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Bourbon is winning in millennial 'cocktail culture,' says distillery president

The recipe for America's booming bourbon business is a mix of growing cocktail culture and social media, Michter's Distillery President Joseph Magliocco told CNBC.

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"There's a growing appreciation for [bourbon] among millennials, as opposed to beer and some other stuff," Magliocco said on "Power Lunch" Friday. "A lot of it is really cocktail culture."

The Kentucky-based supplier imports wine and niche spirits.

"Younger people in their, you know, 20s and 30s, really are into cocktails and mixology," said Magliocco, who is also the founder and president of Chatham Imports, the parent company of Michter's Distillery. "Mixologists around the country have done a great job. And now, with social media, it’s really spreading around the world."

Close-up two men clinking glasses of whiskey drink alcohol beverage together at counter in the pub

While whiskey, a distilled spirit made from fermented grains and aged in wooden barrels, is made in several parts of the world, federal law says bourbon — one of the most popular forms of whiskey — must be produced in the U.S. and made from at least 51 percent corn. Kentucky, the birthplace of bourbon, produces 95 percent of the world's whiskey supply, according to the Kentucky Distillers Association.

But the buzz around high-end spirits is nationwide.

Sales of American whiskey grew 8.1 percent in 2017, jumping $252 million to $3.4 billion, according to the Distilled Spirits Council. Total sales outpaced sales of other adult beverages in the same year, including tequila, cognac and Irish whiskey.

Retail prices for Michter's Distillery bourbon start around $50 a bottle and can go as high as $10,000 for a bottle aged 25 years — and they're more expensive abroad, said Magliocco, who is also on the board of the Kentucky Distillers Association.

"We’re not selling to price-sensitive consumers," he pointed out. "We’re selling to consumers that want a certain type of whiskey."

And, China, with its love of luxury, "would be an amazing potential export market" for his business, Magliocco said.

Last year, the U.S. exported $1.63 billion worth of spirits around the globe, a 14.3 percent increase year over year. China imported $12.8 million worth of U.S. spirits, and nearly $9 million of that was whiskey, according to the Distilled Spirits Council.

But, a growing number of industries, including liquor, have been on edge as trade war tensions persist. China, Mexico, Canada and the European Union have all slapped tariffs on America's bourbon industry.

Still, despite the tariffs and working in a heavily-taxed industry, "both at home and abroad," Magliocco said he's not worried about trade wars. He said liquor companies make projections in advance — sometimes decades beforehand — so they're used to dealing with unknown variables.

"As far as tariffs go, at Michter’s, we don’t believe that it’s going to have a material effect on our sales growth," he said. "We’re kind of in a unique position. Right now we’re allocating every single thing that we make, because demand is exceeding our supply and we won’t rush stuff unless its ready."

"The great thing about whiskey, is that typically it gets better with age," he said.

WATCH: America's bourbon boom shows no signs of stopping

CNBC

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