In A Highly Competitive Market, How Michter’s Marketing And Small Production Got To Be Kentucky’s New Cult Bourbon

Bourbon is back big time. After decades of languishing along with other brown whiskies, interest is soaring, especially in the higher priced, limited release market. According to IWSR, which does analysis for the spirits market, in 2022 bourbon became the fourth-largest subcategory overall sold on the on-line store Drizly (following red wine, white wine, and vodka; tequila overtook rum and bourbon for total sales). In 2016, bourbon held 26 percent volume share of the U.S. whiskey market, and by 2021it had grown to 30 percent. Moreover, the higher end of the price spectrum of bourbon, with bottles $100 or more, rose from a 10.5 percent share in 2021 to 12.2 percent in 2022. And within that category, bottlings that can cost in excess of $1,000 are on allocation.

Among the most coveted is Michter’s, which only became a brand in the 1990s but is now, despite deliberate keeping stocks low and releases in small batches, the fourth fastest rising brand in the market, ahead of Booker’s and Basil Hayden. Recently at auction a bottle of Michter’s 20-Year-Old bourbon went for $27,500.

I visited Michter’s founder Joseph Magliocco at his distillery in Louisville, Kentucky, to find out what’s driving the bourbon market.

What prospects for whiskey did you see before you got into the business?

In the 1990’s, when we started out on our plans to bring out a rye and a bourbon, the American whiskey business was still in a serious downturn. We had no idea how the category would grow over the next quarter century.

Why buy a brand name for a distillery that no longer existed?

I was familiar with Pennsylvania Michter’s and its great history because I sold it as a summer job during college. After the Pennsylvania distillery went bankrupt in 1989, the brand name went abandoned. In the 1990’s we acquired the brand name for $245 and got to work on re-establishing Michter’s in Kentucky. It would have been a shame to let this historic American whiskey brand disappear.

Where did you obtain your initial stocks?

I was working with Dick Newman, former president of Austin Nichols, the maker of Wild Turkey, as my advisor. My sales vice president Steve Ziegler and I went around Kentucky with Dick to several distilleries and tried their stocks. With the American whiskey business being in the doldrums, distilleries were happy to offer us wonderful stocks that they were overloaded with. In the 1990’s, there was little to no market for older age statement bourbon or American rye. Dick, Steve, and I selected bourbon barrels and rye barrels of a style we really liked, and our first two Kentucky Michter’s offerings were 10 Year Kentucky Straight Single Barrel Bourbon and 10 Year Kentucky Straight Single Barrel Rye. Due to confidentiality agreements, I cannot disclose the particular distilleries that we purchased this whiskey from.

How much whiskey were you able to produce when you built your own distillery, and how much today?

We have Michter’s Shively distillery with a 46-foot high copper column still and a 250-gallon copper pot still doubler, custom designed by the great American still maker Vendome. This distillation system is comprised of over 11,000 pounds of copper. Our second distillery, Michter’s Fort Nelson, has the legendary 550-gallon copper pot still that does the first distillation and the 110-gallon copper pot still doubler originally used at Michter’s Pennsylvania distillery. As a company policy, we do not release production and sales data.

Maker’s Mark was highly influential in the late 1980s in putting bourbon back on the map with their marketing. What were your ideas to promote Michter’s?

With our very limited budget, we didn’t have many marketing alternatives. We concentrated on people tasting our whiskeys and on educating people about them. It was bartenders and whiskey-knowledgeable retail people in our industry who spearheaded the comeback of American rye and the growing appreciation for quality American whiskey. These are the people that have been so vital to promoting Michter’s.

Have you had influence on the movies and TV shows in which Michter’s has been featured, like Billions?

No, but we are thrilled whenever we are watching a tv show or a movie and see Michter’s.

Your small batch philosophy has given Michter’s a distinct cachet. Isn’t expansion the American way of entrepreneurship? Bigger and bigger?

Everything we release at Michter’s is truly small batch (we intentionally designed our batching tanks so that they cannot hold more than the contents of 20 full barrels) or single barrel. Although Kentucky Michter’s has grown over the years, we are still quite small compared to many other American distillers. We have to allocate our whiskeys because demand exceeds supply, and we do want to be able to offer our loyal customers more whiskey over time. That being said, we have made a conscious decision to not cut any corners as we increase our capacity. Whether we are doing it or not, our goal is to make the best American whiskey. We want our quality, if anything, to get even better over time. If that means growing more slowly, so be it.

