Flooding, Tariffs, and No Buffalo Trace?

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Forward: I have remained quiet about my opinions on the recent tariffs and the effects they’ll have on exported and imported alcohol in the United States. Now that Kentucky is experiencing some of the worst flooding in a while, I see many of the same opinions being lobbed concerning bottle availability and pricing. I figured now is the time to offer an opinion that covers both.

The bourbon industry has always suffered bad fortune in some form or another since its inception. If you go back far enough, there was the wild west of bourbon before 1897 where producers were putting anything and everything into a bottle and selling it was bourbon or whiskey. Two world wars paused production. Prohibition looked like it might kill off the industry for good. And even when all of those events were in the rearview mirror, American seemed like it had simply lost its taste for brown water.

It’s not like the good times are much better to the industry. When bourbon truly started to take off 15 years ago, shortages of the good stuff were common. Producers were caught off-guard with limited stocks as angry enthusiasts voiced their complaints across multiple platforms. The secondary market saw wild swings with bottle valuations during the pandemic. It seemed like the best time to become an enthusiast was years ago.

Then the tariffs and floods came.

“Good, more for me then”

Whenever you hear people talking about what impact the tariffs will personally have on them, the sentence “Good, more for me then” will inevitably be muttered. I can see their logic. Here’s a scenario that I imagine goes through their minds: Imagine you typically sell eggs to five neighbors for $5 per dozen. One day, two neighbors stop buying from you. Theoretically, you have two dozen extra eggs to sell. That probably means that you’ll charge less for your eggs to get rid of the rest, right?

You might be right in the short term. Those three neighbors might buy some extra, cheaper eggs from you a couple of times, but it’s not sustainable. Producers of any product do not keep the same output if there is less demand. And consumers don’t consistently buy more of something over the long term if the price is lower.

In my example we’re only talking about the regular eggs. How about if I threw in the curveball that your chickens also laid 1 golden egg every couple months? Since it’s golden and rare, you would charge more for it – let’s say $20. But the thing with the golden egg is that there are actually 10 neighbors that are interested in buying that golden egg. They don’t buy the regular eggs because they just don’t want them. You see where I’m going with this, right?

But there’s a lot going on behind the scenes that sustained the production of those eggs for those 5 neighbors. You built a coop large enough for that many chickens. You had to buy food for the chickens. You had to hire security to keep the chickens safe and maybe a couple workers to tend to the chickens, collect the eggs and clean the coop. You might also have to buy a new chicken every now and then if one dies.

If your income suddenly gets reduced by 40%, you have less money to spend on all of the things you needed to support those chickens. The only way to reduce costs is to get rid of some of the chickens. Now you don’t have to buy as much food, employ as many workers or replace as many chickens. The downside is that you’re also reducing the chance a chicken will lay a golden egg from once every couple months to once every six months.

I hope at this point you’ve followed along and see where I’m going with this. If you aren’t, then let me put it into context by using Buffalo Trace as my example. Buffalo Trace is the chicken owner. The chickens represent the capacity of the distillery operations. The eggs represent their basic brands. The golden egg represents an allocated product they produce like Buffalo Trace Antique Collection, Blanton’s, Pappy Van Winkle or any other unique product.

If you cut back on how much bourbon and whiskey you make, you lose the ability to have barrels that eventually become those rare, allocated releases that are so fantastic to drink. Allocated bottles like Pappy Van Winkle or Eagle Rare 17 do not just happen because they were left in the barrel long enough. They are carefully selected as they age. Sometimes they are moved to locations where they can’t evaporate out of control or become over-oaked. This is to help them reach into their teenage years (or more!) and still have enough liquid in the barrel that actually tastes good.

Buffalo Trace had been expanding its chicken operation for many years now. They’ve been able to harvest more “golden eggs” which they hold on to in specific places around the chicken coop, errr, campus, until they are ready to sell them. But then the floods came and now those golden eggs might have been washed away. So let’s talk about the floods.

EH Taylor “Flood Survivor”

Kentucky is a state that gets a lot of floods. There’s no way around it. In fact, you’d think that by now these campus’ that are near rivers would have installed moats around their warehouses with emergency sump pumps and generators to ride out the storm. I dunno, I’m just spitballing solutions when I see devastation like this.

