What is Bourbon worth to Kentucky & the world? First-Ever Economic Impact Study of Bourbon Industry

We would answer that question, “it is priceless.” The Kentucky Distillers’ Association tells BourbonBlog.com that Kentucky’s signature Bourbon and distilled spirits industry pours hundreds of millions into the Bluegrass economy and is a statewide leader in job creation, according to a new study just released.

The study was conducted by University of Louisville Economist Dr. Paul Coomes.  It found that distillers help create about 10,000 jobs with an annual payroll of $442 million, generate $125 million a year in taxes and have helped Kentucky weather the recession through growth.

“Bourbon and other distilling is truly a signature Kentucky industry,” Coomes said. “We produce 95 percent of the world’s Bourbon. Moreover, the market for Bourbon is growing and Kentucky distillers have been adding jobs this decade even as manufacturing employment overall is down.”

That growth has helped mitigate the economic and fiscal impact of the global recession on Kentucky, Coomes said, noting that distilling employment increased by 6 percent this decade while the manufacturing industry shed nearly 20 percent of its jobs.

“The distilling industry is much more stable than manufacturing as a whole,” Coomes said. “When the Commonwealth looks for industries to invest, distilling is a homegrown business that generates a significant return.”

Coomes is a professor of economics at the University of Louisville’s College of Business and Public Administration. He received his Ph.D. from the University of Texas. He unveiled the study  at the second meeting of the legislature’s Kentucky Bourbon Trail® Caucus this past week.

Other major findings include:

– Kentucky hosts nearly half – 43 percent – of all distilling jobs in the United States.

– With a high job multiplier of 3.29, distilling creates more spin-off jobs than other signature industries such as tobacco farming (1.267), horse farms (1.181) and coal mining (2.142)

– Distilling ranks 4th out of 244 Kentucky manufacturing industries in total employment and job multiplier behind automobiles, meatpacking and light trucks/utility vehicles.

– Kentucky dominates Bourbon production with 95 percent of the world’s supply.

– Kentucky Bourbon is the largest export category of all U.S. spirits, shipping 25 million proof gallons to 126 countries in 2008

– State and local governments receive $125 million in taxes every year from spirits production and consumption.

– Kentucky taxes distilled spirits higher than any other open market state except Alaska.

-Local communities benefit greatly from distillery operations that generate $9 million each year in taxes on aging barrels and property, creating essential funding for schools, libraries, fire departments and more.

Coomes also reviewed the potential tourism impact of the Kentucky Distillers’ Association’s Kentucky Bourbon Trail®, one of the state’s most famous tourism attractions. “We are only beginning to see the economic and tourism impact of the Kentucky Bourbon Trail,” he said.

Distilleries have seen more than 1.5 million visits in the last five years alone, according to Eric Gregory, president of the Kentucky Distillers’ Association that owns, manages and operates the Kentucky Bourbon Trail®.

And, more than 3,000 people completed the KDA’s Kentucky Bourbon Trail® in 2009 – a 400 percent increase over 2008. That’s significant, Dr. Coomes reported, because of the increased revenue to nearby communities and local hospitality groups that will benefit from the tourists.

“Over time, regular interstate travelers may choose to stay overnight in Kentucky rather than Tennessee, Ohio or Indiana because of the Kentucky Bourbon Trail,” Coomes said. “And it can only be found in Kentucky.”

Chris Morris, chairman of the Kentucky Distillers’ Association Board of Directors, said, “Bourbon has long enhanced Kentucky’s image around the world. This in-depth study clear shows that the Bourbon industry also enhances the economic health of the Commonwealth.”

Morris is Master Distiller at Brown-Forman’s Woodford Reserve Distillery.

KDA President Gregory said the report is solid proof of Bourbon’s essential role in Kentucky’s economy and as a key global export. “Jobs, tourism, tax revenue – Bourbon ranks high in all these categories that benefit Kentucky’s citizens,” he said.

“But just as important, Bourbon is a proud symbol of Kentucky craftsmanship and tradition that’s hailed around the world. Our legendary distillers do a fantastic job of producing the world’s finest spirits, representing the Commonwealth and promoting responsible consumption.

“We appreciate their commitment to Kentucky and applaud Dr. Coomes for his outstanding research and report.”