Why do different iterations of whiskies aged in various barrels mean such a wide spread of prices on the shelf?

Some of the industry’s special releases can require more expensive barrels and costly extra production steps. Ultimately, the prices are set by people’s demand for these iterations.

Your sales vp Steve Ziegler said at one time, “My job was a lot easier years ago, when we felt lucky to sell 50 three-bottle packs nationally in a month. Now, unfortunately, what we release simply is not enough to meet demand right now, and we are addressing the shortfall without cutting corners.” When did things take off?

I can’t really pinpoint a particular time when things “took off.” We started off with extremely modest sales, and the growth of Kentucky Michter’s has been gradual over a 20-plus-year period.

Is everything you make now allocated?

Yes.

How many countries do you have markets in?

We sell all over the U.S., and we sell to over 60 export markets. The Michter’s whiskeys have been well received internationally, and our export business is significant for us. It’s wonderful for our team to be able to sell an American product abroad that is recognized as high quality.

How do you say “no more” to long-term customers who have stayed with you, or important clients in hotel/restaurant markets like N.Y., Vegas, London, Dubai, etc?

That is one of the hardest challenges that we face. We are so grateful to our customers who have done so much to introduce people to Michter’s. We unfortunately don’t sometimes have as much to offer them as they would like. We comply with the applicable laws about allocating and do our best to allocate fairly.

For years Booker Noe and Pappy had achieved cult status, with available bottles going for well over SRP. You said that at a recent auction a bottle of Michter’s 20 Year Old went for $27,500, yet it is available on line for around $6,000-$7,000. What causes such mania?

For years there have been great Scotches and great Cognacs that have been selling for thousands of dollars a bottle. It’s great to see that people around the world are now realizing that whiskey made in the U.S. can rival the world’s greatest spirits. The prices being paid for some terrific American whiskeys reflect that realization.

What makes the 20 Year Old and your newest signature releases much different from other bourbons and ryes you make?

At Michter’s we pay as much attention and take as much care with our Michter’s US*1 Bourbon and our Michter’s US*1 Rye as we do with our most mature and most rare offerings. Master Distiller Dan McKee and Master of Maturation Andrea Wilson carefully monitor the aging of our barrels. The ones that they let age to 20 years and beyond are pretty extraordinary. When making great whiskey, there is no substitute for patience. Whether it’s a special release like our Toasted Barrel Whiskeys (in 2014 Michter’s became the first whiskey company to finish whiskey in a barrel that was toasted, but not charred) or one of our ongoing offerings, we pursue a house style that is rich and flavorful.

How did Bourbon Row on Main Street in St. Louis come about? Whose idea? Did the old distilleries and new distilleries agree on the idea. Were you in at the beginning?

In 2011 we announced our plans to renovate the historic Fort Nelson Building and turn it into a distillery. At that point, as far as I know, we were the first whiskey company in decades to announce a downtown distillery. Because of the poor condition and the historic status of the Fort Nelson Building, we were not able to open Michter’s Fort Nelson Distillery until our renovation was finally complete in 2019. By then several other wonderful downtown distilleries had been opened by other Kentucky distillers. I think that having a group of great downtown distilleries creates a critical mass that benefits all of them.

Is your plan to keep making small batches of successful bottlings, or to put a series of new products in the market?

At Michter’s we are always experimenting and innovating in an effort to make the best whiskey possible. We plan to continue to offer single barrel and very small batch whiskeys made at Michter’s Shively Distillery and eventually offer some of the whiskey we have been making at Michter’s Fort Nelson Distillery on the legendary Michter’s pot-to-pot still system first used at Pennsylvania Michter’s.

You bought a house in Louisville recently, though you also live in NYC. Do you think Louisville will demand you be there full-time?

I work between Michter’s in Louisville and its Manhattan-based parent company, Chatham Imports. After 25 years of staying in Louisville’s great hotels, I bought a home in Kentucky. The people I have met here in Louisville are wonderful, and I plan to spend a lot of time in Kentucky.