Is There A Barrel Shortage?

There have been whisperings of an impending barrel shortage for some time now.  One of the challenges for the bourbon industry is the requirement that bourbon be placed in new charred oak containers, so once a barrel is used for bourbon it can never be used again (for bourbon, at least).  With the current boom there are more barrels of bourbon aging in Kentucky than there are people, and it takes a lot of wood to make all those barrels.

It has been suggested that the economic downturn of recent years has eased the supply problem.  Fewer new homes are being built and there’s less demand for premium wood for high-end furniture, so all that wood can be used elsewhere.  The Whiskey Wash recently reached out to Brown-Forman to get their thoughts on the barrel shortage from the perspective of a company that owns its own cooperages.  According to VP, Director of Corporate Communications and PR Phil Lynch:

“Brown-Forman has owned its own cooperage since 1946, and now we own two cooperages, having opened the new Jack Daniel’s Cooperage in Decatur, Alabama last year.  We believe owning our own cooperages gives us a strong competitive advantage, but not because of the “barrel shortage” issue, but rather because we can toast and char the barrels to our precise standards.  In fact, we use different toasting and charring for different bourbons to create unique taste profiles, because, as I’m sure you know, some 60% of a bourbon’s flavor is derived from the maturation process.

“As for our challenges, last year’s extremely wet and long winter weather created a temporary supply chain issue with securing logs from which to make barrel staves, because the loggers couldn’t get into the forests to log until the ground dried out.  But as the year progressed, that problem diminished.

“Of course, with all the new distilleries being built across the U.S., there is an increasing demand for barrels, which is why we opened a second cooperage in Alabama and recently bought property in Owen County, Indiana on which we are building a fourth stave mill to produce staves for our cooperages.  We also have three other stave mills in Jackson, OH; Clifton, TN; and Stevenson AL.

“I will also note that Independent Stave Company recently announced plans to expand capacity its operations here in Kentucky, so the barrel-making operations are expanding to meet the growing demand for barrels.”

While there have been hiccups in the supply chain over the last few years, the only distilleries likely to experience a serious issue with a barrel shortage are the smaller and newer ones who haven’t yet had the opportunity to build those relationships with cooperages.  But even the smaller cooperages are expanding their capacity to meet demand, so this shortage is not likely to last very long.