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Kentucky Bourbon industry worth $8.6 billion
Kentucky’s Bourbon industry contributes US$8.6 billion annually to the state’s economy – a 60% increase since 2009 – according to a study by the Kentucky Distillers’ Association.
The study also indicates that the bourbon industry in Kentucky generates $235 million in local and state tax revenue and a total annual payroll topping $1 billion generating 20,100 jobs – a 104% increase since 2009 and 2,600 more since 2016.
The industry is also in the middle of a $2.3 billion building boom, with Diageo and Stoli both in the process of building multi-million pound distilleries in the state.
In the past decade, the number of distilleries in Kentucky has more than tripled to 68, and the number of counties with a distillery has quadrupled to 32.
If the industry continues to grow at this rate, the Association believes its economic output will exceed $10 billion by 2020, with employment more than 24,000 with payroll over $1.2 billion.
It follows protests 10 years ago against tax hikes on spirits, with the industry then urging legislator’s to modernise “archaic” alcohol laws, reform outdated tourism restrictions and tackle the discriminatory tax that only Kentucky levies on aging whiskey barrels.
Previously, Kentucky was subject to an ad valorem barrel tax – a tax levied against ageing Bourbon barrels. That was repealed in 2014 under the House Bill 445, which offered Kentucky distillers a corporate income tax credit against the amount of barrel taxes paid, providing that money was reinvested into their work in Kentucky.
“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,” said Senate President Robert Stivers, R-Manchester. “That growth is exactly what an authentic signature industry can do for Kentucky.”
Eric Gregory, president of the Kentucky Distillers’ Association, called the turnaround a “monumental success story”.
“By working together to remove unnecessary and artificial barriers to business, we have transformed Kentucky Bourbon from an industry once viewed as ‘sin’ to one that truly defines signature impact, expansion and global image,” he said. “This is the epitome of how a public-private partnership works.”
The biennial study was conducted by economists Dr Paul Coomes and Barry Kornstein, formerly of the University of Louisville, in conjunction with the Kentucky Distillers’ Association. The study was based on data collected before retaliatory tariffs on whiskey exports were imposed by the European Union, China, Canada, Mexico and Turkey, with the impact on Kentucky distilling not measured in this report.