US: Bourbon capital Kentucky angers distillers with tax rise

Bourbon distillers have been left incensed by the introduction of a tax rise on alcohol in their Kentucky homeland, also one of their strongest markets.

Kentucky's state government this week implemented a 6% tax rise on alcohol and tobacco. Informally termed the 'sin tax', critics have accused the authorities of seeking to plug a $456m budget deficit rather than raising taxes out of public health concerns.

The rise is just one of several tax rises on alcohol that have been proposed across a number of US states this year, something the US Distilled Spirits Council (Discus) has warned could lead to 150,000 job losses in the country's hospitality sector.

The Kentucky rise is one that has particularly angered distillers, due to the state's position as the "Capital of Bourbon". Kentucky accounts for around 90% of Bourbon production.

"The tax increase in Kentucky that took effect this week is misguided and sends the wrong message to consumers, the homestate bourbon industry, and the hard-working men and women who produce America's native spirit," said a spokesperson for Beam Global Spirits & Wine, the drinks arm of Fortune Brands and producer of Bourbon brands Maker's Mark and Jim Beam.

"Ironically, the tax increase could backfire if Kentucky consumers begin purchasing spirits in neighboring states with lower taxes," Beam told just-drinks today (3 April).

Kentucky-based Beam rival, Brown-Forman, which owns Jack Daniel whiskey, has taken out adverts in local newspapers this week to attack the tax rise.

Anecdotal reports suggest consumers have been stocking up on Bourbon and other alcoholic drinks prior to the implementation of the tax rise.

Discus has asked states not to harm the drinks industry as it attempts to handle one of the worst US recessions for a generation.