Collecting whole barrels of Bourbon Whiskey is increasingly popular outside America. 

The dramatic rise in global whisky prices has fuelled interest in American whiskey, as prices for Bourbon casks are still very attractively priced versus their Scottish and Japanese equivalents. But faltering prices for some fine wines is also driving interest in categories which are showing greater strength right now.  And Bourbon certainly fits that bill, as pointed out by Forbes magazine in a recent article. 

Bourbon Whiskey is taken very seriously by major whisky critics today. Jim Murray's Whisky Bible, for example, describes Kentucky's Buffalo Trace distillery as 'one of the world’s great whiskies'. And we are therefore proud to be adding the capability to source and store Bourbon barrels to the Cru platform from July 2024. 

For collectors outside the USA, accessing whole Bourbon barrels can be challenging. In this short guide we explain what Bourbon whiskey is, why it is attractive for collectors, and how to access this increasingly lucrative and important market.    

What is Bourbon Whiskey?

Bourbon is a type of American whiskey (the 'e' is intentional) made primarily from corn, alongside other grains such as barley, rye, and wheat. It was originally made to utilise excess grain left over from annual harvests in some southern US States. By law, Bourbon whiskey must have at least 51% corn (maize) in its mash bill and must be aged in new charred oak barrels. It must go into barrel (for aging) at not more than 62.5% ABV and must be bottled between 40% and 75% ABV. 

Bourbon is often bottled younger than Scottish or Japanese whisky, and there is no legal requirement on how long it must be aged for. But productions of much older Bourbon are also made, usually with large price tags to match. Buffalo Trace distillery brand Eagle Rare, for example, makes a 25-Year-Old limited release which Forbes reports now sells for around US$10,000 a bottle (if you can find it at all!).  

In this note we focus exclusively on Bourbon whiskey. Other American whiskeys are differentiated by different grain compositions in the mash bill, which determines if a whiskey is a Bourbon, Rye or plain 'American whiskey'.

A Brief History of Bourbon

The Limestone-rich water of Bourbon country imparts specific flavoursBourbon whiskey production dates back to the late 18th century when it emerged in a number of rural areas in Kentucky and Tennessee. European settlers brought distilling traditions and employed them on the local grains, which were often not barley (as in Scotland) but corn (maize). The limestone-rich water in these regions also played a critical role in defining Bourbon's distinct flavour profile and identity. 

One of the key figures in the history of Bourbon is Elijah Craig, a Baptist minister and distiller who is often credited with 'inventing' Bourbon. Legend has it that Craig charred oak barrels to transport his whiskey, which imparted a smoky profile to the spirit which he (and many others since) instantly fell in love with!  

While the exact origins of Bourbon are still debated, it is clear that early distillers in Kentucky were experimenting with different techniques to create a high-quality whiskey. Over the years, Bourbon whisky has become synonymous with American culture and tradition. The spirit gained popularity during the Prohibition era when 'moonshiners' and 'bootleggers' produced illicit whiskey to meet the demand for alcohol. After Prohibition was repealed in 1933, Bourbon distilleries began to flourish, and the spirit gained a loyal following among consumers across America, and then the world.

Bourbon's Flavour Profile

Bourbon whiskey embodies the history and craftsmanship of American distilling. 

For connoisseurs and experts, tasting Bourbon is a sensory experience that requires attention to detail and appreciation for the craft. The colour, aroma, and taste of Bourbon will vary depending on the mash bill (grain composition), the age of the whiskey, the type of barrels used for aging, and the distillation process.

The tasting notes associated with fine Bourbon (Credit: The Kentucky Distillers Association)

Tasting notes most often associated with Bourbon include hints of caramel, vanilla, oak, and spices, all delivered with a smooth and velvety mouthfeel. A higher corn percentage in the mash bill adds a bit more sweetness. A good amount of wheat will add smoothness, additional vanilla and tasted oak notes. A sprinkling of malted barley will bring subtle touches of nuts and smoke with age.

Bourbon Distilleries

Buffalo Trace Distillery is one of the icons of fine Bourbon

Bourbon whiskey today is produced by a relatively small group of distilleries in the United States, with Kentucky still its unofficial home. Some of the most well-known Bourbon brands in the retail market include Wild Turkey, Maker's Mark, and Woodford Reserve. Each distillery has its own unique mash bill, water sources and aging process, which contributes to the distinct flavours and aromas found in their whiskey.

At the top of the Bourbon tree sits a charmed circle of the most sought-after distilleries and brands. Some of the most collectable are Buffalo Trace, Old Rip Van Winkle, Willett Family Estate, Eagle Rare (a brand of Buffalo Trace), William Weller Larue, Blantons and Colonel E.H. Taylor. Most of these brands will produce multiple age statements and even sub-brands and special productions. Prices for older and rarer productions routinely extend to tens of thousands of Dollars.

How to Collect and Manage Bourbon Whiskey Barrels

The Bourbon barrel market differs from Scotland or Japan in some important respects.  

Who Can Bottle Bourdon Whiskey?

For a start, unlike their Scottish counterparts, Bourbon distilleries are allowed to buy spirit from the open market and blend this with their own distillate. This technique is especially popular with new distilleries who don't yet have a sufficient 'back catalogue' of their own aged spirit. This situation creates the opportunity for private collectors that we discuss below.

