Wednesday, August 19, 2015

How Bourbon-Barrel Shortages Are Affecting Local Distillers

Posted By on Wed, Aug 19, 2015 at 8:49 AM

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"There was a period of four months when I couldn't get any barrels — I was starting to panic," Neukomm recalls. That was just over a year ago. McGinnis president Don McGinnis confirms that the need for Missouri white oak remains acute. He traces the trouble to the economic downturn in 2008. The decline in the housing market and related factors put sawmills out of business and caused loggers to be laid off.

(The Minneapolis Star-Tribune reported in 2012 that, between slackening demand for paper and the housing market's bust, more than 22,500 logging jobs had been lost in the last decade.)

This coincided with the historically unprecedented rise in the demand for bourbon. "With the growing demand for barrels and then the shortage of loggers, the problem has escalated," McGinnis concludes grimly.

click to enlarge A selection of whiskeys and bourbons. - STEVE TRUESDELL
  • Steve Truesdell
  • A selection of whiskeys and bourbons.

Things seem to be stabilizing, at least for existing distilleries with established connections to the barrelmakers. McGinnis is serving its regular customers, even if it can't take on new ones. And though David Weglarz has to deal with delays and price increases, he too is getting his barrels.

He worries about new distilleries, though. "This is such a tough industry to get started in because all of your operating capital sits in your rickhouse for years before it brings any return. And the whole while, it's literally evaporating! And now the cost of barrels keeps increasing, which directly impacts the amount of whiskey you can afford to put away," Weglarz laments.

Only time will show the true impact. Today's decisions about how much whiskey to make and age have everything to do with how much whiskey will be available to drink several years from now. If the barrelmakers can't get enough wood, there won't be enough barrels to age all that whiskey.

For now, anyway, small Missouri craft distilleries are getting by. If barrel prices don't keep skyrocketing and delays don't keep stretching out, Missouri's hard-working distillers may make a few dollars, and thirsty Missourians may still have access to plenty of good native whiskey. With enough loggers, we could get the oak needed to make enough barrels, and maybe even bring the prices back down. That would be good for everyone.

But if you were thinking about opening up a new craft distillery, now might not be the best time.


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