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

If you’ve never visited a whiskey distillery, the experience can be unusually old-fashioned. While newer distilleries thrive on automation, many still tout their “manual” operations as a defining characteristic, a legacy that gives them street cred. Many distilleries outright welcome the lack of computers or even climate control in all aspects of their operations, even if it means things don’t always go as planned. Easily avoidable mistakes are considered a cost of doing business, perhaps adding to the romance of whiskey making while draining the budget.

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

Contract negotiations

Like many industries, whiskey is very incestuous and the distillery listed on the label may not actually make the liquid in the bottle. In fact, this 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 inventory from MGP Ingredients in Indiana.

There are two main ways to get whiskey without distilling it yourself. Sourcing generally involves purchasing barrels already made by someone else. Contract distilling is when whiskey is distilled to order according to a customer’s specifications. Both are commonplace.

Mandell is a veteran of Bardstown Bourbon Company, a renowned business he helped launch in 2014. Bardstown made (and still makes) its own whiskeys, but like many distillers, it also produces for others under contract. These contract distilling services are where you make money quickly. Whiskey produced today will not be sold until it has been properly aged (for years) but unlike consumers, contract customers must pay up front. Bardstown managed to thread the needle and do both sides successfully, but without its thriving contract production business and the hiring of Hargrove (who now leads the Whiskey House production team) to fix some quality issues, Mandell suggests that Bardstown might not have been so lucky in its early days.

When Mandell and Hargrove left Bardstown during a private-equity buyout a few years ago, they got to work on a new venture almost immediately. The concept, Mandell says, was simple: “What if we could start again, take everything we learned and build the distillery and the system from scratch,” he says. “What is needed there? What problems can we solve?”

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