Kentucky Distillers Set Information for Bourbon Barrel Inventories, New Fills – And Punishing Manufacturing Taxes
FRANKFORT, Ky. – The variety of Bourbon barrels in Kentucky reached a report 11.4 million in January, because the state’s signature business marked its fourth consecutive 12 months filling greater than 2 million barrels – whereas paying $40 million in discriminatory barrel taxes, the best quantity in historical past.
If you embrace different getting older spirits, the state’s complete stock is nearly 12 million barrels – a monumental milestone within the storied 200-year historical past of Kentucky’s iconic Bourbon business. The tax-assessed worth of all barrels additionally hit an all-time excessive this 12 months of $5.2 billion.
Whereas barrel data are usually trigger for celebration, the skyrocketing and punitive influence of getting older barrel taxes is extra a trigger for concern, warned Eric Gregory, president of the non-profit Kentucky Distillers’ Affiliation, which launched the figures in the present day.
“We’re thrilled that our homegrown and historic business continues to flourish, however these numbers might have been a lot greater if Kentucky didn’t have a significant barrier to entry for brand spanking new distilleries within the type of this barrel tax,” Gregory stated.
Kentucky stays the one place on the earth that taxes getting older barrels of spirits.
For the reason that starting of the 12 months, Kentucky has fallen to twelfth within the nation within the variety of distilling operations, in accordance with federal Tax & Commerce Bureau (TTB) statistics. There at the moment are greater than 2,300 distilleries in all 50 states. Kentucky has fewer than 100.
Within the final 12 months, Kentucky ranked twenty ninth within the nation within the fee of including new distilleries.
Kentucky’s share of distilleries nationwide has plummeted from a excessive of 24% to now simply 6%, and Kentucky’s share of distilling jobs has dropped from 43% all the way down to solely 30%, although the state crafts 95% of the world’s Bourbon.
“On the peak of our signature spirit’s recognition, the proliferation of Bourbon distilleries exterior of Kentucky ought to ring alarm bells for anybody who cares about this business, its workers and its financial and tourism influence on the Commonwealth,” Gregory stated.
Within the final 5 years alone, barrel taxes have greater than doubled, hovering 102%. Kentucky distillers are paying practically $40 million in barrel taxes this 12 months – $7 million greater than final 12 months – an unjust levy as a result of the high quality artwork of getting older and maturation of Bourbon is crucial to the manufacturing course of.
“We’re solely asking to be handled like each different producer in Kentucky – and probably the world – whose items are usually not taxed through the manufacturing course of,” Gregory stated. “Barrel taxes hamper development, punish success and jeopardize the state’s capacity to draw new distillers within the birthplace of Bourbon.”
The brand new manufacturing numbers are based mostly on inventories reported as of Jan. 1, 2022, submitted to the Kentucky Division of Income for tax functions and consists of all distilling corporations in Kentucky, the overwhelming majority of that are KDA member distilleries.
Listed below are the specifics:
· Complete barrels of Bourbon: 11,406,135
· Variety of Bourbon barrels crammed in 2021: 2,619,633
· Complete stock together with Bourbon and different spirits: 11,982,965
· Assessed worth on all barrels for tax functions: $5,207,221,744
Kentucky Bourbon has seen super development because the flip of the century. Manufacturing skyrocketed 475% since 1999. The state’s getting older Bourbon stock has greater than tripled throughout that point, whereas the tax-assessed worth of all barrels is now $5.2 billion, a staggering $780 million enhance over 2021.
The Bluegrass State continues to learn from this amber wave, which now pours $9 billion annually into the Kentucky financial system, sustains greater than 22,500 jobs with an annual payroll topping $1.2 billion a 12 months, and attracts thousands and thousands of prosperous vacationers from around the globe to the Kentucky Bourbon Path® experiences.
A key export, distilling has the state’s highest job spin-off issue amongst high producers; buys not less than 17 million bushels of corn and different grains yearly, principally from Kentucky farm households; and is presently investing greater than $5.2 billion in new stills, warehouses, bottling strains, tourism experiences and extra.
Nonetheless, distilling is also the best taxed amongst all giant manufacturing industries within the Commonwealth, paying greater than $285 million in native and state taxes yearly. That’s $180 million extra in taxes every 12 months now than distillers paid a decade in the past.
Kentucky distillers additionally pay over $1.8 billion in federal alcohol taxes, by far probably the most amongst any state.
Of the 11 states forward of Kentucky within the variety of distilleries, all however one license state (Washington) has a considerably decrease spirits tax fee than Kentucky, Gregory stated. Kentucky’s tax fee is $8.41 per bottle; California, which leads the nation within the variety of distilleries, is $3.30.
“Not a coincidence,” Gregory stated.
“We have now confirmed, time and time once more, that Bourbon is a good funding for Kentucky,” Gregory stated. “However we can’t ignore the truth that greater than 2,200 distilleries have made the enterprise choice to not find right here, regardless of our wealthy traditions and ready-made infrastructure.”
Gregory stated the time is now – when the business is wholesome – to eradicate synthetic boundaries to development just like the barrel tax, and to proceed modernizing Kentucky’s archaic alcohol legal guidelines. He pointed to 2 current research that confirmed tequila has gained vital floor on American whiskey.
Simply final week, information by Nielsen IQ exhibits that tequila gross sales have grown 70% since final 12 months and agave spirits at the moment are difficult whiskey and vodka in gross sales. IWSR Drinks Market Evaluation stated this 12 months, for the primary time ever, People will spend extra money on mezcal and tequila than U.S.-made whiskey.
Gregory thanked the Kentucky Basic Meeting for making a legislative job drive that’s exploring choices to eradicate the barrel tax and decrease impacts on schooling and native communities. “We applaud this honest, open and goal course of that’s listening to from all stakeholders,” he stated.
“It’s crucial that distillers, group companions and elected officers work collectively to draw extra distillers and funding to the Commonwealth, as a result of there’ll come a day – hopefully not in our lifetimes – when Bourbon will not be as in style as it’s proper now.
“It’s time for options. We should defend our distilling dominance. The longer term is in our palms.”
Based in 1880, the Kentucky Distillers’ Affiliation is a 501(c)(6) non-profit commerce affiliation that passionately unites, promotes, protects and elevates the Commonwealth’s signature Bourbon and distilled spirits business. Its numerous and rising membership produces the overwhelming majority of the world’s Bourbon, from legendary, international manufacturers to rising micro distilleries which might be fostering the subsequent technology of the Commonwealth’s timeless craft and treasured financial engine. The KDA maintains an open membership coverage, champions a powerful dedication to the accountable and average consumption of spirits, and fights to curb underage consuming and drunk driving.
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