No industry has been left untouched by pandemic-related disruptions, and distilling is no exception. From shutdowns and glass shortages to paying more for just about everything, the spirits world has been rocked more deeply than at any other time since Prohibition. And the latest issue may be the most serious yet.
Multiple whiskey distilleries have reported an imminent shortage of barrels, confirmed by reports from a number of cooperages. “It’s a looming problem,” says Colin Keegan, owner of Santa Fe Spirits. “We were warned by our barrel supplier (Kelvin Cooperage) in December, so we placed our first order of the year as a larger one. It’s usually six weeks delivery, and now it is six months.”
At FEW Spirits, this year’s supply of barrels is secure, but founder Paul Hletko has been hearing murmurs about a potential shortage — and they’re getting louder. “All our coopers are calling us up, telling us to get our orders in now,” he says. “A major barrel crisis is coming.”
But for some distillers, the shortage is already here. Journeyman Distillery normally buys some of its barrels from Independent Stave Company (ISC), but owner Bill Welter was recently told that his 2022 order would be capped at the level he bought in 2021 — a problem for the growing company. “We’re fortunate in that our barrel suppliers gave us a heads up so we were able to pad the inventory,” he says, noting that The Barrel Mill, another longtime supplier, is able to meet Journeyman’s shortfall this year.
Barrel Shortage Redux
“We are definitely entering what I call barrel shortage 2.0,” says The Barrel Mill’s vice president of marketing, Richard Hobbs, referring to a deficit that occurred about a decade ago across the cooperage industry because of a lack of wood. “At that point … we had to turn away a lot of business, which we don’t like, and that’s happening again.” While cold calling potential customers is a normal part of doing business, Hobbs has lately fielded a rising volume of inquiries from new clients, including “a lot of people that normally wouldn’t even answer an email or phone call from me,” all of them seeking barrels.
The same thing is happening at Adirondack Barrel Cooperage, where co-owner Kelly Blazosky is taking on new customers whose usual suppliers can’t meet their needs. Ditto for East Coast Wood Barrels. President and master cooper George Voicu says, “Right now, people are looking for barrels for whiskey left and right, and this is a sign of shortage.” He says the cooperage will be able to fulfill its existing clients’ orders this year and take on some new customers, but he can’t meet the needs of all who have contacted him.
Part of the issue may be as simple as larger distilleries, which make up the lion’s share of business for cooperages like ISC, increasing their own barrel orders as production expansions come online. Smaller clients with less buying power often end up squeezed in such scenarios. But costs for oak and steel have gone up — the logging and smelting industries haven’t been spared from Covid-related problems either — along with a massive increase in freight and shipping costs. Coopers themselves are plagued by delays in getting raw materials, and several are having trouble hiring enough employees to keep up with demand. “It is harder to find qualified applicants” than it was before the pandemic, says Blazosky, who is actively hiring as Adirondack Barrel Cooperage expands.
Risk for Some, Opportunity for Others
As supplies shrink, prices rise, but distilleries desperate for barrels have no choice but to pay up. To compensate for delayed orders and in anticipation of shortages down the line, many distillers are ordering more barrels than they need now, which, Hletko notes, will end up compounding the problem, not to mention the added upfront expense. Cardinal Spirits in Indiana is seeing a fivefold increase in lead times for barrels, and thus ordering two or three times as much as usual to ensure it will have the supply needed for planned projects. Running out of barrels would be, for most whiskey distillers, a devastating blow.
Whiskeys like bourbon and rye, which by law must be aged in new charred oak barrels, are most at risk from a shortage. But for a style like American single malt, which is often aged in used casks, the dearth of new barrels fortunately isn’t as serious. Stranahan’s has primarily matured its single malt in new charred oak since its inception in 2004, as a way to meet the standards for straight malt whiskey. Though the Denver distillery is currently experiencing a shortage of new barrels, head distiller Owen Martin isn’t too worried. Standards of identity for American single malt are expected to be formalized sometime this year, and — because they allow any type of oak barrel for maturation — he sees an opportunity to innovate.
“Stranahan’s has always incorporated barrel reuse and trading in its distilling processes, but with the new regulations, this will give us a chance to get creative,” he says. “Barrel reuse not only allows us to experiment with the oak/malt balance in our whiskey, but also allows us to work more efficiently with our inventory while industry supply is down.”