Sometimes there is just no stopping mother nature. The pictures of the devastation to the Buffalo Trace campus look insane and my first thought is “What about all of the barrels stored in the subfloors and first floors of the warehouses? Visitors that have taken the tours here know these especially well. One of the main warehouses you get to walk through is Warehouse C.

Buffalo Trace intentionally stacks the bottom floor (which sets many feet lower than the actual ground around the building) with priceless experimental barrels or highly aged bourbon, wheated bourbon and rye whiskey. Visitors that known a little bit about bourbon probably believe that all warehouses at Buffalo Trace are packed with goodies like this. But in reality, it’s usually the bottom floors that hold the oldest – and most valuable – barrels. They’re trying to control evaporation and prevent oak over-extraction.

I’m not saying that every first floor of every Buffalo Trace warehouse held priceless barrels of Pappy, BTEC, BTAC and more, but I believe there are more of those types of barrels on the first floors per capita than any other warehouse floor. This is especially devastating to warehouses like H (which is where every barrel of Blanton’s must age inside of at least for a period of time). The reason is because Warehouse H is only four floors tall which could mean that 1/4 of all Blanton’s barrels have been wiped out by the flood.

Warehouse K is known to house a substantial amount of Buffalo Trace Experimental Collection barrels within and Warehouse M has a large refrigerated room on the first floor that stores barrels destined for ultra-rare releases like the 25 Year Old Eagle Rare release and all “Last Drop” releases. It’s hard to tell if these barrels were salvaged before the water levels rose too high.

One oversight that I’m betting Buffalo Trace is kicking themselves over is the fact that many years ago, they converted Warehouses S/R and T/U into office space. These warehouses are the furthest from the river and could have possibly fared better in a flood. I haven’t been there on the ground, but from the pictures I’ve seen, the road that is closest to Warehouse T/U appears to not be under water.

Buffalo Trace’s newest warehouses appear to be safe

The one thing that I don’t think people are realizing is that Buffalo Trace has been building new warehouses at a rate of roughly one every four months on the northern end of their campus. This area was an adjacent property known as Peak’s Mill. The new warehouses are metal clad (with insulation) and contain wooden floors with dual zone heating installed within. The 58,000+ barrels they hold are stored in ricks (which is awesome when you consider so many distilleries are building palletized warehouses these days).

I’m drawing attention to them because I want to point out that as much as people might think that Buffalo Trace could be facing a bourbon shortage in the coming years, these new warehouses will probably guarantee that’s not going to happen. In fact, the oldest of these new warehouses has probably already started to have its barrels harvested as of a couple years ago.

Buffalo Trace started building them in 2018 to make sure they could meet the demand of the bourbon boom. But now we’re in the middle of a slowdown that started around 2023 and 2024 just as the barrels were coming of age. The question is just how much inventory the floods have wiped out. My guess is that the barrels on the bottom floors were not filled with the 5-8 year old barrels that these new warehouses are filled with. If I’m right about that, then we’re not going to see any shortages of products that contain whiskey under 9-years-old.

Conclusion

My prediction for the future of Buffalo Trace products is this; I think that over the next three years, we won’t see a shortage of any standard Buffalo Trace labels. I think that the Peak’s Mill warehouses guarantee a steady stream of liquid that’s going to be just as mature as their products currently on the shelf today.

But I do see the limited-edition bottles being impacted the most. I think that these were the types of barrels that were being stored on the bottom floors of Buffalo Trace’s oldest original warehouses. I think that the barrels that the flood waters touched will be discarded due to health and safety concerns about contamination. If you’ve been the victim of a flood in the past, then you know that this is a very real thing.

Buffalo Trace stopped publishing case numbers of the various BTAC labels that were created each year, so there’s no sure-fire way of knowing if I’m right, but there will be signs. Keep your ear to the ground this fall to hear if Buffalo Trace distributors are telling stores that their allocations are going to be less than last year. We might also see less new label filings through the TTB. Those new Prohibition Series bottles? I bet that program gets put on hold. I even think brands like “The Last Drop” and successors to Eagle Rare 25yr will become even more scarce than they already are.

All of this is bad news to enthusiasts who hoped that this would be the year they’d finally land their first BTAC bottle or that maybe WLW would be as plentiful as GTS. I think that there’s going to be more than a few years of impact to the total numbers of their elite bottles. I can only hope I’m wrong.