LOUISVILLE, Ky. – Every Kentuckian knows Kentucky supplies most of the world’s bourbon, but the Commonwealth is also shipping all kinds of wines and spirits throughout the state having a big impact on the economy.
Wine and spirit wholesalers generate $500 million in payroll each year in Kentucky.
“Wine and spirits distributors and wholesalers employ almost 2300 Kentuckians all across the state the annual average wage is about $70,000 a year, so this is a very significant industry,” said Charles George, Executive Director of the Wine & Spirits Wholesalers of Kentucky. “We often hear about the producer tier and that’s great, we all love bourbon in Kentucky and we are very thankful for what the bourbon industry has done but there is a lot more to that product getting to market than just producing the product it has to be distributed and sold in a safe manner and that’s where the wholesaler comes in.”
A first of a kind report sanctioned by the Wine & Spirits Wholesalers of Kentucky revealed just how important this industry is to Kentucky.
“The footprint of this industry which is these 17,000 jobs and over $500 million in payroll just through the wholesale and retail channels, it’s not the production side just moving through the ecosystem to the consumer,” said Paul Coomes, an Emeritus Professor of Economics at the University of Louisville and author of the study.
The study also found the wholesale and distribution industry brings in more than $250 million in tax revenue.
Overall—there are 45 wholesale wine and spirit companies in Kentucky, the largest being Southern Glazer’s Wine and Spirits who employ 370 employees across the state.
“We represent over 9700 different items here today we warehouse 450,000 cases in this building and ship 3 million cases a year out of this facility,” said Pete McLaughlin, Executive Vice President for Kentucky/Ohio for Southern Glazer’s Wine and Spirits.
The company does more than just get the spirits to the store shelf or restaurant it also works to promote the brand.
“Distributors we are not just a logistics company we don’t just deliver product we are brand builders in Kentucky,” McLaughlin said. “It’s not only selling too and delivery we are responsible for education and promotion within a brand as well.”
McLaughlin says the company holds educational and training sessions for bartenders and stores to ensure everyone is educated on the products they will be selling, creating drink recipes with their products is another service provided through the company.
Holiday season is the busiest time of the year for Southern Glazer’s Wine and Spirits does 30 percent of their business over the holidays.
The three tier alcohol system –which requires alcohol to go from a producer to distributor to a retailer not only ensures quality of the product—it allows for Kentucky to collect a hefty amount of taxes.
“Alcohol is probably the most taxed item in our society for various reasons a lot of people don’t realize when you purchase a six pack of beer or a bottle of wine at a store the layer taxes that are caked into that price,” said Coomes. “There are large federal taxes paid at the production level but the wholesale taxes are very significant.”
In Kentucky those taxes equate to 11 percent on distilled spirits and ten percent on wine and beer on the state level but alcohol is also taxed by the volume. Wine is taxed at $0.50 a gallon, spirits at $1.92 a gallon and beer at eight cents a gallon. Spirits are then taxed once again at six percent when bought at a restaurant or a store. All the taxes equate to around $150 million a year in warehouse taxes and $115 a year in retail taxes at the state level. If those numbers seem high it’s because they are, Coomes says Kentucky ranks near the top when it comes to taxing alcohol.
“Kentucky is actually a fairly high tax state for alcohol products,” Coomes said. “Wine for example is number 1 for taxes at the wholesale level, I think it’s about sixth in beer and about 17th in spirits”
It’s a tax revenue stream that shows no signs of going flat.