flickr photo by Colbyt69 https://flickr.com/photos/77210973@N07/6923682835 shared under a Creative Commons (BY) license

In the 1970s, bourbon sales plummeted. Drinkers ordered vodka martinis and tequila sunrises. Bartenders dusted bourbon bottles more often than they poured them.

But several decades later, the tide turned. Small-batch bourbons flew off the shelves. Don Draper downed tumblers of the stuff. Drinkers started ordering Maker’s Manhattans and Four Roses Old Fashioneds, buying 20 million 9-liter cases of bourbon and Tennessee whiskey in 2015.

Then rumors started about rolling blackouts. Bartenders looked furtively down the bar and whispered about a shortage. Proponents of preparedness started stockpiling bourbon in their basements and bomb shelters.

If there is a bourbon shortage, the simple explanation is that demand for the amber liquid is growing at a rate suppliers did not foresee, and the time required for aging bourbon means there will be a lag before the supply can catch up. The deeper reason is that we are actually running out of fresh barrels. Perhaps nothing the free market won’t solve…

An Unpopular (and Short-Lived) “Solution”

In 2013, demand was so great that Maker’s Mark announced they would water down their bourbon in order to fill more bottles.

Demand for our bourbon is exceeding our ability to make it, which means we’re running very low on supply. We never imagined that the entire bourbon category would explode as it has over the past few years, nor that demand for Maker’s Mark would grow even faster. We wanted you to be the first to know that, after looking at all possible solutions, we’ve worked carefully to reduce the alcohol by volume (ABV) by just 3%. (Source)

The ABV would decrease from 45% to 42%—meaning Maker’s would drop from 90 proof to 84 proof. The announcement was made on February 11, 2013. Six days later, due largely to customer outcry, they reversed it.

You spoke. We listened. And we’re sincerely sorry we let you down. … The unanticipated dramatic growth rate of Maker’s Mark is a good problem to have, and we appreciate some of you telling us you’d even put up with occasional shortages. We promise we’ll deal with them as best we can, as we work to expand capacity at the distillery. (Source)

While a creative “solution”, lowering the ABV of Maker’s Mark did not go over well in the marketplace at all.

No Simple Solution

Here is the thing about bourbon. It must be:

• Made from at least 51% corn
• Aged in new, charred white oak barrels
• Distilled to no more than 160 proof
• Barrelled for aging at no more than 125 proof
• Have no flavor/color additives

Even after it’s made, bourbon still has to play catch-up via aging: 5 years and 9 months for Maker’s Mark, 7 years for Buffalo Trace, or up to 23 years for Pappy Van Winkle.

In 2014, Buffalo Trace released a rather bleak statement: “Despite the increase in distillation over the past few years, bourbon demand still outpaces supply. … The increase in sales, coupled with the aging process and evaporation loss, leads to a shortage with no end in sight.”

Cue stockpiling.

Exacerbating the problem is that we are running out of barrels. There is plenty of white oak but – after the logging industry shrunk with the housing market crash – no one to harvest it. Barrels cannot be reused for bourbon. Cooperages (barrel makers) lack supply and, with the bourbon boom and influx of craft distilleries, can barely keep up with demand as it is.

There is no quick fix. The mash must be 51% corn; it must be barreled in new, charred white oak; it must be aged for a certain number of years. And decisions about supply are made years in advance. Theoretically, bourbon could run out completely before production catches up with the increase in demand.

Ramping Up

But in May 2016, Buffalo Trace re-opened three barrel-storage warehouses (they were being used as offices). Each holds 50,000 barrels. Warehouses T and U are full; Warehouse S will be filled over the next ten months. Three more warehouses, each holding 10,000 barrels, are being reopened. They are building 30 more 50,000-barrel warehouses, one every 5 months for the next 10 years.

(That said, Buffalo Trace is still cautious: “As far as the current inventory of bourbon at Buffalo Trace Distillery mature enough to bottle, things are marginally better than they were three years ago.”)

The Kentucky Bourbon Trail (a subsidiary of the Kentucky Distiller’s Association) is more enthusiastic. According to their statistics, 1.2 million barrels were filled in 2014 (the most since 1970) and 630,000 people visited the Bourbon Trail.

In 2015, it gets even better: 1,886,821 barrels were filled – the most since 1,922,009 barrels in 1967. Almost 900,000 people toured the Trail.

1,886,821 barrels. That’s 100,001,513 gallons of bourbon. Or 504,729,207 750-ml bottles. Or 8,533,462,442 shots.

“This is astounding, phenomenal, mammoth,” said KDA President Eric Gregory. “We’re running out of adjectives to describe the growth and success of Kentucky Bourbon. Plus, filling nearly 2 million barrels in one year should remove any doubts about the future of our signature industry.”

No kidding.

What does this mean to Bartenders?

With a possible shortage on the horizon, bartenders should try to prepare as much as possible by creating flexible drink menus and building quality relationships with their suppliers. The good news is that the supply will absolutely be growing in the next few years – meaning it should alleviate any shortage. The concern, of course, is that demand will unexpectedly drop and there will be an oversupply of whiskey. Then again, if that happens, you can bet you’ll find us bourbon lovers stockpiling on the cheap!

flickr photo by Colbyt69 https://flickr.com/photos/77210973@N07/6923682835 shared under a Creative Commons (BY) license