The Bourbon Industry Is in Turmoil. Could Tech Provide the Shot It Needs?

If you’ve never toured a whiskey distillery, the experience can be oddly old-fashioned. While newer distilleries thrive on automation, many still claim their “hands-on” operations as a defining characteristic, a tradition that gives them street cred. Many distilleries brag about the lack of computers or even climate control in any aspect of their operations—even if that means things don’t always go according to plan. Easily preventable errors are made as a cost of doing business, adding to the romance of whiskey making while perhaps draining the budget.

Mandel says that while the influence of a seasoned master distiller is great, there is a real risk in eschewing technology when it comes to the finished product. “What the other guys get is just inconsistent,” he says, “because they have less control over the process.” And that inconsistency, he adds, can often be felt in the quality of their whiskey down the line.

contract negotiation

Like many industries, whiskey is very undiluted, and the distillery named on the label may not produce the liquid inside the bottle. In fact, that distillery may not exist at all. For example, you can’t visit the Redemption Whiskey Distillery, because there isn’t one; The brand sources all of its stock from MGP ingredients from Indiana.

There are two primary ways to obtain whiskey without distilling it yourself. Sourcing usually involves buying barrels that have already been made by someone else. Contract distilling is when the whiskey is distilled to order to the client’s specifications. Both are common.

Mandel is a veteran Bardstown Bourbon CompanyA well-known operation he helped launch in 2014. Bardstown made (and still makes) its own whiskey, but like many distillers it also produces for others on contract. These contract distillation services are where quick money is made. Whiskey produced today won’t be sold until properly aged—for years—but unlike consumers, contract consumers must pay up front. Bardstown has been able to thread the needle, and both sides have done so successfully—despite its thriving contract manufacturing business and the hiring of Hargrove (who now leads the Whiskey House production team) to fix some quality issues, Mandel suggests that Bardstown wasn’t so lucky in its early days.

When Mandel and Hargrove left Bardstown for a private equity buyout a few years ago, they almost immediately began working on a new business. Mandel said the idea was simple: “If we could start over, we could take what we learned and build the distillery and system from scratch,” he says. “What’s needed there? What problems can we solve?”

Turns out there were a lot of problems to solve and a lot of demand. After all, many so-called non-distiller producer brands—including most of the “celebrity” whiskeys that now flood the market, like Beyoncé’s SirDavis—have to be made somewhere.