101, a prominent whiskey bar in Houston, Texas. “Everyone’s scared of not having product on the shelf. The fear is that your consumer will find a new favorite, and there’s some truth to that fear.”

While consumers don’t expect to easily find a bottle of Pappy Van Winkle 20 or 23 year on the shelves, other brands have been reduced to highly limited allocations as well, fueling a more surprising and alarming bourbon buying environment.

That’s why, in Riley’s view, there absolutely is a bourbon shortage. He’s ready to tick off a lengthy list of brands which are already allocated or difficult to find, including the Buffalo Trace Antique Collection labels, Heaven Hill’s Parker’s Heritage, Elijah Craig 12 year, Four Roses Limited Edition and Single Barrel, Old Forester Birthday Bourbon, and the Kentucky Bourbon Distillers product family, including Willett, Rowan’s Creek, and Noah’s Mill. That’s a lot of bourbon a consumer might want to buy, but won’t be able to due to supply shortages.

Why There’s Not a Bourbon Shortage

“The word ‘shortage’ implies a 1970s gas lines scenario, and nothing like that is happening in bourbon,” says Richard Thomas, editor of The Whiskey Reviewer, and a frequent critic of what he believes is the “yellow journalism” of the bourbon shortage storyline. “They use a big, scary headline, but underneath it is a thin, poorly supported article that doesn’t prove its case.”

With business booming, expansions are taking place, including at some of the hardest hit brands already mentioned. Sazerac, the parent company of Buffalo Trace, is expanding all three of their distilleries, while Maker’s Mark is building a new still and new warehouses. Diageo is in the midst of constructing a new distillery, Bulleit Distilling Co., where they will distill Bulleit Bourbon and Bulleit Rye.

Expansions are underway or have already been completed at Wild Turkey, Heaven Hill, Four Roses, Beam Suntory, and others. Collectively, hundreds of millions of dollars have been invested into stills, warehouses, and distribution, along with fancy new visitor centers to continue stroking interest and demand.

“Most distillers either had ample extra capacity or started expanding early enough to get on top of things,” states Thomas. “Kentucky currently has more bourbon aging in its rickhouses than ever before. There is no reason to think the industry as a whole can’t cope with sustained, moderate growth.”

Bourbon barrels at One Eight Distilling in Washington, D.C. [Photo: Jake Emen]

It’s easy to see that from a retailer’s perspective though, presented from Pontoni and Riley above, there is indeed a shortage. Customers walk into a store, ask for a product, and can’t get their hands on it. Yet, even Pontoni admits the counter to the “bad news” he presented. “Good news is we’re starting to see light,” he says, citing those same expansions. “The easing of the shortage will likely work in a couple of phases, as aged whiskey comes to market, gaps in the US will be satisfied, then export will open up.”

Meanwhile, at a bar such as Manhattan’s The Flatiron Room, a whiskey list more than 1,000 bottles strong continues to grow, and all must be obtainable. “I don’t think there’s a bourbon shortage,” says owner Tommie Tardie. “I think we’re going to be fine. It’s interesting, because when you own an on-premise business, you know there’s other stuff going on with allocations and quantity distributions. But there’s a lot of whiskey out there. They keep making it, and they keep aging it.”

As the major brands and distilleries are all expanding, the number of craft producers has also skyrocketed, adding more and more names to the list of those who are doing the making and the aging.

Many begin life by sourcing bourbon from mass producers, namely MGP Ingredients in Lawrenceburg, Indiana, a huge factory which makes enormous amounts of whiskey and sells it privately to companies who bottle it and sell it under their own label. Regardless, that’s more bourbon you can drink today and more bourbon you can be excited to try in the future.

BottleSociety.com currently showcases 83 distillers producing 123 different bourbons in the United States. Perhaps things aren’t so scarce after all. While Kentucky will always be bourbon’s home, today, there’s bourbon being made from Brooklyn, New York to Breckenridge, Colorado, and across the country from Michigan to Washington, and Illinois to Texas. Most of it also happens to be quite good.

The consumer has a vastly wider selection of bourbons to choose from right now … For every door that has been temporarily closed, another 20 have opened.

The consumer has a vastly wider selection of bourbons to choose from right now, more than he or she would have had even five years ago. There’s also a greater range of styles, with new brands, different mash bills, and unique cask finishes. For every door that has been temporarily closed, another 20 have opened.

The Bottom of the Barrel

People on both sides of the bourbon shortage debate actually agree that there’s more to it than meets the surface with all of their big, bold headlines and loud declarations. The key point is that a mass “shortage” is not the same as the limited availability of a particular brand. “There is a bourbon shortage, but the way it’s being depicted isn’t true,” says Raymond.

“To the extent that there is a shortage, it is narrowly focused to a handful of labels,” says Thomas. “Supply is more or less fine everywhere else.”

So while some may have to scramble to source favorite bottles, whether that’s Willett, W.L. Weller, Elijah Craig, or another specific brand at another specific time, a handful of bourbon producers hitting allocation does not a shortage make. Rest easy bourbon drinkers, there’s (mostly) enough to go around, and there’s more on the way.