Buffalo Trace Distillery, whose corporate predecessors unloaded three whiskey warehouses for $433,000 at a time when the industry found itself in a tight spot, recently dug into its pockets for $18.8 million to buy them back – new evidence, perhaps, that bourbon is once again an alcoholic beverage of choice and a cash cow for its producers.
Spokeswoman Amy Preske told State Journal reporter Kevin Wheatley that Buffalo Trace has no immediate plans for the warehouses, originally sold by Ancient Age Distillery in 1991. Like a lot of other property that changes hands in Frankfort, they ended up as office buildings leased to state government. The old warehouses became Leestown Square, a three-building complex.
The rental business evidently was not lucrative enough to keep the two most recent owners, Two-O-Third Aventura of Miami, Fla., and Sembler Frankfort of St. Petersburg, Fla., out of financial trouble. U.S. Bank foreclosed in 2010 after they defaulted on a $31 million loan.
State government leases on the office space expire in 2014 and 2015. Pamela Trautner, spokeswoman for the Finance and Administration Cabinet, said the state has no plans to move and the distillery said it will honor the lease agreements.
It’s tempting to speculate on what the distillers might do with their retrieved warehouses in the event that bureaucrats ultimately vacate the premises – say, if state government makes good on its professed intention of curtailing property rental in favor of owning its own office buildings.
Not so long ago, Kentucky’s signature spirit seemed to have fallen from grace among a new generation of drinkers, weaned on soda pop, who preferred more neutral-flavored mixers (think vodka, gin, tequila) to corn whiskey that was aged in charred oak barrels. Now that new generation is itself aging, and acquiring more refined tastes. Bourbon is back. Demand is up both here and abroad.
Last year, reporting on the opening of a new $50 million state-of-the art production facility at the Wild Turkey distillery in Anderson County, Bruce Schreiner of the Associated Press wrote that the expansion was driven by new markets for premium brands that appeal to more cultivated tastes. New cocktail recipes have been concocted for young adults and an emerging middle class overseas is anxious to give Kentucky libations a try.
Maker’s Mark of Loretto, a pioneer in the market shift from low-cost to upscale whiskey, planned 20 to 25 new warehouses within six years.
Jim Beam, maker of the world’s top selling bourbon, was in the process of upgrading its Clermont plant, not just to increase production but to add amenities for the growing number of tourists eager to learn about the fascinating traditions of whiskey-making. In Franklin County, Fiscal Court granted a 10-year occupational tax break for new employees of the local Beam plant to show appreciation for its $28 million expansion project.
Perhaps Buffalo Trace will be happy to continue as a state government landlord. But Leestown Square, with 469,600 square feet of space, might serve more valuable purposes for a company that operates on a site where distillers practiced their craft even before Frankfort’s founding. If the current whiskey boom continues, one or more of those buildings might be the perfect place for a museum dedicated to an industry that rivals politics in its impact on Central Kentucky. We’re curious to see what eventually develops.