The title of Fortune magazine’s February cover story—”The Billion Dollar Bourbon Boom”—brings the latest spirits craze into sharp focus. In his piece, Clay Risen, writes about the increased global demand for American whiskey—Australia, China, and Japan are clamoring for the drink, with Japanese spirits and beverage mammoth, Suntory, even offering $16 billion to outright buy Beam Inc. Domestic whiskey sales have shot up forty percent in the past five years and account for $8 billion in global sales. Globally, bourbon exports have tripled over the past decade from $376 million in 2002 to $1 billion in 2013.
For people who watch the spirits industry, to say this trend is a surprise might be an understatement. As Risen notes in his story, just a decade ago the American whiskey industry was struggling to move its product. So when this unexpected spike in domestic and global demand struck, bourbon producers were caught shorthanded. They scrambled to find solutions. Maker’s Mark announced it would reduce its bottling proof from 90 to 84 to help extend supplies, a short-lived plan that received a very public flogging and was quickly retracted. Some producers compromised by blending younger whiskies with aged whiskies, which put more bottles on the shelf, but diluted both the product and the brand.
But where some saw problems, artisan Texas distillers, like Garrison Brothers Distillery in Hye, near Johnson City, and Ranger Creek Brewing and Distilling, in San Antonio, saw opportunity. (And, to quickly dispel a common misunderstanding, bourbon can be produced anywhere in the United States, not just Kentucky.) This increased demand was a good thing for local bourbon distillers, who now look a bit clairvoyant. Their relatively recent entrance to the market came at just the right moment—and bourbon is a spirit that really is all about timing. Unlike white spirits like vodka, gin or white rums, which can essentially be produced and bottled instantly for sale, the bourbon production cycle is measured in years (to be classified as straight bourbon, the spirit must be aged for two years). And these Texas producers are barreling their product and getting it to consumers who are more savvy than ever about the spirits they choose to buy.
Mark McDavid, co-founder of Ranger Creek, knows he can use this trend to help educate people about Texan bourbon. “I think the whole craft distilling business will help convince consumers that there are bourbons outside of Kentucky that are worth checking out, especially as we start to distribute our product outside of the state,” he said. “I think Texas is definitely leading the charge with that, which is a natural fit for the culture we represent.”
He’s not the only distillery that thinks so. The Texas bourbon market is seeing its own mini-boom. Dallas Distilleries in Garland released Herman Marshall bourbon, and Balcones Distilling out of Waco offered a very limited release of bourbon that was gone in almost the same instant it was announced. And there is word of other grain-to-glass bourbons soon to hit the market from other distilleries, including Austin-based Treaty Oak Distilling and Firestone & Robertson Distilleries in Fort Worth.
Both Garrison Brothers and Ranger Creek have been producing bourbon for the past few years in what has fashionably been deemed a grain-to-glass method: the entire production—from grain to mash, fermentation, distillation, barreling, and bottling—is done completely by the distillery. (The term is intended to distinguish their complete craft from producers who purchase pre-made spirit that is then distilled and/or bottled as a new product.) The Garrison Brothers mash bill—or fermentable grain recipe—is 74 percent corn, 15 percent wheat, and 11 percent malted barley, yielding a smooth, sweet spirit. By contrast, Ranger Creek’s .36 Bourbon is made of 70 percent corn, 16 percent rye, and 14 percent malted barley, producing an equally smooth, yet spicier, bourbon.
So this where some people get confused about the distinction between bourbon and whiskey, but’s it’s simple: all bourbon is whiskey, but not all whiskey is bourbon. In 1964, the U.S. government decided to protect bourbon as a distinct American spirit and the U.S. Standards of Identity outlined parameters for what constitutes bourbon, including these:
- Made of a minimum of 51 percent corn (though most quality bourbon includes between 70 and 79 percent corn, and rye and wheat are also allowed as remainder of the mash bill along with malted barley, which aids in the production process).
- There are no aging requirements, but longer aged bourbon gets a perception of premium value. It must also be aged in new, American charred oak barrels.
- Is not a “Blend Whiskey,” which is only required to have 51 percent straight bourbon but may also have other ingredients such as neutral spirit, coloring and flavor additives, the total makeup of which is not required to be disclosed on the label.
Garrison distinguishes itself further by using all organic grains for their straight bourbon. They also locally source grains from the Panhandle town of Dalhart and grow their wheat onsite.
“Most other distilleries use feed grain, which isn’t a bad thing, but if a Texan walks into a liquor store, I want them to know that our stuff–all of it–is made in the great state of Texas,” said Garrison, whose limited release Cowboy Bourbon recently won American Micro Whiskey of the Year in the 2014 Whisky Bible by noted whiskey expert Jim Murray. “To me, authenticity is what makes a great craft product,” he said. (Garrison often travels with a bottle of 23-year Pappy Van Winkle, and when he introduces people to Garrison Brothers Bourbon, he’ll have them blind taste the two together. He swears people pick the Garrison bourbon every time.)
This attention to detail means that craft distillers like Garrison can’t produce in near the quantity that the big boys can (Beam Inc. produced 1.4 million cases of Maker’s Mark last year), but they do have a substanial inventory compared to other craft distillers. Garrison estimates a total production of 15,000 cases for 2014 and 20,000 cases for 2015, based on the 6,000 barrels currently aging in his rack houses. Ranger Creek estimates they’ll do a steady couple thousand cases for the next few years.
And Garrison has lofty goals to become the tenth largest distillery of American bourbon in the country. His current projections already include the addition of another still that could help bring his production to about 250,000 cases annually—about a quarter of the size of Maker’s.
But market forces are strong, and supply problems are trickling down to Texas distilleries, particularly in sourcing new oak barrels that are required for aging bourbon (distillers aren’t allowed to reuse barrels). American cooperages—the companies that produce these barrels—cannot keep up with the demand. “Our greatest limitation on growth right now is getting barrels,” said McDavid, who sources his barrels from five different cooperages. “We have gallons and gallons of white dog [the clear whiskey spirit from the still that is ready to be aged in barrel] ready to barrel but we’re hamstrung because of barrel shortage.”
While Ranger Creek waits for more barrels to arrive it still has product on hand to release. Garrison is set to release a larger volume of his straight bourbon—which he ages for at least three years—for 2014, 2015 and 2016 than he ever has before.
So could the market eventually become flooded? Will supply eventually outstrip demand and cause a bourbon bust?
“I think this bourbon renaissance that’s going on is not going to stop any time soon,” McDavid said.
And even if it wanes, Garrison is optimisitc about the future. “Even if bourbon busts, worldwide, there are still going to be a lot of people hooked on Garrison Brothers bourbon, and that’s really all I care about,” he said. “It’s going to be a while before we’re anywhere near passing Kentucky bourbon, but we’re in a good place. At least we’re trying.”