We're just a little past the 10th anniversary of the Heaven Hill fire. It's interesting, in retrospect, how little effect it has had on the big picture, although it was certainly a scary event and the loss of DSP 31 was a sentimental one, if nothing else.
What struck me as I was looking over some materials from back then is that Heaven Hill was only without a distillery for about 28 months, from November of 1996 to March of 1999. In the interim, they had whiskey made for them at Jim Beam and Brown-Forman. I don't believe they even built any more warehouses, although they did acquire some around the area. They acquired some at Bernheim too, but since they're masonry they don't like them and won't use them for whiskey.
Parker and Craig Beam made a lot of changes to Bernheim, but they are more or less content with it now. It is operating at capacity and they are still making whiskey at Brown-Forman, which is just about the only distillery that is not operating at capacity right now.
Today the Courier-Journal had an article about Beam investing about $120 million in its Kentucky distilleries. I know Barton has been increasing capacity and Brown-Forman is about to add more at Jack Daniel's. Wild Turkey has built some new warehouses. I don't know of anything specific going on at Four Roses, but they would seem to need it most of all.
Although Buffalo Trace says it is operating "near" capacity, I haven't heard about them adding any, but they're already the biggest distillery in Kentucky. They are adding a little bit of warehouse capacity by refurbishing Warehouse D.
It just seems like, before too much longer, somebody is going to have to either get one of the old plants out of mothballs or build a new one. Will Heaven Hill, perhaps, build a new plant in Bardstown? Will Kirin expand Four Roses? Maybe Diageo will get back in, perhaps by resurrecting Stitzel-Weller, which it does still own. That would kill two birds, because if they stop buying so much of the Four Roses output, Four Roses can double its distribution without increasing its production.
It looks like Beam is increasing warehousing and storage capacity at Frankfort (formerly Old Grand-Dad) but isn't thinking about firing up those stills again and is, instead, putting in another one at Booker (Boston). And, of course, Maker's is going forward with the plan announced some time ago to build what is, in effect, a third distillery on the site.
I was struck by the KDA statistics in the CJ article, showing annual production in Kentucky rising from fewer than 500,000 barrels in 1999 to more than 1,000,000 in 2006. In other words, doubling in eight years. I don't believe Daniel's and Dickel have increased that much, but they (especially JD) have been increasing production too. That the Kentucky producers doubled production without doing much to increase capacity shows you just how much excess capacity there was in 1999, but that's done. Something has to happen. I mean, it already is happening at Beam and B-F (at JD). I can't believe everybody else is going to stand on the sidelines and let those two companies increase their dominance, are they?
Just wonderin'.