Buffalo Trace Distillery - a complete history

The history of the Buffalo Trace Distillery is quite fascinating, but the modern history of the place (post-WWII) is often glossed over and the story of the distillery’s ownership in the 1980’s and early 1990’s is usually overlooked completely. Most people also have no idea that a few of the most sought after bourbon brands made at Buffalo Trace are not even owned by the distillery (or its parent company, Sazerac, by extension). How did this come to be? Let’s take a fuller look at the history of this American whiskey producing icon.

The distillery campus is in Kentucky’s capital, Frankfort, and stretches out from the east bank of the Kentucky River, which bisects the city. The area where the distillery lies was originally surveyed in 1773 and settled as Leestown in 1775 (Kentucky was actually part of Virginia until it attained statehood in 1792, becoming the 15th state). While records indicate that distilling occurred in the immediate area in those earliest days and the oldest building currently standing on the distillery grounds dates to 1790, the first true commercial distillery on the site was constructed in 1812 by Harrison Blanton.

There was at least one change of ownership in the mid-1800’s, and distilling had expanded to what could be considered an industrial scale by 1858. Then the distillery was purchased by Colonel E. H. Taylor, Jr. in 1870. He christened the distillery with its first name that we know of; O.F.C. (Old Fire Copper or possibly Old Fashion Copper). Although it was a relatively modern distillery, Taylor invested heavily and rebuilt it into the “best of the best”. Taylor oversaw the introduction of copper fermentation tanks, column stills and a steam heating system for the warehouses, among other whiskey making innovations.

But Taylor had overextended himself and declared bankruptcy in 1877. He was rescued financially by George T. Stagg, whose company had taken much of O.F.C.’s whiskey on consignment. Stagg became the owner of the distillery in 1878, but Taylor remained involved as a partner in the business and continued to manage and develop the operation. In 1879-1880 a second distillery was built on the site. The Carlisle Distillery was also located on the Kentucky River, just north of O.F.C. Distillery.

Eventually the relationship between the two men soured and they parted ways in 1886, with Taylor keeping the J. Swigert Taylor Distillery in Woodford County, which the company had purchased in 1882. By the early 1890’s, Stagg had sold a controlling interest in the company to Walter B. Duffy, a business tycoon from Rochester, NY. Stagg retired from the company shortly after that.

In 1898 the Carlisle Distillery was renamed as the Kentucky River Distillery and remodeled so it could turn out high volumes of cheap whiskey. The O.F.C. Distillery continued to produce premium “hand-made” whiskey for the company’s more respected brands. In 1904 the O.F.C. Distillery was renamed as the George T. Stagg Distillery, in honor of its previous owner.

One of the most important men in the history of the distillery was actually hired on as an office boy at the age of 16, in 1897. Albert B. Blanton was raised on a farm adjacent to the distillery and was a descendent of Harrison Blanton. He worked his way through every job possible in the company before becoming the plant manager in 1912. Blanton led the distillery through the uncertain years leading up to Prohibition, guided it through Prohibition, and oversaw operations for another 20 years after Repeal.

With Prohibition looming (both on the state level and nationally), the distillery shut down at the end of 1917 and was sold at auction in 1918. Blanton, having the vision to see beyond Prohibition, bought the distillery himself to ensure its future. He sold it a year later to Henry Naylon, a business associate of the previous owner, Walter Duffy. Blanton then become the president of the company that ran the distillery.

Blanton was able to obtain one of very few permits available for the George T. Stagg Distillery to operate as a concentration warehouse. This allowed the company to store whiskey that had been held in less secure, rural warehouses and it gave them the authority to bottle and sell whiskey for medicinal use. The still house of the Carlisle / Kentucky River Distillery was partially demolished during Prohibition, but beyond that the site remained largely intact during those dark years.

In 1929 the government announced that they would issue a small number of permits for distilleries to operate once again so they could replenish the supplies of medicinal whiskey. Naylon was unwilling to invest in the repairs necessary to get the distillery running again, so Blanton orchestrated a deal for the sale of the company and facility to the Schenley Products Co., which went on to become one of the four big players in the American whisky industry after Prohibition (along with Seagram’s, National Distillers and Hiram Walker and Sons).

Blanton was able to obtain one of those permits and the distillery went back into production in April of 1930. In addition to distilling their own small allotments, the George T. Stagg Distillery was able to produce whiskey for other concentration warehouses that had permits but no operational production facilities. This kept the distillery running until Prohibition finally ended on December 5, 1933.

