Swelling Bourbon Industry Boosts Kentucky Economy

Kentucky’s skyrocketing Bourbon industry shows no signs of slowing down, as the signature spirit increased its economic output by $1 billion in the last two years alone and added another 2,000 distillery-related jobs to its workforce, according to a new study released earlier this week.

Kentucky Bourbon now pours $8.5 billion each year into the state’s economy, generates as many as 17,500 good-paying jobs with an annual payroll topping $800 million, provides $825 million in tax revenue, and is in the middle of a $1.2 billion building boom.

Gov. Matt Bevin unveiled the findings at a press conference today in Frankfort along with top state and business leaders. The biennial study was conducted by the University of Louisville’s Urban Studies Institute in conjunction with the Kentucky Distillers’ Association.

“The powerful growth of Kentucky’s Bourbon industry is a testament to our proud history of innovation, engineering and manufacturing,” Gov. Bevin said. “It is a genuine, home grown, only-in-Kentucky success story.

“As we continue cutting bureaucratic red tape across the Commonwealth, we will pave the way for even more economic opportunity and job growth in the Bourbon industry, as well as every other industry across the Bluegrass state.”

Senate President Robert Stivers, R-Manchester, agreed and applauded the industry’s economic expansion and large spin-off impact, saying, “Kentucky Bourbon is proof that our pro-business tax agenda works.

“By virtually eliminating the barrel tax, we paved the way for more than one billion dollars in new distillery investments and created jobs for thousands of Kentuckians,” he said. “That growth is exactly what an authentic signature industry can do for Kentucky.”

House Speaker Jeff Hoover, R-Jamestown, said the study just scratches the surface of Bourbon’s growing impact. Many distilleries are still working to implement tourism reforms under Senate Bill 11, which passed the House last year by historic margins.

“There were more than one million visits to the Kentucky Bourbon Trail and Kentucky Bourbon Trail Craft Tour experiences last year, elevating the Kentucky tourism experience to levels never seen before,” he said.

“The more we do as a legislature to responsibly regulate this industry in this global economy, will only serve to fuel this growth in good-paying jobs and investment.”

KDA President Eric Gregory said, “This report proves that Kentucky Bourbon is the new fuel for the state’s economy. Jobs, investment and revenue are at all-time highs and paying tremendous dividends to every corner of the state.”

Major highlights include:

• Distilling contributes $8.5 billion to Kentucky’s economy, up $3 billion since 2008 and $1 billion in the last two years alone. This includes direct, indirect (spin-off) and induced impacts;

• As many as 17,500 people owe their paychecks to the spirits industry; either directly, or because their employers are part of the industry supply chain, or due to the household spending of those people. This is up 2,000 jobs from 2014;

• Payroll for those workers increased to more than $800 million, from $707 million in 2014;

• New craft distilleries employ 200 people with salaries totaling more than $5.5 million;

• Average salary for distillery employees is $95,089;

• Distilleries are in the middle of a $1.2 billion building boom driven by the virtual repeal of the ad valorem barrel tax and new tourism reform measures;

• Use of locally grown corn has increased by 65 percent in the last two years, aiding Kentucky’s farm families;

• Distilling has the second highest job multiplier in the state when it comes to total number of jobs and spin-off factor, behind only light truck and utility vehicle manufacturing;

• More than $190 million in tax revenue for local and state governments is generated by spirits production and consumption, distillers pay another $625 million in federal excise taxes;

• At 34.4 cents per dollar of output, Kentucky taxes spirits higher than all other 536 industries in the state. Kentucky’s spirits tax rate is fifth highest in the country among open market states;

• The number of distilleries has grown to 52 – the most distilleries in Kentucky since the repeal of Prohibition;

• Bourbon barrel inventory, now at 6.7 million, has reached its highest level since 1974;

• If the industry continues to grow at this rate, economic output will exceed $10 billion by 2020, with employment more than 20,000, payroll over $1 billion and state tax revenue $200 million.

Agriculture Commissioner Ryan Quarles said he was particularly pleased with the increased usage of Kentucky corn, which amounts to 15 to 20 million bushels. “We have been working with the KDA and our distilleries to source more local corn, so it’s good to see that our efforts are paying off.

“Agriculture has been at the heart of Kentucky Bourbon for centuries, since the first pioneer distillers started transforming their excess corn to spirits. Now it’s a global partnership as our distillers thrive, as this study shows.

“We’re thrilled that as bourbon’s global presence grows, so do opportunities for Kentucky’s farmers.”

Louisville Mayor Greg Fischer said, “We’ve seen first-hand how Bourbonism can boost economic development and revolutionize tourism. The combination of Louisville’s unique distillery attractions and growing restaurant scene is drawing national and international attention – and visitors.”

David Adkisson, President and CEO of the Kentucky Chamber of Commerce, said, “The outlook is bright for Bourbon – and will be brighter as we continue to improve the business environment of Kentucky. There’s no doubt that Kentucky Bourbon is enjoying a historic renaissance.”

But he noted Kentucky’s rank in the number of distilleries and overall workers has slipped nationwide. “Other states are catching up. We must continue to be proactive by cutting outdated regulations, improving our tax code and encouraging businesses to grow and create more jobs.”