Harlen Wheatley talks during a tasting at Buffalo Trace Distillery where he serves as Master Distiller.
The hardest part of making bourbon, master distillers will admit, is figuring out how much to make.
“We’ve already made our product for 2021, so when sales guys come to me and say, ‘We’re all excited, we’re going to grow sales by 20 percent, and we’re going to make a lot more bottles,’ I sit back and I say, ‘I actually know exactly how much you’re going to sell,’” said Buffalo Trace’s Master Distiller Harlen Wheatley.
In recent years, Wheatley and his small but growing fraternity of master distillers have seen their facilities begin expansions on the production, storage and visitor sides of their operations.
Maker’s Mark has announced a $70 million expansion in Loretto that will increase capacity by 50 percent, along with upgrades to its visitor center. Wild Turkey, outside Lawrenceburg, spent more than $100 million on a new packaging facility, an updated distillery and a new visitor center. Woodford Reserve is getting a $35 million investment to expand operations and welcome visitors. Beam opened a new visitor center in Claremont called Jim Beam American Stillhouse in 2012, part of a $30 million investment in the state. Four Roses spent $2.4 million on a new visitor center less than two years ago in Anderson County, while Heaven Hill Distilleries opened the nearly $10 million Evan Williams Bourbon Experience in downtown Louisville. Smaller spirit makers are also coming onto the scene, such as Angel’s Envy, which broke ground in 2013 on a $12 million distillery in Louisville. In 2012, Alltech opened a new distillery in Lexington, and Willet began distilling its own spirits for the first time in decades in Bardstown, Ky.
“It’s a tricky process, because you don’t want to go broke while you’re doing it. You have to pay tax, you have to buy supplies, and so you have to balance how much ... you want to invest with what the demand is, and we’ve always taken a fairly conservative approach and not over-made,” said Wheatley, whose parent company, Sazerac, announced a $70 million infusion in April to three of its Kentucky distilleries, including the construction of an 83,000-square-foot warehouse that’ll be built on Wheatley’s Buffalo Trace campus.
That new warehouse won’t be the only one coming online for Wheatley’s Frankfort facility. Two warehouses Wheatley said the distillery divested in the mid-1980s have been repurchased by Buffalo Trace.
“For now, we purchased them because we wanted to basically bring those buildings back into the fold. We don’t have any immediate plans because they’re currently rented, but we’re extremely happy to have those buildings back as part of the original footprint of the distillery,” he told Business Lexington.
Leases on the two buildings, which house state offices of technology, agriculture, health and family services, public advocacy and energy and environmental, are set to expire this summer and next, according to Pamela Trautner, public information officer for the Finance and Administration Cabinet. The state has requested a one-year renewal for the offices with leases expiring this year, she said.
With a two-year minimum age required by federal law for whiskey to be called bourbon, and most distilleries not going below four years for their youngest products, these companies are investing a lot in the future, given that it will be near — if not beyond — a decade before they actually sell any of the product that will be housed and distilled in these new facilities.
Britt Kulsveen Chavanne and Drew Kulsveen outside the company's new distillery in Bardstown.
“That’s not a new conundrum,” said Britt Kulsveen Chavanne, a vice president and part of the family that started Willet. “That’s one thing about this business is you have to plan light years ahead when you don’t know what the market will be like. That’s the way it’s been since our grandfather was here.”
Located next to a storage facility for Heaven Hill in Bardstown, Willet is once again distilling its own product on the property that has for years aged bourbons produced by other distilleries, warehoused at Willet and sold under one of Willet’s brands.
“Distilleries have all had distilleries producing on their behalf, because they can’t generate enough whiskey,” Kulsveen Chavanne said.
The bucolic landscape now holds two stills — one copper and made to look like a Willet bottle and a stainless steel still — that are working to keep up with the demand of the company that sells to 34 states and 11 foreign countries.
“We’re producing what we can afford to produce,” said Willet’s Master Distiller Drew Kulsveen, Kulsveen Chavanne’s brother. “We’re 100 percent financed by our existing business and as long as that continues to grow, so will our production. We don’t plan on a scale that larger distilleries do; their network is much larger than ours.”
The company has seen sales increase about 60 percent, including a 70 percent bump in sales of the Willet pot still bourbon in Kentucky in 2013, but the brother-and-sister duo say they don’t expect to see their product in new places anytime soon.
“We haven’t been into a new market in years because we have so much growth in the markets that we’re in. Before we make that step somewhere else, we want to take care of the people who’ve been taking care of us for years,” Kulsveen said.
