Is There a Bourbon Shortage or Not?

May 15, 2015 – There’s been quite a flurry of reports recently regarding a looming shortage of bourbon, or maybe not.  In a long article on May 12, the Wall Street Journal looked behind the production of bourbon to its maturation and storage  — in white oak barrels.

Yes, there is a barrel shortage, which may result in a bourbon shortage.  It goes like this:

The popularity of brown spirits is soaring at established distilleries.  Add in about 300 new craft distilleries making bourbon.  Then factor in the lumber industry, which has yet to recover from the 2007 housing bust.  Sawmills closed and loggers left the industry.

There’s plenty of white oak to be had, just not enough sawmills and loggers to supply it.  This interesting statistic demonstrates just how big the contraction in the lumber industry has been:  In 2005 11.7 billion board feet were produced.  In 2009, it was 5.9 billion board feet.  The housing market is beginning to pick up and last year 8.6 billion board feet were produced but the backlog continues to be a problem for the white oak used by distillers.

One barrel maker said that desperate distillers are offering $250 a barrel, a 70% increase over the usual $150 per barrel price.  The company, McGinnis Wood Products has been in business for over 50 years and can only fill orders for longtime customers.  Bourbon needs a minimum of two years in barrel and the barrels are not re-used for bourbon.
Most of the big corporations have the capital and capacity to expand their buying area from close to home to other states and even purchase their own mills.  Even so, according to the Kentucky Distillers’ Association, bourbon production has surged more than 50% between 2010 and 2013.  In 2013 they filled 1.2 million barrels, 200,000 more than the year before. For the craft distillers, finding barrels is a huge problem and many anguish that they won’t be able to mature their bourbons in barrels, an absolute necessity as charred barrels are critical for color and flavor.

So, yes, there is a barrel shortage, which may lead to a bourbon shortage.  It doesn’t sound as though the shelves will be empty any time soon, or ever, but it may drive prices higher and limit selection of special, handcrafted product.