That hammer on wood sound you just heard was every distiller in Kentucky pounding a mallet on a bourbon barrel to pop the bung to celebrate the passing of emergency orders HB 500.
It was sometime last year that the Kentucky Department of Alcoholic Beverage Control figured out the process used by Kentucky distilleries to sell single barrels of bourbon was not codified and it broke many established laws. In other words, it was illegal, and the ABC gave the industry partners until April 15, 2022 to fix it or shut it down.
So, while distilleries in many other states across the country entered 2022 prioritizing Direct-to-Consumer (DTC) shipping of spirits, Kentucky’s number one legislative priority was to make sure private barrel selects of bourbon could continue to happen.
A Statement from the Governor’s office upon the signing reads: House Bill 500 promotes Kentucky’s signature industry by providing clarity in the practice of selecting private barrels of bourbon at distilleries. These events have become a popular attraction for tourists on the bourbon trail.
Kentucky Single Barrel Sales Law Passed with Only Days to Spare
The industry was under a mandate to legalize the popular private barrel selection process, which the ABC had said was lacking clear statutory authority and gave the industry until April 15 to seek a legislative solution. The alternative would have been disastrous for Kentucky distillers.
Kentucky Distillers’ Association – KDA President Eric Gregory said, “The deadline motivated all segments of Kentucky’s three-tier system – distillers, wholesalers, and retailers – to collaborate and compromise. We are all interested in growing the Bourbon pie for everyone, especially for consumers and tourists.”
The problem was the logistics of the Private Barrel Selection (PBS) process was mired in a flawed and inefficient regulatory process. Technically it’s the many steps that a consumer and the distillery go through to select and purchase a single barrel that unintentionally went against current laws. Fortunately, the newly signed bill establishes a legal framework for the popular private barrel selection programs.
What was the Problem with Selling Single Barrels of Kentucky Bourbon?
Bourbon fans often turn the single barrel or private barrel selection process into a pilgrimage as they plan a trip to visit their favorite distillery. What a better tourism experience than a trip to the place where your favorite spirit is made along with a chance to meet the maker of that spirit. According to a study from the KDA as much as 70% of Kentucky Bourbon Trail visitors come from out of state and they spend between $400 and $1,200 on average while visiting.
Every distillery runs their single barrel selection and sales process slightly different. Some distilleries provide a consumer with as few as three barrels while others may offer as many as a dozen different barrels. Some distilleries will take visitors to the barrel warehouse and let them draw samples of bourbon directly out of the barrel with a whiskey thief while others will have samples pulled and poured for them and waiting in a tasting room. One of the challenges here is Kentucky limits consumers to a maximum of 1.75 oz. of bourbon for tasting per person per day. If you are investing thousands of dollars and sampling from multiple barrels of whiskey you are likely going to taste more than 1.75 oz. The new law excludes this limitation for private barrel selects.
Though not quite the same experience some single barrel picks can also be done remotely, and the consumer never sets foot on the distillery grounds. In this case, the distillery will send out the samples in the mail for tasting. Sample sizes and Direct to Consumer shipping laws both come into play here.
Another hurdle was consumers are only allowed to purchase a maximum of 9 liters (two cases) per purchaser per day. A single 53-gallon barrel depending on its age and the loss to the Angel’s Share may yield less than 100 or as many as 240 bottles.
Now, with passage by the Kentucky House, Senate and Governor Andy Beshear’s signature it’s time to turn the page and look ahead.
In addition to the single barrel program there are several other goodies in the bill that will help with bourbon sales and tourism. Here is a complete breakdown.
What’s in Kentucky’s New HB 500 Law?
Single Barrel Selects / Private Barrel Selects (PBS)
Fully authorizes private barrel selection events and requires 70% of private barrels picks to go to retail licensees through the three-tier system, allowing distilleries to sell 30% of barrel picks to private consumers, businesses, and non-profit groups. All retail private barrel selections must go through the three-tier system.
There is no limit on the total number of single barrels a distillery may sell per year.
Distillery Exclusive Bottle Sales
Allows distillers to sell exclusive bottles on-site at distillery gift shops. This provision will drive repeat visitors to Kentucky distilleries, meeting consumer demands for unique bottles that they can only get in the Commonwealth.
Total bottle sales at the distillery are limited to 9 liters per person per day. Of that 9 liters, distillery exclusive bottles are limited to 3 liters per person per day.
There is no limit on the number of distillery exclusive bottles a distillery may choose to sell.
Satellite Tasting Rooms
Gives each distillery the opportunity to open a satellite tasting room, which will help bring Bourbon tourism to downtowns and communities that might not be able to attract a full-blown distillery experience. Satellite tasting rooms can offer samples, bottle sales and cocktails with proper licensing.
Satellite tasting rooms are limited to one per Distilled Spirits Plant – DSP number. The primary DSP location must offer a tourist experience with samples and souvenir bottle sales to be able to offer a satellite location. For example, Casey Jones Distillery a full-service craft distillery in Hopkinsville, which is in Western Kentucky, may choose to create a satellite location in Louisville or Lexington, the two largest cities in the state, respectively.
If a distillery has more than one DSP number and both offer a tourist experience with samples and souvenir bottle sales then they can have multiple satellite locations.
And with the proper license the satellite locations can also offer mixed cocktails.
This may take a few months in working with the Kentucky ABC to figure out the logistics and proper licensing for satellite locations.
Samples and Bottle Sales at Fairs & Festivals
Allows distillers to offer complimentary samples and sell bottles at fairs, festivals and farmer’s markets. Retailers also are allowed to offer free samples and sell bottles of wine and spirits at these same events in the county where they are licensed.
Barrel Aged Cocktails
Legalizes sales of barrel-aged and batched cocktails, a common practice that was not specifically authorized in Kentucky law since the alcohol was not poured from its original container.
Gregory expressly commended Rep. McCoy, the bill’s sponsor, and Sen. John Schickel for their leadership. “Both genuinely understand and appreciate the importance that Bourbon plays in Kentucky’s economy and tourism industry,” he said.
“This bill will continue to transform the Kentucky Bourbon Trail® experience into a major tourism destination like Napa Valley and Sonoma in California,” Gregory said. “We deeply appreciate the support of the Kentucky General Assembly and thank them for their support.”
Now it’s time to break out your favorite single barrel select bottle and enjoy a pour. Responsibly of course. Cheers!
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