Distillers finding new ways to prevent warehouse disasters

After suffering a wave of fires and collapses, Kentucky’s Bourbon producers are finding new ways of improving the structure of their warehouses, and of mitigating the environmental effects of unpredictable disasters.

The past year has seen unfortunate incidents befall Bourbon producers in Kentucky, some of which have had harmful effects on the environment. These incidents come at a time when the Bourbon industry is witnessing a boom.

According to the Kentucky Distillers’ Association (KDA), more than 7.5 million barrels of Bourbon are maturing in Kentucky – equivalent to almost two barrels for every person living in the state. With such a vast amount of ageing stock, warehouses are holding billions of dollars in future revenue.

On 2 July, lightning struck a Jim Beam warehouse in Versailles. It was one of 126 warehouses in Kentucky operated by Beam Suntory. Firefighters brought the blaze under control and prevented it from spreading.

For the company, thankfully, the losses were relatively minimal. The incident destroyed 45,000 barrels of “relatively young” whiskey – only 1% of Beam Suntory’s inventory.

While the fire did not affect distillery operations or the availability of Jim Beam for customers, its impact on the environment was monumental. The fire led to a 23‐mile‐long plume of alcohol spilling into the Kentucky River, killing thousands of fish and other aquatic life forms due to depleted oxygen levels in the water.

After four days, it passed into the Ohio River, and Beam Suntory is now facing a fine from the Kentucky Energy and Environment Cabinet (EEC). John Mura, communications director of the Kentucky EEC, says the state’s Department of Fish and Wildlife Resources is also likely to issue the company with a separate penalty.

Following the incident, Beam Suntory says it has planned an “exhaustive review” of its warehouses to look at reducing risks and minimising environmental damage if fires occur in the future. The firm is also partnering with Kentucky authorities to recycle and reuse the material from the destroyed warehouse.

Immediate action

“We took immediate action to minimise and remediate the environmental impact,” explains Emily York, senior director – corporate communications at Beam Suntory. “This included deploying aerators to support regeneration of the affected water, deploying a barge in the Kentucky River to operate aerators, and building berms at the site to avoid further runoff to the nearby waterways.

“We are continuing to work to restore the natural environment, including by monitoring the water quality of the river through water sampling and water field screening.”

Beam Suntory had also suffered a fire in 2003, again when lightning struck a Jim Beam warehouse in Kentucky. To mitigate the environmental impact of such events, Mura suggests that distilleries should have a containment area to prevent any liquid from spilling into a body of water. But this could be a challenge for older distilleries. “In some cases, it’s very difficult to do this,” he notes, citing the example of Jim Beam, which has warehouses “within yards of a water body”.

The July warehouse fire was the latest in a series of dramatic events at Kentucky distilleries. In June 2018, a warehouse at the Bardstown‐based Barton 1792 Distillery caved in on one side. Warehouse 30 was built in the 1940s and was estimated to hold approximately 18,000 barrels, with half of the barrels affected. Two weeks later, the rest of the warehouse collapsed, and a further 9,000 Bourbon barrels met an untimely end.

The following March saw a fermented mash spill at the distillery injure two workers. The incident was caused by a failed beer well, which is used in the production process to hold the fermented mash before it is distilled.

Storm damage

Meanwhile, weather conditions affected Owensboro‐based OZ Tyler Distillery this June, when one of its barrel‐storage warehouses collapsed. It was hit by “severe storms, with high winds and a great deal of rain” on 16 and 17 June, according to Jacob Call, master distiller and director of operations. The northwest quadrant of the warehouse was affected by the initial collapse. The site was also fortunate not to have lost much inventory from the incident. It said there was “no impact [on] the environment”.

After an investigation of the damaged rickhouse, the decision was made to deconstruct the remaining portions of the warehouse through a “planned and controlled collapse”. Following the incident, OZ Tyler Distillery partnered with structural building health company Structuright to use real‐time technology to monitor its rickhouses around the clock. The firm surveils the structural and environmental health of buildings using an app‐based system. The site will be able to continually monitor distance, angle, vibration, temperature and humidity in the rickhouses via the mobile app. Call says the distillery will be the first in the US to employ such a system.

To ensure distilleries are prepared for potential incidents, the KDA has created two best‐practice documents, including a warehouse safety list with Bardstown‐based Buzick Construction, which has built the “overwhelming majority of warehouses in the state”.

The guidelines are now considered standard for KDA members, which include producers such as Diageo, Brown‐Forman, Beam Suntory, Bardstown Bourbon Company, Heaven Hill Brands, OZ Tyler and Four Roses. “Our members are very open and transparent with each other. They know that any issue that happens to a distillery affects the entire industry,” says Eric Gregory, KDA president.

Compared with the big Bourbon players, smaller producers have fewer barrels and different storage needs. “As they grow and build warehouses, we want to make sure that they’re building them to the standards that the association would like to see,” adds Gregory.

The KDA will hold a talk this autumn looking at how distilleries can prevent incidents and alleviate their effects when they do happen. Structuright will also talk to the KDA’s members about its app‐based system.

According to Gregory, Jim Beam has a crisis company on call that arrived within an hour of the fire happening and was able to “contain a lot of the spill from going into the creek and save the other warehouses on site”. He adds that despite such incidents, “we try to use it as a learning opportunity as much as possible”, and that distilleries could benefit from sharing information about their actions and precautions in the wake of an emergency.

“A little bit of preparation in the beginning might help mitigate the financial costs on the other side,” he advises.

The Kentucky ECC is also now arranging a meeting with the Bourbon industry to come up with ways to prevent future incidents from occurring, in the hope that a collaborative effort might mitigate the effects of any future disasters.

Business, Entrepreneur, Estate, Family, Next Generation, Startup, Succession, Wealth