Ever since 2000, lumber has been something of a sore subject in the United States. Growth in Chinese furniture manufacturing has undercut many domestic businesses, turning local hardwood production into more of an export-driven endeavor. And the housing crisis has put a clamp on what was, for decades, a healthy demand for kitchens and flooring made with wood.
“It’s been a very difficult industry to be in the last 10 years or so,” said Bill Luppold, who is an economist for the U.S. Forest Service. “We’ve lost so much of our business.”
But while the wood industry at large is suffering, there is actually one segment that seems to be doing just fine. In fact, it might be doing a bit too well. White oak barrels, used to age bourbon, are in such great demand that barrel production is actually struggling to keep up.
“People are drinking more bourbon, and that’s increasing the demand for barrels,” said Judd Johnson, the editor of the Hardwood Market Report.
The data certainly seems to bear that out. Bourbon production, in response to the growing craze over Kentucky-distilled whiskey, jumped more than 70 percent between 2009 and 2013, according to data from the Kentucky Distillers’ Association.
And that’s actually a bit of a problem. Bourbon barrel production is a particular process, which requires the use of only higher quality wood. As it happens, that fancier wood isn’t as easy to come by.
“We may have a lot of volume out there, but only 14 percent of it is the grade that could be utilized for stave logs,” Jeff Stringer, a professor at the University of Kentucky who studies hardwood silviculture and forestry, told Farm World this past December. “There is an issue long-term because we’re not seeing enough white oak re-generation as we did at one time.”
Stave logs are the oak planks that barrel-makers piece together and then hold in place with metal loops to make the bourbon barrels. Unlike those used to age other spirits, including tequila, they are never used twice.
“The barrels have limited use,” said Johnson. “Since they can’t be used endlessly, that adds to the problem.”
But this problem could also, eventually, prove to be a blessing for the industry down the road. Growing demand from a skyrocketing bourbon boom, which laps up new white oak, never using it twice, means there will be an opportunity for loggers so long as they can supply the demand.
And what better incentive than the current markup in wood prices? White oak staves, in response to the rush to supply bourbon barrels, are selling for more than 20 percent above what they were at the start of the year.