By 1935 Schenley had initiated a major rebuilding of the distillery which was overseen by Blanton. It was his vision which made the distillery into what we have today. His first big decision was to rebuild the old still house into the new power plant. Now with tremendous boiler capacity, the distillery was properly positioned for rapid growth. Next to come were the new buildings for mashing, fermenting and distilling. Blanton also deeded a right-of-way to the Frankfort and Cincinnati Railroad, allowing a branch line leading to the distillery site to be built.

With production capacity way up, new warehouses were needed. Warehouse H, the only metal clad warehouse on the site, was built first, with a capacity of 15,000 barrels. Today, Warehouse H is the aging location of Blanton’s Single Barrel Bourbon. Warehouses I and K were also added in 1935. Warehouses L and M followed in 1936, and Warehouses N and O in 1937. Each of those six buildings has a capacity of 50,000 barrels.

Blanton oversaw further expansions of the distillery in the years following World War II before he finally retired in 1952. In June of 1953, the George T. Stagg Distillery became the first in Kentucky to produce its 2 millionth barrel after Repeal.

Not much changed at the distillery after the early 1950’s, but production continued at a steady pace into the 1970’s, even as demand for whiskey declined. By the early 1980’s there was a massive oversupply of aging whiskey at Stagg, and across the industry. In 1983 The George T. Stagg Distillery was sold to a newly formed company called Age International. It was started by Ferdie Falk and Bob Baranaskas, who had been the CEO and President, respectively, of Fleischmann’s Distilling.

Nabisco was preparing to sell off its subsidiary which owned Fleischmann’s Distilling and the prospective buyer already had an established liquor division. Falk and Baranaskas assumed that they would lose their jobs, so they decided to start their own liquor business. With a small group of investors, they approached Schenley with the hope of buying the Old Charter bourbon brand. Old Charter wasn’t for sale, but the family that owned Schenley offered to sell them the Ancient Age bourbon brand along with the George T. Stagg Distillery, where it was produced.

With a focus on the more promising Japanese market, Falk and Baranaskas asked their Master Distiller, Elmer T. Lee (who had worked at the distillery since 1949) to help them develop a new product. In 1984 he came up with Blanton’s, the first commercially produced single barrel bourbon. Barrels for Blanton’s were sourced from Warehouse H, said to have been the favorite aging location of Albert B. Blanton, the new bourbon’s namesake.

Blanton’s was a great success and in the years that followed, Age International introduced three other single barrel bourbons; Elmer T. Lee, Rock Hill Farms (named after Blanton’s former home) and Hancock’s Presidential Reserve. Along with Blanton’s, they were all produced from the same mash bill as Ancient Age bourbon.

In spite of these new brands, Age International wasn’t doing well financially, and by 1991 the distillery’s staff had dwindled down to 50 employees; a skeleton crew compared to the 1000 people that worked there during the peak years.

In the spring of 1991, in order to keep the distillery going, Falk and Baranaskas sold a 22.5% stake in Age International to a Japanese company named Takara Shuzo. That company, which was established in 1842, is a major producer of Sake and Shochu, and began importing whisk(e)y into Japan in the 1960’s. They had been the Japanese importer of Blanton’s since its inception, as well as importing the other Age International bourbon brands. As part of that deal, Takara Shuzo was given a 30-day right of refusal to purchase the remaining shares of the company, should they be put up for sale.

By mid-1992, Falk and Baranaskas had entered into an agreement to sell their majority interest in Age International to Heublein Inc. (a subsidiary of Grand Metropolitan, the multinational corporation which merged with Guinness to form Diageo in 1997). Takara gave notice of their intent to exercise their right of refusal and purchase the remaining shares of the company exactly 30 days after they were given written notice of the impending sale to Heublein. They cut it so close (a day before the deal was to have closed) that they actually had to go to court and have an injunction issued to stop the sale to Heublein.

Why did they wait until the last minute? Well, Takara Shuzo didn’t actually want the distillery, they just wanted to take control of the bourbon brands that were owned by Age International. So they took that 30 days to put together a deal to sell the distillery to the Sazerac Company, along with the exclusive rights for the sales and distribution of the Age International bourbons in the US. Of course there was also a long term contract for Sazerac to continue producing those bourbons at the George T. Stagg Distillery.

Takara Shuzo finalized the deal with Sazerac on the same day that they notified Age International of their intent to exercise the right of first refusal. Takara matched the offer made by Heublein, paying $20 million for the remaining shares of Age International, and the sale was complete less than 30 days after they had given written notice of their intent to buy the business. Falk and Baranaskas retired as very wealthy men. Sazerac bought the distillery and the US distribution rights for the Age brands for an undisclosed sum. And finally, Takara left the corporate structure of Age International intact while gaining control of the brands that they wanted.

