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Friday, July 5, 2019

Jim Beam Warehouse Fire - What You Need to Know

As has been reported from everywhere from CNN to the Weather Channel, a fire at Jim Beam that started on Tuesday, July 2 has impacted two warehouses and destroyed 45,000 barrels of 'relatively young whiskey from the Jim Beam mash bill'. For those unfamiliar, the Jim Beam mash bill is estimated to be 75% corn, 13% rye, and 12% barley and entered at 125 proof into a #4 char barrel. This mash bill is estimated to produce all Jim Beam products (Beam, Devil's Cut, Black, Bonded, etc.) as well as Booker's, Knob Creek, and Old Crow.
Thankfully, like the O.Z. Tyler warehouse collapse last month, no injuries were reported. Fortune is reporting that Jim Beam operates 126 warehouses that contain approximately 3.3 million barrels so this loss represents approximately 1.4% of the product. When they did the math, it is estimated each barrel can produce between 150-210 bottles.... at an average price of $15-35 per bottle, the loss is in the $90-300 million range of lost bourbon. This is based on retail prices to the end consumer so the true loss to Jim Beam is estimated to be much lower as their wholesale prices are lower. Regardless, it's a big loss.

Pat McDonogh/Courier Journal via AP

In terms of the environmental impact, Kentucky Energy and Environment Cabinet spokesman John Mura has said that there has been runoff into a nearby creek that flows into the Kentucky River. The agency has said that the runoff could have a serious impact on aquatic life and is expected to create low dissolved oxygen levels, which could result in substantial fish kills. 

State officials warned recreational users on the Kentucky River that runoff will result in water discoloration, foaming and an odor. Because of this, officials are urging people not to capture or eat fish that appear to be unhealthy or dying. Additionally, the Environmental Protection Agency has been dispatched to the scene

Pat McDonogh/Courier Journal via AP

As of today (July 5th), the fire is still burning and officials are still a day or two away from determining when to extinguish the fire. Officials believe the only thing burning at this point are ethanol fumes and the thought is to let it burn out, rather than bring more water to it, which has the potential to further runoff to the Kentucky River. Officials are still looking for the root cause of the fire and have not ruled out weather, such as a lightening strike .

Our Take

Thankfully, no one was injured or killed in this disaster. However, there is a clear environmental impact and Beam should be held accountable for the damage they have caused which will add to the cost. Jim Beam is the world's best selling bourbon brand, so if anyone can handle a loss of this magnitude, they are probably better equipped than anyone. They have released a statement that the fire won't impact the availability of the product for consumers... which is obvious because the barrels that burned were 'relatively young'. It'll be interesting to see in a year or two when the barrels would have been at their maturation if there are availability issues or if the price increases due to scarcity.

Below are some pictures of some of the Jim Beam warehouses I took when I toured the distillery in 2011. These are not the warehouses that burned.

Statement from Jim Beam

“We are thankful that no one was injured in this incident, and we are grateful to the courageous firefighters from multiple jurisdictions who brought the fire under control and prevented it from spreading. Initial reports suggest that the fire resulted from a lightning strike, and we will work with local authorities to confirm the cause and to remediate the impacts.

We have a comprehensive warehouse safety program that includes regular inspections and rigorous protocols to promote safety and the security of our aging inventory. We operate 126 barrel warehouses in Kentucky that hold approximately 3.3 million barrels for our brands, and the warehouse that was destroyed contained 45,000 barrels of relatively young whiskey from the Jim Beam mash bill. Given the age of the lost whiskey, this fire will not impact the availability of Jim Beam for consumers.

We appreciate the support of our neighbors and the Kentucky Bourbon community as we manage through this incident.”

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