1st Quarter 2008

growth of tennessee whiskey exports graph

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tennessee's percent of american whiskey exports graph

Tennessee Whiskey Exports:
The New Old Reliable

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One doesn’t usually associate words like “reliable” and “steady” with whiskey. Yet whiskey has become one of the state’s most reliable exports. Steady, and steadily increasing, the foreign sales of whiskey have more than trebled in the past decade. Over that time, it has well out-performed most other exported goods. With 2007 exports valued at $478 million, it was Tennessee’s fourth largest export this past year. (It was ranked 11th  back in 1997.) The evidence suggests that this will continue for some time. 2008 is just the latest in a string of very strong years. Through April, whiskey exports are up a full quarter from just a year earlier. Very few products have had such a successful run through a variety of economic climates. 

The global demand for American whiskey has never been stronger. This certainly explains much of the state’s success. But not all. During the past 10 years, American whiskey exports have risen by more than 150 percent (not adjusting for inflation). But Tennessee’s exports are up over 360 percent. In the past decade, Tennessee has become the nation’s top exporter of whiskey (surpassing Kentucky in 1999) and has gone on to grab more than 60 percent of America’s total whiskey exports. It now exports more than twice as much whiskey as Kentucky, now the number-two state.

The reason for this performance of course is Jack Daniels. The number of American whiskey brands marketed abroad remains narrow. While most of those brands are rapidly gaining sales, U.S. exports are in fact still dominated by two brands: Jim Beam and Jack Daniels. And over the past decade, Jack Daniels has forged a huge lead over its Kentucky competitor. Brown Foreman, the owner of Jack Daniels, reports that more than 50 percent of its sales now come in international markets. Jim Beam exports in the neighborhood of 35 percent of its total sales. The dramatic success of Jack Daniels has rebounded to the state’s benefit. (Not all state whiskey exports are Jack Daniels, of course, though the vast majority is. Distributors and wholesalers export some Kentucky bourbon as well. George Dickel does not export, although its product is available through mail order and specialty stores in some European countries. Those sales, however, appear to go through distributors located in other states.)

The success of Jack Daniels has been linked to its ability to build an identity firmly rooted in rural Americana. Foreign consumers may not know exactly where Tennessee is, but they recognize its lifestyle as depicted in Jack Daniels ads. Bourbon makers are increasingly taking this same marketing tack, and we will see how Brown Foreman responds. next