While there’s no universal agreement as to precisely when a bourbon becomes expensive, there is plenty of agreement that many have long passed that point. I wanted to find out exactly what factors contributed to their high price, so here are ten reasons why some bourbons are so expensive.
1. They’re Made from High Quality Ingredients
The first reason why some bourbons are so expensive is because they’re made from high-quality ingredients, which is necessary because low quality ingredients will negatively impact a bourbon’s taste.
Bourbon is made from four ingredients:
- Grains whose starches are converted into sugars and then alcohol.
- Water to cook the grain and dilute the alcohol.
- Yeast that causes the sugars to be converted into alcohol.
- Barrels whose wood gives bourbons 70% – 80% of their flavor.
Bourbon must be made from at least 51% corn – and is often made from closer to 70% – 80% corn, which is the cheapest of all grains used to make any type of whiskey. Nevertheless, it’s more expensive to use high quality grains of corn that are uncracked, clean and sorted to ensure that foreign materials haven’t gotten inside and contaminated them.
Water and yeast are also relatively cheap but it’s more expensive to use water that’s clean and pure and free of iron which reacts with alcohol and turns it bitter, and yeast with as few impurities as possible so that it doesn’t impart any bitterness to the bourbon.
As for barrels, high quality can mean a journey of a few years as decades old Oak trees are carefully felled and dried in a way that preserves the character of the wood needed for maturation and ensures its heavy oils don’t spoil the bourbon. Finished barrels are also charred so that the bourbon can access the flavors in the wood.
2. They’re Made from A Better Cut of Distillate
The second reason why some bourbons are expensive is because they’re made from a better cut of distillate.
When bourbon is distilled, alcohol from the beginning and end of the run is not used because it contains undesirable (and sometimes dangerous) elements that give the bourbon an unpleasant flavor. The closer the alcohol is to the middle or heart of the run the better it is, and a distillery will therefore cut the distillate to collect more from the heart of the run and less from the beginning or end.
A narrower cut is obviously better as it removes more of the unwanted elements that give the bourbon an unpleasant flavor, but it also means that less distillate is used which increases the cost of production. A wider cut would decrease the cost of production by using more distillate, but it would also mean that the bourbon would retain more of the unwanted elements.
3. They’re Aged in New Barrels
By law bourbon must be matured in brand new oak barrels. This is in contrast to Scotch or Irish whiskey that by law must be aged in used oak barrels (usually ex-bourbons barrels). This may have something to do with the fact that new barrels retain all their flavors and are more likely to produce bourbons with a consistent taste.
Using anything only once is very expensive, even if some money is saved by selling them on. But as mentioned, the barrels used to mature bourbons are often of high-quality, which makes it even more expensive to use them only once.
4. They’re Stored for A Long Period of Time
One of the biggest reasons why some bourbons are so expensive is because they’re matured for a long period of time.
Bourbon is matured in barrels so that it can pick up flavors from its wood. This happens because during the time the bourbon is stored, changes in temperature causes the barrels to expand and contract and the liquid to seep in and out of the wood, where it picks up flavors in the process.
The longer bourbon is matured the more flavors it will pick up, but this also makes bourbon much more expensive. After all, it costs a lot of money to have a product that you can’t use for years, and even more to maintain storage facilities that provide the proper environment in which bourbon can age well.
And while there’s no legal minimum amount of time bourbons must be aged for, in practice most are aged for at least 4 – 7 years with many being aged for 10, 12 years or even longer, and each year of maturation making the cost of producing them more expensive.
5. Bourbon Is Lost During the Maturation Process
Another big reason why some bourbons are so expensive is because a lot of it is lost during the maturation process.
That’s because wood is porous so bourbon can easily evaporate from the barrel. In fact, anywhere from 2% – 10% of the bourbon in the barrel (size, method of storage and climate of location dependent) evaporates per year.
And the longer a bourbon spends maturing in the barrel the more will be lost to evaporation. Bourbons matured for 10 years will have lost 18% – 20% of their volume to evaporation and bourbons matured for 25 years will have lost 30% – 40% of their volume to evaporation!
This loss of bourbon is called by the cute sounding name, ‘the angels share’ but that doesn’t stop it from causing bourbon to be much more expensive.
Of course, as mentioned, most bourbons are aged for 4 – 7 years which means a significant loss of bourbon from the barrel, but many are aged for much longer which means a substantial loss of bourbon from the barrel.
6. They Have a High Alcohol Content Level
People prefer bourbons with a higher alcohol content level or ABV because alcohol carries flavor compounds, so the bourbon will have more intense and concentrated flavors. However, a higher ABV also means that more distillate was used, which makes it cost that much more.
