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Is a bourbon shortage next? What global supply chain delays could mean for Kentucky distillers

Is a bourbon shortage next? What global supply chain delays could mean for Kentucky distillers

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Is a bourbon shortage next? What global supply chain delays could mean for Kentucky distillers

Dana McMahan
 |  Special to Courier JournalBourbon vs. rye: Woodford Reserve distiller breaks it down.Woodford Reserve Master Distiller Chris Morris explains the differences between bourbon and rye whiskey.Louisville Courier JournalWhiskey drinkers have grown accustomed to their favorites going on allocation when there’s not enough to go around, thanks to the continued popularity of the drink we know and love. Standbys we used to be able to grab at the corner spirits shop for $25 are now elusive bottles costing double as everyone is getting on the bourbon bandwagon.But it turns out there’s another factor in the mix these days that can make it harder to get our hands on the whiskeys we love – the pandemic. Thanks, COVID-19.While on a Zoom tasting with a few folks from Castle & Key Distillery – meant to let some journalists sample its new Slow Hands Single Barrel rye – the distillery’s co-founder, Wes Murry, mentioned that he’d had to buy air tickets from France to transport the glass used for the gorgeous bottles containing the rye.Wait, what?So I sat back down via Zoom with Murry a couple of days later to get the full story.“Was that a real thing?” I asked. “Oh no, no, that was very real,” Murry said. Normally the glass would have come by boat from Europe, he said, but “with social distancing and everything else, productivity is way down.”So they airfreighted the first 20,000 bottles in for their new whiskey.Producing the spirit inside the bottle itself is just one element of getting bourbon from barrel to a shelf, Murry said. “You have all these pieces that go into your brand, and they’re not made domestically, especially if you want to get favorable pricing.”Materials that feed into the whiskey supply chain, like glass and metal, are facing the same delayed delivery issues also causing skyrocketing lumber prices and long delays for consumers buying appliances.Supply chain issues: President Biden to order a review of US supply chains for vital goodsAnd a delay in those products can have a big ripple effect.According to the Kentucky Distillers Association, bourbon is an $8.6 billion industry in Kentucky, generating 20,100 jobs with an annual payroll of $1 billion. And spirits production and consumption pour more than $235 million in state and local tax coffers every year.In fact, with 4.3 million people in the state, there are now almost two barrels of bourbon for every person living in Kentucky, according to the KDA.So, it’s big business. And any disruption in the supply chain for distilleries could add up.“It’s not speedy right now,” Murry said. “There’s kinks in the system. And you have to build in the extra time, and you definitely need to build an extra cost to manage those kinks.”Distillers, especially smaller ones like Castle & Key, are feeling the pinch, according to David Ozgo, Distilled Spirits Council’s chief economist.Speaking to the need for air tickets for glass bottles Murry told me about, “there is a worldwide glass shortage right now,” Ozgo said. “Many factories shut down as a result of COVID-19 quarantining. Now that economies are opening back up, manufacturers have a backlog of orders. Unfortunately, one does not simply flip a switch and turn a modern glass factory back on. It takes time.”Between those capacity issues, high demand, high shipping costs and difficulty getting containers for shipping, small distillers without long-term supplier contracts are the most impacted, he said. In an effort to minimize the delays and cost increases, they’re buying for at least half the year or more, Murry said. And that’s tough. “You know, at the end of the day, we only get paid once the product hits the shelves, and a distributor pays us,” he said, “so we have to float all that all that capital, all that cost, even that much longer than the four years the product sits in a barrel.”They also ended up having to switch to sourcing wine corks from Portugal, he said.You may like: From distilleries to huge expansions, here’s what’s new on the Kentucky Bourbon TrailAll told, the supply chain pain costs, as Murry calls them, can add $2 or $3 to the price of a bottle. They have two choices: raise the price consumers pay or absorb it. They opted to absorb it. “It was important for us to release our product,” he said, “and so you eat the cost and just hope that it’s impermanent.”Combine all of these logistical challenges with a single barrel release that’s pretty limited to being with, and we’re looking at some pretty exclusive (not to mention unique to this time in history) bottles. If you want one, you’ll be making a field trip to the Kentucky distillery. You’ll need a reservation and you’re limited to one bottle per person per day.The Slow Hand rye is $59.99 per bottle, and, after having tasted all four versions, I can tell you you’ll want to try all of them. 


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