Black-Owned Distilleries Capture their Share of the Kentucky Bourbon Market

April 13, 2021
Black-Owned Distilleries Capture their Share of the Kentucky Bourbon Market

The American distilling world is becoming more diversified.

Distilleries owned and operated by African Americans are reshaping bourbon’s 200-year history in Kentucky. This is an important turning point for a beverage that was initially made by enslaved labor. The new entrepreneurs are making a difference by updating bourbon’s image and providing new economic opportunities. The competition is already intensifying as small, modest startups must fend off powerful, multimillion-dollar enterprises, and as access to capital remains problematic. Nevertheless, there are several indications that the transformation of the distilling world is underway.


Video Spotlight: The Yarbrough Brothers’ Distillery


This post is based on The Washington Post article, Black-Owned Distilleries Are Breaking Barriers that Once Surrounded the Kentucky Bourbon Industry, by J. Wood, March 26, 2021, and the YouTube video, Louisville Brothers Pour Heart, Soul into First African American Bourbon Distillery in Kentucky, by WHAS11, February 17, 2020. Image source: Shutterstock / Africa Studio.

Discussion Questions:

1. Describe the Brough Brothers type of manufacturing facility. What are its advantages and disadvantages?

Guidance: The Brough Brothers distillery is a modest operation with limited production space and equipment. With the current facilities, the output will be limited to 50 gallons a week. The process is likely to be small batch production. The disadvantages are substantial: 1) lack of capital exacerbated by the pandemic, 2) lack of production capacity to generate the income needed to expand fast, 3) no economies of scale, 4) difficulty to maintain consistent quality (small batch), and 5) limited experience in distillery. The advantages are: 1)  opportunity for innovation, 2) differentiation as a micro-distillery with a social conscience and a premium product targeted at African Americans, and 3) less reliance on a multitude of investors (see the case of Fresh later in article). The present article in The Washington Post already provides free publicity and national name recognition. The new COVID-19 relief legislation also contributes financial and technical assistance to small, minority-owned businesses.

2. Is the location of the Brough Brothers distillery away from Whiskey Row a good choice? Why, or why not?

Guidance: Unlike other distilleries, the Brough Brothers distillery is not located in Louisville’s popular Whiskey Row. Rather, it occupies an unpretentious space in an economically disadvantaged part of town. The primary disadvantage is low market access in a tourist-fueled business. However, other location factors are favorable: lower cost of land for startup and future expansion, easy access to labor, lower property taxes, and development support with special loans and grants. Clearly, market access is going to be a major challenge that the Yarbrough brothers will have to overcome with a fight for the legal claim as “first Black-owned distillery in Kentucky,” by making their pitch to the right category of tour guides and tourists, and by utilizing one of the owners’ experience in the export business.

3. What are the “barriers” that Black-owned Bourbon distilleries are breaking? What are the environmental forces that encouraged this movement?

Guidance: The barriers mentioned in the article are: 1) a history of enslavement in the industry, 2) poor access to credit, 3) lack of a minority presence in the business, and 4) persistent resistance to diversity. The environmental forces that helped break the barriers are: 1) societal trends with shifting attitudes toward diversity, 2) reckoning with history and diversity push in Kentucky businesses (e.g., Jack Daniel’s), 3) scholarship programs for distillery students, and 4) spectacular growth in African Americans’ average spending on bourbon.

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