And who were the new owners of the distillery? The history of the Sazerac Company dates back to the mid-19th century, with the start of three separate businesses. Sometime in the early 1800’s, Antoine Amedee Peychaud emigrated from Haiti to New Orleans. Here, he created an herbal bitters with a strong influence of gentian and aniseed, which he named for himself. In 1841, Peychaud set up an apothecary shop in New Orleans’ French Quarter where he sold his patented Peychaud’s Bitters.

In 1840, just down the road from where Peychaud would open his shop the next year, a man named Sewell Taylor opened the Merchant’s Exchange Coffee House. At the time, coffee houses served both coffee and alcohol (and often more of the latter), but unlike taverns they were also centers of commercial activity. Taylor was also a merchant, and was the sole importer of many of the products that he sold in his coffee house. Among those products was Sazerac-de-Forge et Fils, a French brandy. A popular libation around this time was a cocktail of brandy, sugar and bitters. At the Merchant’s Exchange Coffee House, this drink was made exclusively with Sazerac brandy and Peychaud’s bitters.

By 1850 Sewell Taylor’s importing business had grown to the point that he decided to sell his coffee house and open a liquor store across the street, where he could focus on selling his imported products. Shortly after opening his new store, Taylor hired a young man named Thomas H. Handy as a clerk.

In 1852, Aaron Bird, the new owner of the Merchant’s Exchange Coffee House, changed its name to the Sazerac Coffee House. In 1860, Bird sold the business to John B. Schiller, who ran it for nine years before selling it on to Thomas H. Handy 1869. The next year Antoine Peychaud closed his apothecary store and went into business with Handy. The newly formed Thomas Handy Company was the sole importer of Sazerac brandy and the manufacturer of Peychaud’s Bitters (I believe that Sewell Taylor had retired, and possibly passed away by this point).

Unfortunately, the 1870’s also marked the beginning of the Phylloxera epidemic taking hold of mainland Europe. The little aphid devastated vineyards across the continent, eventually wiping out at least 2/3 of the region’s production capacity. As French brandy supplies dwindled, barmen in the U.S. switched over to American whiskey. The Sazerac-de-Forge et Fils Company was sold at some point and while the brand continued on for nearly a century, its production ceased around 1970.

At the Sazerac Coffee House, rye whisky became the main component of their signature cocktail. When exactly this cocktail took on the Sazerac name, when it transitioned from brandy to rye, and when Absinthe was added to the recipe are all highly debatable points and not really relevant to the topic at hand.

After Handy passed away in 1893, the company was taken over by his former secretary, C. J. O’Reilly, who relaunched the business as the Sazerac Company. Shortly thereafter, the company introduced an American rye whisky under the Sazerac name. The company survived Prohibition by temporarily running as a delicatessen and grocery vendor during those years. The Sazerac Coffee House had closed permanently at the beginning of Prohibition and Sazerac Rye was not revived after Prohibition ended, but the company did return to the spirits importing and distribution business. The Sazerac Company also continues to produce Peychaud’s Bitters to this day.

In 1948 the company was purchased by the Goldring family of New Orleans. Under their ownership the Sazerac Company has grown tremendously, buying existing spirits brands and creating new ones. But that growth, which was modest at first, has snowballed over the last three decades. Herbsaint, which was one of Sazerac’s first acquisitions under the new owners was historically notable. After Absinthe was banned in the US in 1912, a number of substitutes for it were used in the Sazerac cocktail in the years leading up to Prohibition. In 1934, after Prohibition had ended, Herbsaint, a wormwood-free replica of Absinthe which was produced in New Orleans, was introduced. It quickly became the ingredient of choice for the Sazerac cocktail. The Herbsaint brand was purchased by the Sazerac Company in 1949.

While Sazerac had a long history of spirits importing, sales and marketing, both of brands that they owned and brands that were owned by others, the biggest growth for the company didn’t begin until the late 1980’s. As Seagram’s sought to diversify their holdings during this time, they sold off a group of spirits brands in 1989 which were split between Heaven Hill Distillers and the Sazerac Company. The American whiskey brands picked up by Sazerac in this purchase were Eagle Rare bourbon and Benchmark bourbon. Sazerac didn’t own a distillery at the time, so production for these two brands was contracted out to Heaven Hill.

Then, in 1992, Sazerac bought the George T. Stagg distillery and the US distribution rights for the Age International bourbon brands. At the time, Sazerac primarily viewed this deal as a brand acquisition that just happened to have a distillery attached to it. Ancient Age bourbon was selling half a million cases a year back then, and that was what Sazerac was most interested in.

