New KDA Study: Bourbon is Still Booming, Bringing $9 Billion to Kentucky Economy Annually


January 19, 2022

Even a pandemic can’t stop bourbon’s economic impact on Kentucky. A new study shows that Bourbon now injects about $9 billion into the economy annually, generating more than 22,000 jobs that account for $1.23 billion in payroll.

The study, commissioned by the Kentucky Distillers’ Association, showed distilling in the Commonwealth also creates more than $285 million in local and state tax revenue. The study was released to the media in the Capitol Rotunda in Frankfort on Wednesday, with Gov. Andy Beshear, lawmakers, representatives of the distillers’ association and distillers such as Bill Samuels and Chris Morris.

Beshear lauded the sustained growth in the industry since the first such study was done in 2009, saying, “Distilleries, jobs, wages, revenue and investment are up triple digits across the board in the last 12 years. In turn, this amber wave has spurred more corn production, barrel cooperages and other supply-side manufacturers that are sustaining families and adding vibrancy to local communities.”

He added, “To see that type of growth … is incredible.”

The report was compiled by noted economist Dr. Paul Coomes and is the sixth report since 2009 to chart the growth and challenges facing Bourbon and other distilled spirits. 

That the growth continued despite what Kevin Smith, Chairman of the KDA’s Board of Directors and Vice President of Bourbon Affairs at Beam Suntory, referred to as “a challenging few years” due to the Covid-19 pandemic, was a topic on the tongues of all.

The one “soft spot,” Beshear noted, were exports – due to international tariffs imposed by the European Union and China, bourbon and spirits exports from Kentucky took a major hit over the past two years. However, the tariffs have since been lifted, paving the way to rebound after a $170 million fall-off from the previous two years.

Aggressive changes in archaic tax laws, meanwhile, have helped pave the way for the economic growth in the Bourbon industry, leading to rapid development of new properties, such as rickhouses and visitor centers at distilleries across the state. The study shows there are $5.2 billion in capital projects completed, in progress or planned by 2025.

Senate President Robert Stivers created the Bourbon Barrel Reinvestment Tax Credit in 2014 to offset the discriminatory tax that distillers pay on aging barrels. Stivers said the credit stimulated barrel production leading to now-record inventories and promises more to come, citing cooperation from all aspects, from the distilleries to the government to the state chamber of commerce.

“This is what a good economic environment looks like,” Stivers said.

“We’re thrilled that Bourbon is at an all-time high since the glorious Repeal of Prohibition, but we can’t let success or complacency curtail this strong momentum,” KDA President Eric Gregory said. “We have more jobs and distilleries than ever before, but we also have more competition from all 50 states.”

Highlights from the report:

  • $9 billion in economic output every year
  • More than 22,500 jobs, up 83% in last 20 years 
  • $1.23 billion in payroll, up 250% in last 20 years 
  • Average salary of $101,567 – the first time that amount has exceeded $100,000
  • KDA distillers bought 17 million bushels of corn in 2020, with 75% coming from Kentucky farmers
  • Corn production has tripled in many Kentucky counties where distillers are located
  • All-time record of 10.3 million aging barrels of Bourbon, the first time over 10 million
  • Bourbon production – number of barrels filled each year – is up 435% since 1999
  • Kentucky distillers filled a record 2.4 million barrels in 2020
  • $5.2 billion in capital projects completed or planned by 2025, including more than $100 million to build or expand Kentucky Bourbon Trail® experiences
  • Investments between 2021-2025 will create 4,565 new jobs, $258 million in payroll and $29 million in tax revenue
  • Distilling has the highest job spin-off factor among top 20 Kentucky manufacturers by employees; for every distilling job, three more are created
  • Value of distillers’ real and tangible property has quadrupled in last 12 years to $1.49 billion
  • Kentucky continues to tax distilling higher than all other large industries in the Commonwealth. 
  • Distilling production and consumption generates $286 million in local and state tax revenue annually. That’s $179 million more tax revenue a year versus 12 years ago.
  • Kentucky has the fifth-highest Bourbon and spirits tax rate in the country, and the state’s distillers by far pay more in federal alcohol tax – $1.8 billion – than any other state
  • The KDA’s Kentucky Bourbon Trail® and Kentucky Bourbon Trail Craft Tour® experiences continue their rapid rebound from COVID and closures, up 160% in total attendance from last year and just down slightly from pre-pandemic record in 2019.