Except at the top end of the market, Bourbon whiskey is not generally cask specific. Spirit usually comes from one batch sourced from a single distilling session. The whiskey is aged - usually without regauging - and once matured, specific barrels are selected for single cask bottling or blending.  

Supply and Demand for Bourbon

Demand for aged Bourbon has been strong for a number of years. According to Allied Market Research, the global market for Bourbon rose to US$ 7.8 billion in 2021, and is projected to increase with a 5% CAGR to US$12.8 billion in 2031. 

The growth in the underlying market is important. because the supply of aged spirit is restricted in numerous ways. Firstly, establishing a new Bourbon distillery is not straightforward due the requirements of the US legal system. Even those intrepid (and well-backed) few who do take the plunge will most likely be heavy buyers of secondary market spirit for a number of years while their own production ramps up. Many other distilleries don't have enough capacity and buy the bulk of their bottled production from the secondary market.  Other brands don't have distilling rights at all and rely exclusively on the secondary market for their spirit.  Pinehook is a good example of this.  

Bourbon therefore represents an interesting opportunity for private collectors. Those with the right connections can step into the secondary market and buy up newly filled barrels and sell them on after three or five years of aging to distilleries and brands desperate for aged spirit. The market is especially appealing due to its low entry point, with new filled casks available from a couple of thousand US Dollars.  Seasoned collectors can (and do!) purchase multiple casks at a time and ride the 'appreciation curve'.  

Why Purchase a Barrel of Bourbon Whiskey?

Unlike Scotch Whisky - where collectors often purchase casks with a view to bottling themselves - the Bourbon barrel market is primarily focused on future re-sale. Because of the structural shortage of aged spirit, collectors are able to deploy a small amount of capital to buy up new fill barrels and make attractive risk-adjusted returns re-selling back to the market after three or five years.  

What Bourbon Barrels Should a Collector Buy?

There are no restrictions on private collectors purchasing Bourbon barrels, except that distilleries cannot sell direct to 'retail' buyers (because of US alcohol regulations).  

Collectors should factor in a minimum holding period of three years, after which a barrel can be sold in the secondary market (as many distilleries already bottle at this age statement). The current market price of a generic Bourbon barrel at three years is around US$ 3,000 for a generic mash bill from non-exclusive producer. Note that you will be able to sell your barrel based on the name of the distillery (but you probably won't be able to put the name the distillery on the label if you decide to bottle a secondary market barrel - due to strict US trademarking laws).  

Holding beyond three years should see the value of the barrel increase at an accelerating rate, and there is currently a lot of interest in extended aging given the scarcity of spirit at longer age statements.  

Bottling Bourbon Barrels

Bourbon barrelA small number of collectors do choose to bottle their own barrels, usually after 5 years or so, and there are plenty of independent bottlers who can facilitate this. But most Bourbon lovers who want to bottle their own spirit approach producers directly for what is called a 'store pick'. They are given a choice between a few mature casks, select one, and within 3-6 months it is bottled for them. 

But nothing prohibits collectors from buying newly filled barrels, ageing them, and bottling themselves. US whiskey law is quite flexible in this respect, and your label design should be fully customizable. But you won't be able to add the distillery name to the bottle due to trademark laws. You can, however, add the name of the town where the spirit was distilled, which is usually a pretty good indicator of which distillery it came from!

Note also that USA bottles are 75cl in size, not 70cl which is the standard with Scotch, Irish and Japanese whisky. 

Bourbon Barrel Characteristics 

Bourbon barrels have some different characters and metrics that collectors of Japanese Whisky casks won't be familiar with. Bourbon barrels usually contain around 200 bottles, and larger formats (Hogsheads etc.) are rare. Bourbon is always aged in new wood as this is a legal requirement.  

Photo Credit: Bardstown Bourbon Company 

Bourbon barrels will almost always have the percentages of the constituent grains itemised. These grains are usually corn, rye, wheat and malted barley. As an example, a Bourbon barrel will usually be presented as follows:

Kentucky Bourbon Barrel Distilled at Bardstown Bourbon Company Mash Bill C74/R0/W18/MB8 OLA 117.34 at 61.4% ABV AYS 2024

• "AYS" refers to the age of the youngest spirit in the barrel.
• "ABV" is the alcohol by volume when the spirit entered the cask.  
• "Mash Bill" composition key is: C = Corn, R = Rye, W = Wheat and MB = Malted Barley
• "OLA" is the Original Litres of Alcohol when the barrel was filled.  

For more exclusive barrels, the mash bill might be broken down into more detail, such as the precise origin of the grains, the 'grade' of grain and more details on the distillation process.   

Those outside the USA might also have to get used to seeing volume data sometimes expressed in gallons instead of litres on some barrels.  

Aging Bourbon

Bourbon whiskey ages more quickly than Scottish, Irish or Japanese whisky due to the new wood used and to the higher average temperature of the main regions of production (Kentucky, Tennessee and Mississippi are all located in the southern United States). Extended age statements (25YO or more) are certainly found, but they tend to be restricted to the most exclusive producers.   

Cru Bourbon barrel storage rates are only about half that of Scottish Whisky

Storing Bourbon Barrels

Bourbon barrels purchased from Cru will be stored either at the distillery of origin or in a dedicated Bourbon barrel warehouse in the USA.  All barrels will be visible with all their underlying data, and location, in the owner's portfolio management section of Cru's account.