Bourbon Boom Creates Revenue for Kentucky


Whether you enjoy a glass occasionally or have sworn off brown liquor since college, there is no denying that bourbon distilling has once again become a big business for the state of Kentucky. Horses and coal put the state on the map, but bourbon is what is drawing the largest crowds, leading distillers to undergo capital improvements of over $2.3 billion collectively along the bourbon trail.

Distilleries in Kentucky employ just over 20,000 people with an annual payroll of close to $1 billion. Recent estimates show 9.2 million barrels of bourbon currently aging in rickhouses, a little over two barrels per Kentuckian, generating property tax revenues of approximately $29 million annually. While this is good news for the State’s finances, it is causing issues for distilleries big and small. Kentucky is the only state with a barrelage tax, which may ultimately be accountable for the sudden growth of distilleries outside of Kentucky. In 2014, the Kentucky legislature passed a corporate income tax credit to help offset the taxation, however, the rapid increase in aging barrels has greatly reduced the benefit of the tax credit. The value of aging barrels was around $3.8 billion in 2020, an increase of $400 million since 2019 and twice the assessed value of barrels in 2010.

Booms and busts

Before 2019, the previous peak of barrels in rickhouses was in 1968 when the state had 8.7 million barrels aging. Bourbon started losing its luster in the 1970s and was out of favor through the 1980s when rum and vodka took over the top spots nationally. During that time, much of the bourbon produced in Kentucky was exported overseas. However, prominent bourbon distillers saw an opening for another domestic bourbon boom in the late 1990s, when the Beverage Testing Institute in Chicago obtained a bottle of Pappy Van Winkle in 1997 and gave it a score of 99 out of 100 – the highest rating ever given to a whiskey. Anticipating the resurgence of bourbon enthusiasts, the Kentucky Distillers Association started the Bourbon Trail in 1999 with ten distillers. Today there are 38 distilleries only 20 minutes from each other, and the total barrelage has increased 164% since 2000.
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Kentucky Experiences Substantial Growth in Logistics


Kentucky revenue has held up well during the COVID-19 pandemic. General fund revenue for the current fiscal year was up 5.6% through the end of 2020, increasing 16.1% in December after a slight downturn in November. One notable business sector contributing to revenue growth in the state is logistics.

The business of logistics is a critical component of supply chains and is growing at a rapid pace in Kentucky, employing close to 83,000 people. Kentucky’s central location in the Ohio Valley makes it a prime spot for distribution across the United States for many suppliers and shippers. Leaders in the sector are pushing Kentucky legislators to provide funding and subsidies to help build out the State’s infrastructure in areas surrounding warehouses and airports. To date, lawmakers have provided resources to help with traffic problems around Shepardsville, where a third cloverleaf highway interchange has been completed to help alleviate tractor-trailer congestion.

To further ease major traffic problems related to the sector’s rapid expansion, a new warehouse area has been established slightly further south near the Bardstown exit off of Interstate 65. McKesson Corporation, the oldest and largest healthcare company in the nation, recently signed a lease in the Shepardsville area for a one-million-square-foot warehouse that is currently being used to distribute COVID-19 vaccines. Five weeks prior to the first vaccine shipping date in mid-December, the CDC along with project Warp Speed, was involved in helping build out refrigeration units to store vaccine doses for Pfizer and Moderna. With the world watching, the first shipment of Prizer-BioNTech vaccines departed the Louisville UPS Worldport Hub on December 13, 2020. The UPS Worldport Hub is the second-largest freight enplanement airport in the U.S. and fourth-largest worldwide.
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