The company operates one shift on one bottling line employing 18 people, according to Kulsveen Chavanne. “There’s a lot of our operation that hasn’t changed in spite of all our growth.”
Keeping family-owned or -run businesses as intimate and traditional as possible is a trend in the bourbon industry and industries that feed into it.
The Sherman family of Louisville supplies many of the nation’s distillers and brewers with the systems they use to make their products through the Vendome Copper and Brass Works.
Vendome Copper & Brass Works Vice Presidents and siblings Rob Sherman, Barbara Hubbuch and Mike Sherman stand in front of a copper pot still their company had recently completed and was awaiting shipment to Alltech's Ireland distillery.
Celebrating its 110th birthday, Vendome sits understated just off Market Street, on the outskirts of Louisville’s downtown.
Mike Sherman, a company vice president — as are his brother and sister — said the company has seen lead time for craft distillers requesting new stills, tanks and other distilling equipment grow from four or five months just two years ago to 10 months now.
Vendome does custom work, but in times like this, Sherman and his family admit it might be more economical to make standard equipment and say, “That’s what we’ve got, take it or leave it. But we don’t want to do that,” said Sherman, a fourth-generation employee of the company.
On an annual basis, Rob Sherman talks with the company’s bigger clients, such as Anheuser-Busch, Beam Global and the like, to make sure they know what’s coming. But if something breaks or is unexpectedly needed, they push to the front of the line.
“Whenever they need it, they get it,” Mike Sherman said with a laugh about the large-scale clients.
At Vendome’s workshop in February, a copper pot sat destined for the Ireland distillery of Nicholasville-based Alltech. So did a large amount of equipment heading to Tennessee, as Jack Daniels looks to increase the capacity of its wildly popular Tennessee Whiskey.
Those at Vendome aren’t the only ones in Kentucky working hard to ensure the best-selling whiskey in the world is able to keep up with demand.
Louisville-based Brown-Forman, Jack Daniels’ parent company, churns out 650,000 oak barrels a year from its cooperage near the Louisville Airport. Most companies purchase their barrels from independent barrel makers. Brown-Forman not only has the Louisville location, but to meet its anticipated demand with the Tennessee expansion and the one underway at its Woodford Reserve distillery, the company has decided to open another facility.
Coopers such as this one at the Brown-Forman Cooperage in Louisville can make up to 250 barrels a day. The facility produces around 3,000 barrels each day and 650,000 annually. The typical cooper will transfer to another job in the facility after a few years of putting barrels together by hand.
The Decatur, Ala., cooperage is expected to be open soon. Not long after it is, it should outpace the number of barrels produced in Louisville, each one of which will be filled with Jack, according to Greg Roshkowski, vice president and general manager of Brown-Forman Cooperages.
As popular as bourbon and other whiskeys have become in the United States over the past decade, the foreign market has expanded even more. It is to the point that many of Kentucky’s distilling families are working for internationally owned companies.
But that doesn’t necessarily mean anything changes in the rick houses and by the copper pots of Kentucky.
“We’ve been owned by a foreign company for 30 years probably, and they’ve had no affect on us. They don’t do anything different; they’ve left it up to us,” said Jimmy Russell, master distiller for Wild Turkey, where he’s worked for 60 years.
“I don’t think they’d invest all this money if they wanted to kill it,” said Fred Noe, Jim Beam’s great grandson and master distiller of the spirit that bears his ancestor’s name, when asked about the recent news that Beam Global was going to be purchased by Suntory, a Japanese spirits company.
“Every indication and every conversation I’ve had with all of our people is that they want to keep everything continuing, staying the same,” Noe said about the company that’s been a part of his family for seven generations, dating back to before Jim Beam. “The tradition, it goes back to 1795, and they don’t want to kill it, so we’re going to continue business as usual.
“What they want to do is use our distribution to help distribute the Suntory Whiskey in this part of the world, and we’ll use their distribution to distribute in the Far East,” Noe said.
As ownership of Kentucky’s bourbon makers spreads from nearby Nicholasville, Bardstown and Louisville to New Orleans or as far as London, Milan, Osaka and Tokyo, Noe said he and his counterparts are as close as ever.
“We’re like family; it’s one big family. We sit and enjoy drinking together, telling stories about where we’ve been, where we’re going,” Noe said. “It is a brotherhood; we’re all in this together. It’s a great life we’ve got.”
But Wheatley knows through all of their discussions and internal forecasting, there will be a constant about him and his fellow distillers.
“One thing we know for sure is we’ll never be right,” he said. “If we need 10,000 barrels, we’ll make 10,000, but that’s going to be off one way or the other.”