The billion-dollar bourbon boom

  @FortuneMagazine February 6, 2014: 7:16 AM ET
BOU24 bourbon

Fred Noe, Jim Beam's great-grandson and the company's master distiller, stands guard in the rack-house at the Jim Beam American Stillhouse in Clermont, Ky.

(Fortune)

On a recent trip to Australia, Fred Noe, the master distiller at Jim Beam, stopped by a liquor store in a small town outside Sydney. In the city, Noe had seen hundreds of people line up to get his signature on a bottle of bourbon. "My guys said, 'Fred, you're a rock star!' And I said, 'Yeah? Where are my groupies?' " But even here, in the Australian countryside, dozens of bourbon fans had shown up to greet him -- groupies included. "A lady asked me if I would come outside and sign the hood of her car," he says. "I took a Sharpie and wrote 'Stay on the Beam' on the hood of her Ford Falcon. Another lady wanted me to come home with her and sign her pool table, but the sales manager said, 'No way.' "

Noe chuckled, but he's used to it. American whiskey has never been hotter, and that has made the man behind Beam an international celebrity. Noe is the great-grandson of Jim Beam and the seventh member of his family to serve as the company's master distiller. But while his forebears spent most of their time laboring over stills in Kentucky, he's as likely as not to be judging a cocktail competition in Moscow or meeting with executives in Beijing. "That is something I never dreamed in my entire life, going to Russia or China," he says. "Those might as well have been the moon."

A decade ago, the American whiskey industry was flat on its back, having suffered decades of weak sales and underinvestment. Today, though, bourbon -- the corn-based, barrel-aged spirit that accounts for the vast majority of the whiskey made in America -- is everywhere, from Mad Men to the wet bars of C-level office suites, feeding a global ecosystem of tourism, whiskey bars, cocktail competitions, and craft distilleries. The most coveted drink on Wall Street is no longer a Screaming Eagle Cab or a 40-year-old Glenfiddich, but the 23-year-old bourbon from Pappy Van Winkle, which is so rare that it can retail for up to $3,500.

"I like that it's a bit sweeter, whereas I don't really like the smokiness of Scotch," says Ian Bremmer, the founder and president of the Eurasia Group and just one of the many young, globetrotting executives turning to bourbon. "It's like the difference between American reds and French reds. The French are smoky and oaky, while Americans do fruit bombs -- which, done well, are really nice."

In absolute numbers, the bourbon industry's $8 billion in global sales is relatively modest. (The Coca-Cola company alone has 16 drink brands with annual sales above $1 billion.) What's extraordinary is the growth -- and the fact that bourbon's popularity appears to have come out of nowhere. According to Euromonitor, domestic whiskey sales have soared by 40% in the past five years -- NASCAR-fast numbers in a sector where good growth often means 2% or 3% a year, and a revolution for a spirit whose sales declined almost without a break for 30 years. Things are even better abroad. In 2002, American distillers exported just $376 million in whiskey; by 2013 that number had almost tripled, to $1 billion, according to numbers released this month by the Distilled Spirits Council of the United States.

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