I get paid to think about whiskey and beer, and as a result, I think about both of them at the same time more than most people. Usually this just leads to me having a Boilermaker, but sometimes it yields an intriguing idea about the two categories and how they’re related.
Here’s my latest idea. Craft beer didn’t really take off until around 2005. Why? The first generation of drinkers who had never lived in a world without craft beers came of age and were very thirsty. Instead of reaching for a Bud, like their parents, they went for one of these tasty and innovative upstarts.
At a rough guess, rye whiskey is going to hit that same point in about five years. When it does, these “rye babies,” who’ve grown up with Rittenhouse and Old Overholt and Bulleit and the myriad craft ryes, may want a hell of a lot of whiskey. And be warned, there are a lot of them: Generation Z will hit 65 million in 2019, according to Bloomberg figures, which will be about 32 percent of the U.S. population. Are we ready for that many rye drinkers?
To be sure, rye’s growth has already been nothing short of amazing. Annual sales for the category were around 16,000 cases in the mid-1990s; an entire class of whiskey, about to disappear. Last year saw almost a million cases of rye sold, on a volume growth rate of 15.9 percent over the previous year.
What happens if this generational boom actually takes place? Does the industry have the stocks of aged rye whiskey to sustain that kind of demand? And what kind of rye whiskey will it be?
“I think that there is plenty of room for supply, and demand, to grow,” says Paul Hletko, the founder of FEW Spirits in Evanston, Illinois, and the former president of the American Craft Spirits Association. “If you look at historical sales volumes from forty to fifty years ago, [sales of rye whiskey] were way higher, with a smaller population base.”
Scott Harris, co-founder of Catoctin Creek Distilling in Purcellville, Virginia, agrees. “If you look at historical periods like the 1950s to the 1960s, or even the 1890s to the 1900s, rye was a much more prominent drink. We believe it can be once again. I do believe a new generation are that key demographic. We see people in the ages of 28 to 38 being most willing to try new products like ours.”
Harris and another small distiller, Phil Brandon, founder of Rock Town Distillery in Little Rock, Arkansas, believe that rye has a lot of room to grow outside the big markets that get all the press attention. “Rye may be mainstream in New York, D.C., and San Francisco,” Brandon said, “but there are still emerging markets where rye is a tougher sell; markets like Oklahoma City, or Minneapolis, and even in Europe, where everyone expects American whiskey to be bourbon.”
Almost everyone I talked to was hesitant to compare rye whiskey so directly to the rise of craft beer. “We used to have this debate about craft distillers vs. craft beer,” said Susan Wahl, the Group Product Director for Heaven Hill, the distillery that arguably has the most experience with rye whiskey in the modern era. “Most of the cycles we’ve seen on the beer side haven’t translated. Yes, there are more people coming into the category. Yes, there is more room for expansion. But the lead time to get to something in the bottle is so much longer, you don’t get the immediate turn you do with beer.”
She’s talking about whiskey forecasting, which is at the heart of this discussion. A vodka maker can make more vodka in under two weeks, if the market demands it. Whiskey is quite a bit different because of that time it takes to age in the barrel. “You have to forecast out five, eight, ten years,” Wahl told me. “We try to predict, and there are days we get it right, and days we get it wrong. Forecasting is a beast. It’s like whack-a-mole. You think you have everything covered, and then a brand wins a big award, and it has more growth than you predicted. Then you have to adjust everywhere within the inventory, because each barrel is going to different taste profiles.” (That exact scenario is playing out right now, because Heaven Hill’s Henry McKenna Single Barrel Bourbon was recently named best whiskey in the world at a spirits competition.)
The “taste profiles” that she refers to are the different bottlings that the distillers build from a mix of barrels aging in their warehouses. Heaven Hill has Rittenhouse and Pikesville, two quite different ryes. Beam Suntory has several these days: Old Overholt, Jim Beam Rye, Knob Creek Rye, and (rī)1. The master distiller (or blender) will pick batches of barrels to blend together to make each different-tasting whiskey.
Are there enough of those barrels? Scott Harris is confident. “I do not believe there will be any supply crunch,” he told me. “What do we have now, over 1,600 distilleries nationally? There’s a lot of big capacity coming online, and rye is certainly one of the prominent things being made, especially in the mid-Atlantic, which is traditional rye country with brands like Catoctin Creek, Sagamore, Dad’s Hat, Wigle, and many more.”
Wahl isn’t as sure. “Rittenhouse is a large brand, but it’s still on allocation,” she pointed out. “This category is still pretty young. People have laid down whiskey in an effort to fuel this category. But it’s a small category, and you only lay down so much. There’s still not enough being laid down to cover the growth. We don’t see that changing anytime soon.” She has a point; sustained double-digit growth tends to eat up reserves, but you’re crazy to count on it.
Whether there is supply or not also depends on selection. What are these new rye drinkers even going to consider a “rye whiskey”?
In a way, they’re lucky. Rye choices used to be pretty limited. It started to change when Sazerac released its 18-year-old rye in 2000, and then a lot more when various bottlers started buying the excellent rye whiskey made by what’s now called MGP in Indiana. That’s the rye that you can find in Templeton, Redemption, Bulleit, and High West (and a bunch of others), and it was great, different, and found fans quickly. The bigger brands mentioned above—plus Wild Turkey’s legacy rye, and a new rye from Jack Daniel’s—are all over store shelves.
But there are also a host of small distilleries who are making rye the way they want to. Wigle is making organic rye in Pittsburgh, Dad’s Hat Rye in Bristol, Pennsylvania, hews more to the rye-heavy “Monongahela Red” style of yesteryear, Leopold Brothers is making a more delicate Maryland style in Denver. Out in San Francisco, Hotaling & Co., which used to be called Anchor, has been making its 100-percent malted rye Old Potrero since the early 1990s.
So, what taste identifies “rye” for these new drinkers?
“The definition of rye is being set by the legacy distillers,” said Hletko. “They make great whiskey, and that makes our job tough, but also fun and interesting. It’s the little guys that make the category vibrant and exciting.”
Hletko also doesn’t put a lot of emphasis on what “rye whiskey” is. “It is really a minority of drinkers that ‘know’ what any beverage is,” he said. “People know what they like, and they will try stuff that other people like. Some will then pursue what they like, and learn more about it, and then ‘know’ what rye whiskey is.”
Ryan Maloney has had his finger on rye’s pulse for a number of years, running Julio’s Liquors, an acclaimed retailer in Westborough, Massachusetts. In his opinion, rye is hot enough to inspire top-billing on a label. “Everyone wants to have that word in their name. It’s like ‘-tini,’ or ‘IPA.’”
He’s not worried about supply if the generational wave hits. Small distillers are building inventory that’s getting older. Big distillers have been ramping up. And Maloney knows there’s a possible game-changer in the wings.
“Canada,” he said, firmly. “And they have established brands. Yeah, if rye gets bigger, there’s a chance for Canada to walk in big.”
There is a lot of rye whiskey—sorry, whisky—stored in Canadian warehouses. We’ll just have to wait and see if it’s going to be of interest to the coming rye whiskey generation.