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A Case Study - American Whiskey Distilleries - The Revolution

Updated: Mar 5


Made in America Whiskey case study

Image by The Whisky Ardvark


Some months ago, we thought it would be interesting to start listing all the possible whisky distilleries around the world - what a stupid idea, right? By the time we reached 1,764 distilleries from 37 countries, it was more than apparent that more than half of these distilleries were located in the US - 1,067 to be exact - which makes it around 65% of the distilleries we had so far. This opened up a huge can of worms/questions, including when did this happen? How many of them are just making whiskey? And what states are the hotspots? We decided to do the math - cause we wanted to know.


In this article, you will find information, graphs, and numbers - months in the making - and dig a little deeper into the US whiskey industry. We hope you enjoy the trip to the land of the free bourbon bunnies.


Disclaimer: Please note that this article and its information and numbers are based on data gathered by observing 1,067 distilleries that produce whiskey in the United States. We do not claim that we have been able to find and include every whisky-producing distillery in America since it is close to impossible. We have included all types of producers from each state - including the District of Columbia AKA Washington DC - but not including distilleries that only make moonshine, rice whiskey, or other unaged spirits. We have also tried to exclude brands that only use sourced whiskies from other distilleries, and concentrate on including just the ones that practice distillation.


Please click here to find our list of US distilleries included in our calculations.



 

The Boring History Part - In Short


Records show that whiskey has been produced commercially in the United States since 1783, when Evan Williams founded his distillery in Louisville, in the Commonwealth of Kentucky, right after the Revolutionary War. Before that, whiskey was mainly made in small quantities by local farmers and enthusiastic merchants - starting from Virginia, Pennsylvania, and Maryland. But by the end of the 1800s, producing rye whisky had become extremely popular and profitable, and many had installed huge column stills to get the best of it.


All changed in 1920 when Congress passed the 18th Amendment - also known as Prohibition - that banned 'the manufacture, sale, or transportation of intoxicating liquors' in, into, and from the United States. According to estimates, around 3,000 operational whisky distilleries existed before Prohibition. Only six were granted licenses to continue distillation for medicinal purposes, and only 13 of the 3,000 are still up and running today.


After Prohibition, up until the late 1990s, a mere 36 new distilleries were established - bringing the total to 49. (If we would have written this article back then, it would have been a lot shorter.) But from 2000 to 2022, the whole industry completely transformed with a flock of businesses jumping on board the Cuckoo-crazy-whiskey-train. And this is when it gets interesting.



 

American Whisky Industry Boom


Today, the legal distillation of whiskey and other spirits is practised in every state in America - including Washington, DC. By estimate, the US produces 37 million 9-litre cases - around 444 million 75cl bottles of whiskey - each year. The industry is dominated by big owners Brown-Forman, Beam Suntory, Buffalo Trace, Diageo, Campari, Sazerac, Heaven Hill Brands, Kirin Holdings, and Luxco - producing more than 95% of all American-made whiskey released for the market. This does not mean that all whiskey is made by the big guys.


According to our findings, between 2000 and 2022 - 1,015 new whiskey-producing distilleries were established in the US. To say that the industry expanded would be an understatement since it means that 95.1% of all currently operational American distilleries that produce whiskey in some shape or form were established in the past 22 years. That is not an expansion, it is an explosion.

American whiskey distilleries established by period of years graph

Image by The Whisky Ardvark


Most distilleries produce only a small amount of whiskey and cater to the needs of locals and their own (in the states where it's allowed). There are many opportunities to do that in a country with 9.834 million km² of land and over 333 million people. How many of them are successful and will survive is a completely different question.


To make themselves profitable, most distilleries have a wide range of products. Like many distilleries worldwide produce gins or vodkas to get the business running and money pouring in, many American distillers widen their net to keep afloat. Instead of competing in the national and international markets, they concentrate on growing themselves locally.


The most common other spirits produced by distilleries in the US include gin, vodka, agave spirits, rum, brandy, moonshine, liqueurs, and even aquavit. Only a small fraction of the distilleries concentrate solely on whiskey - even the big guys like Buffalo Trace also make vodka. But what is the percentage of these distilleries that make whiskey their priority? As it turns out, it is around 51.7%.


USA whisky distilleries established from 2000 to 2022

Image by The Whisky Ardvark


From the early 2000s, it was clear that a trend of establishing new distilleries was forming. The biggest spikes in distillery openings were in 2013 and 2014, when both years saw the opening of 114 new establishments. The year 2016 also saw a triple number figure with 107 new distilleries. There is no doubt that Covid-19 and the lockdown affected the sudden drop in entries, so it will be interesting to see where the industry is heading next.



