Project Management Institute

Future Proof

The Booming Bourbon Industry Has Construction Projects Flowing

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The bourbon industry is in good spirits. In the past decade, bourbon whiskey production increased 115 percent, according to the Kentucky Distillers' Association. That's big business for the U.S. state of Kentucky, which produces 95 percent of the barrel-aged booze. Bourbon now funnels US$8.6 billion into Kentucky's economy annually, a 60 percent jump since 2009.

The bourbon boom has ushered in a building spree, with distilleries currently pursuing construction projects worth a collective US$2.3 billion. Jim Beam, for instance, has dedicated US$165 million to two expansion projects. And Diageo, the parent company of Bulleit, is building that brand's third distillery in the state, a US$130 million project.

These projects are transforming Kentucky's whiskey region into a global tourist destination—one that aims to rival what California, USA winemakers have created in Napa Valley. To that end, bourbon makers are going beyond distilleries to attract tourists, including building hotels, restaurants—even lakes. Stoli Group USA, for instance, is building a US$150 million complex that will include a luxury hotel, restaurant, convention center and music venue.

“It's about creating that overall experience,” Rudy Costello, CEO, Stoli Group USA, told The New York Times. Construction on the facility is expected to start in 2020. “We see the tourism in that area already, and I don't think we've even scratched the surface.”

Peer Party

As companies rush to expand, teams will need to break down project silos. Heaven Hill Distillery learned the value of that lesson before it launched the US$17.5 million renovation and expansion of its visitor center in 2017, with a planned completion in 2021.

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Renderings of Kentucky Owl Park, Stoli Group's complex that will include a luxury hotel, restaurant, convention center and music venue.

On earlier projects, including the original visitor center, Heaven Hill's teams did not always know of changes made by other groups—until the changes had resulted in cost and schedule overruns. For example, two months into the construction of the original visitor center, the designer discovered that changes in structural and mechanical elements, such as the placement of air vents, would interfere with planned design elements. That meant a delay and an unexpected cost to reconstruct the affected area.

“We learned we needed to have our teams work hand in hand to make sure we don't have overage in time or cost,” says Susan Wahl, group product director, whiskey portfolio, Heaven Hill Distillery, Louisville, Kentucky.

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—Susan Wahl, Heaven Hill Distillery, Louisville, Kentucky, USA

Heaven Hill Distillery prioritized collaboration for its latest project. It embedded members from the architect's office in the designer's office, and vice versa. The entire project team, including owner representatives, Abel Construction and Solid Light, meets once a week for status updates. So when the designer or the architect makes a change, the other quickly learns and responds—before it gets built.

Keeping the same integrated core team from project to project has also created seamless knowledge transfer. “It maintains consistency and institutional knowledge,” Ms. Wahl says. “So the team members not only have expertise in their fields, they also have expertise with us and our projects.”

Setting the Bar

Distillers realize that simply selling bourbon is no longer enough; they also have to provide an experience. The Stoli Group is working with famed Shigeru Ban Architects to do so for its Kentucky Owl Park project.

Project plans for the 420-acre (170-hectare) site call for the usual facilities to make bourbon: rickhouses for aging and a bottling center. But to draw tourists, the project team is also planning more elaborate offerings: Existing quarry pits will be turned into lakes with clear, limestone-filtered water. The distillery will be housed in three timber-based pyramids. And a working, vintage-style dinner train will connect Kentucky Owl Park to other distilleries in the area.

“This is an opportunity for us to challenge ourselves like never before,” Dean Maltz, managing partner, Shigeru Ban Architects, said in a statement. “These plans serve as our first Kentucky distillery and incorporate unique highlights and nods to the industry and its history.” —Novid Parsi

Toast of the Town

Counties in the U.S. state of Kentucky with at least 1 whiskey distillery

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2009

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2019

68
Total distilleries in Kentucky, a 250 percent increase since 2009

1.4 million
Distillery stops that tourists made in 2018, a 370 percent increase since 2009

Source: Kentucky Distillers' Association

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