Bourbon is distilled to no higher than 80%ABV but before being placed into the barrels for maturation it’s diluted with water so that it’s no higher than 62.5%ABV. After maturation it’s usually diluted once again and bottled at a minimum of 40%ABV, but of course it can be any ABV in between.
Obviously, the higher the ABV and the less the bourbon from a given barrel is diluted the fewer the number of bottles that can be filled from it – which makes each one cost that much more. And many bourbons are 45% or 50%ABV which is significantly higher than the minimum of 40%ABV.
7. The Government Collects a Tax on Alcohol
Another reason why bourbons are so expensive is because the government collects a tax on alcohol. The more alcohol in your bottle the more tax is collected, and the higher the price of your bourbon.
This applies to all bourbons as its minimum ABV is, as mentioned, 40%, which is significantly higher than many other alcoholic drinks like wine that’s around 16%ABV and beer that’s around 6%ABV, which therefore won’t have anywhere near as high a tax. The following table shows the ABV ranges for common alcoholic drinks:
|Alcoholic Drink||ABV Range|
|Bourbons||40% – 62.5%|
|Beer||4% – 6%|
|Wine||5.5% – 16%|
|Liqueurs||15.5% – 55%|
|Tequila||32% – 60%|
|Brandy||35% – 60%|
|Vodka||35% – 95%|
As you can see, bourbon is one of the strongest alcoholic drinks available, so it will be highly taxed.
And since many bourbons are, as mentioned, likely to have a higher ABV than the minimum – most commonly 45% or 50%, they will be taxed even more and therefore be even more expensive.
Not only that but there’s also an indirect tax on bourbon. Kentucky taxes the rising value of a barrel of whiskey every year it ages. In fact, it’s the only state that taxes whiskey while it’s aging. And the reason this particular tax is important is because Kentucky is also the state which produces 95% of bourbons … what a coincidence.
8. They’re Well Branded and Marketed
The least liked reason why some bourbons are so expensive is because they’re well branded and marketed. This means that part of the higher price is not a result of the higher production costs necessary to produce a better product, but rather the result of a wide-spread perception of extra value due to nothing more than good branding and marketing.
Brands that make exceptional quality bourbons for years become well-established and trusted, and an excellent reputation along with a huge PR apparatus that spends a fortune in branding and marketing, can turn a brand’s bourbon into a premium product that some people are prepared to pay a lot for.
It’s also caused in part by the fact that in most states, distilleries cannot legally sell bourbon directly to the consumer (except through things like gift shops). Instead, they’re forced to sell to a distributor who in turn, can only sell to retailers who are the only ones who are actually allowed to sell to the consumer.
This three-tier system makes it difficult for consumers to know the fair price of a bottle of bourbon, as distilleries are not likely to publish the suggested retail price when retailers have it marked differently as this will look bad for each link in the bourbon-selling chain. With this complication muddying the waters, it’s easier for bourbon to be marketed at a price higher than what it’s worth.
9. They’re In High Demand
One of the most ironic reasons why some bourbons are so expensive is because of a recent increase in demand and consequently the lowering of its supply.
Bourbon has become more popular over the last few years. In 2022 its market size was valued at $61 billion, and it’s projected to reach $90 billion by 2030 (source).
Unfortunately, when it comes to bourbon, because it takes a relatively long time to make it’s not easy for the supply to keep up with the demand. Next year’s supply was determined years ago when the bourbon was barreled, and any increase in production today won’t affect supplies for years or even decades to come.
Where this has become a big problem, distilleries have responded in one of two ways. They have either lowered the ABVs of the in-demand expressions so they can fill more bottles than before, or they have increased the price of the bottles they do have. Which is why some bourbons are not only expensive, they’re also increasingly expensive.
10. They’re Made in Small Batches & Limited Editions
Some bourbons are more than just expensive – they’re expensively expensive. Or even more expensive than that – we’re talking tens of thousands of dollars. That’s because they’re very rare and rarity makes something more valuable.
There are a lot of rare bourbons out there because distilleries are constantly experimenting with new expressions and creating limited editions to commemorate people, places or events important to them. Any that are very well received will instantly become rare because the demand will far exceed the supply.
Similarly, bourbons are often made in small batches. That means a distillery has taken a relatively small number of barrels (10, 12 or 15) selected for some attribute or other, and blended the contents together to produce a finite amount of bourbon that will make up this particular batch.
And since no two barrels produce exactly the same tasting bourbon, this blend will be unique and therefore rare and expensive.
For more information about this see the more detailed article I wrote about the most expensive bourbons, which you can find here.