But how are the new distilleries divided by each state? Don't worry; we asked ourselves the same question. We have also included the number of distilleries that can be deemed primarily producing whiskey or whiskey-related products in this Excel monster, including all active 1,067 distilleries.


Active American whiskey distilleries in February 2023 by state

Image by The Whisky Ardvark


What also becomes apparent is that five states are the hotspots of these distilleries. Even though Kentucky is responsible for most bourbon and rye produced and sold, it is not the winning state by the number of distillers.


Here are the five states in order by the number of distilleries - including the percentage from all 1,067 operating distilleries nationwide.


  1. California 87 Distilleries 8.25% of US distilleries

  2. Kentucky 73 Distilleries 6.84% of US distilleries

  3. New York 64 Distilleries 6.00% of US distilleries

  4. Colorado 55 Distilleries 5.15% of US distilleries

  5. Pennsylvania 53 Distilleries 4.97% of US distilleries

Five top whiskey producing states in America map

Along with the fact that whiskey is now more popular than ever, the biggest reason for the surge of American distilleries is the lifting of limitations on production. Even though nationwide Prohibition ended in 1933, in the 2000s and 2010s, most states still had laws in place to make legal commercial distilling almost impossible. To go into detail about these regulations by state, and when and what changed would be a theme for another article but by looking at the establishing years of mushrooming stillhouses by state we can have an idea.


For interest and example, we fished out some important regulatory tweaks concerning our top five hotspot states that helped small distillers on the way.



1. California

California passed a law called The California Craft Distillers Act of 2015, which came into effect on January 1st 2016. This new law lifted an abundance of Prohibition-era laws that prohibited small businesses and established individuals from distilling spirits - paving the way for craft spirit producers. For the first time since 1920, distilleries are allowed to host private tastings and events and sell up to three bottles of spirits directly to a consumer (per day).


2. Kentucky

Kentucky is one of the few states that got back to distilling very soon after the end of Prohibition. Due to the high-profile giant distilleries that produce more than 95% of the bourbon made in America, this state has always been the hotspot for new developments. Some of the recent legislation passed to make the life of distillers easier and more proficient were brought forward by the COVID-19 pandemic. In 2020, a new law made it legal to sell alcohol over the phone and online and ship instate, or to 10 other signed states, plus DC. The sale of alcohol products in distillery visitor centres was also made easier by removing middlemen involving the paperwork between the warehouses and the shops.


3. New York

New York State became one of America's first epicentres of new-wave craft distilling when The Farm Distillery Act became law in 2007. The law came with the possibility of applying for a small producer license that would initially set you back for less than $1,000 - a considerable difference compared to a class A license, which costs around $51,000. In 2022 a new law was also passed that will fast-track the process of getting a distilling license. Since then, at least 81 new producers have reportedly had their applications submitted for start-ups - so New York is not done growing yet.


4. Colorado

The state of Colorado got a distillery boost when a new type of license was created in 2015 - the Pub Distillery license - allowing the direct sales of spirits distilled by small businesses.


5. Pennsylvania

The first license since Prohibition in the state of Pennsylvania was given to Philadelphia Distilling in 2005. They, and soon others, lobbied for changes in the law to allow the direct sales of spirits from the distillery to consumers, including samples. In 2011, the Pennsylvania state legislature created a new Limited Distillery category, including a license to sell spirits. Since then, there has been a surge in distilleries.



 

What Type of Whiskey/Whisky is Produced Where


Unlike in many other countries, labelling a distillery according to what type of whiskey/whisky they produce is not as straightforward. Although there are producers that only concentrate on making one specific style, around 60% of the 1,067 distilleries we have included make at least two different types of whiskey. Please see below for more details.


Bourbon 772 distilleries/ 72.4%

Rye 516 distilleries/ 48.4%

Single Malt 172 distilleries/ 16.1%

At least two variants 642 distilleries/ 60.2%

From 1,067 distilleries


As you can see, 72.4% of all the distilleries we have included produce at least a version of bourbon - straight, bottled-in-bond, or other. US authorities officially recognised Bourbon as a distinctive product of America in 1964. It is also officially the biggest exported whiskey category. The second most popular type is rye, which has a long tradition in America.


The new guy on the block is the single malt that is currently produced in 16.1% of the distilleries. American malt whisky has different definitions and rules than those of most countries. The 51% minimum grain rule that is applied to bourbon, rye and wheat whiskies is also applied to malt whisky. But, a single malt it is not. Because of the misunderstanding that the phrasing might raise and the preservation of the single malt standards, in July 2022, a proposal was drafted for the definition of American single malt that lines up with the international directives.


To find out more about the rules and regulations of different types of whiskey/whisky, please click here. You can browse by country or type.

 

That's what we have so far, so thank you for reading. Please leave a comment below if you so choose - we would like to hear from you.



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