The distillery continued to make the Age International bourbons under contract using its Mash Bill #2 (which is estimated to be 12% to 15% rye). With Mash Bill #1 (which is estimated to be 8% to 10% rye), they starting making whiskey for their Benchmark and Eagle Rare brands. Most of the other bourbon brands that they have since created or acquired are made with Mash Bill #1, but they also make whiskies from a wheated bourbon mash bill and a rye whiskey mash bill. Mash Bill #2 has remained exclusive to the Age International brands.

In 1997 the company brought in a new management team for the distillery and started a two year restoration project. This was when they really dug into the history of the place and when the leaders of the Sazerac Company finally realized the true value of the distillery they had purchased.

Once the restoration project was completed in 1999, they renamed the distillery as Buffalo Trace and introduced the newly created Buffalo Trace bourbon as their flagship brand. The new name was a reference to the paths followed by Buffalo in the late 1700’s to a crossing point on the Kentucky River near the location of the distillery.

In spite of many incorrect reports to the contrary, this was only the third name that the distillery ever went by. It was the OFC distillery from 1870 – 1904, the George T. Stagg distillery from 1904 – 1999 and the Buffalo Trace distillery from 1999 onward. There are many claims of the distillery going by various other names through the years, but the most common one is Ancient Age. During the years that the place was owned by Age International it was operated through a subsidiary named the Ancient Age Distilling Company and “Ancient Age” was painted on the distillery’s prominent water tower since that was their flagship brand. But they had never changed the actual name of the distillery.

Sazerac also acquired a few more important brands in 1999. Schenley had been bought by United Distillers in 1987. United Distillers was part of Guinness, which merged with Grand Metropolitan in 1997 to form Diageo. Two years later, Diageo decided to mostly get out of the American whiskey business. They only kept the George Dickel distillery in Tennessee and the Bulleit and I.W. Harper bourbon brands. When they sold everything else in 1999, Sazerac picked up the Old Charter and Old Weller brands.

In 2000, the company introduced the Buffalo Trace Antique Collection. One of its initial offerings was the new 18 year Sazerac Rye. This was a product which was created from older barrels of rye whiskey which were discovered during a full inventory of the warehouses in 1997. After that the company made rye whiskey production a regular annual occurrence. Then, in 2006 they added a non-age-stated (but generally accepted to be about 6 years old) Sazerac Rye to their regular offerings. Also in 2006, Thomas H. Handy, a 6 to 8 year old, barrel proof rye whiskey was added to the annually released Antique Collection.

2002 saw the Sazerac Company go into a partnership with the Old Rip Van Winkle Company. The first pick of the barrels of wheated whiskey made at Buffalo Trace would now be set aside for the Van Winkle family of bourbons.

There were further acquisitions in 2009 with the Old Taylor brand being bought from Beam and the Barton 1792 distillery and several Barton owned bourbon brands being bought from Constellation Brands.

So far I have covered the major whiskey related acquisitions of the Sazerac Company that have taken place over the last 30 years, but the company has built a much broader portfolio at the same time. Sazerac now owns six distilleries as well as countless brands (along with the distribution rights to others) covering nearly every spirits category imaginable.

Before I wrap things up, I think it’s important to take a look at the capacity of the Buffalo Trace Distillery and see how it has been growing to meet current and future demand.

The column still at Buffalo Trace, at 84 inches in diameter, is one of the biggest, if not the biggest, used to distill American whiskey. In the post-WWII years the distillery’s capacity was built up to 6 million cases, or about 12 million proof gallons per year. But even that was only a bit more than half of the maximum capacity that their massive still was capable of putting out. The limiting factors were actually the boilers, the mash cookers and the fermenters.

Production was kept up as demand fell in the early 1970’s, and peaked at 200,000 barrels in 1973. They started to cut back the amount of whisky they were making after that, but demand continued to decline into the 1980’s. Even in 1995, as demand was starting to return, they were only filling 12,000 barrels per year. In a 2007 interview with Mark Brown, the president of Sazerac, he stated that the distillery was still capable of its historical maximum production levels if the demand was there. It’s hard to know how much they were producing at that time, but clearly not as much as they could have been.

And then the financial crisis hit in 2008 and they cut production, as was evidenced by the product shortages that the company suffered through six years later when the whiskey came of age. They’ve been playing catch up ever since.

As production increased, warehouse capacity became an issue. Many of the warehouses had been converted to other uses during the 1970’s and 1980’s. The nine warehouses still in use had a combined capacity of just over 322,000 barrels. Over 2015 and 2016, seven former warehouses were converted back to their original purpose (three had been used for finished goods storage and four had been converted to offices). This brought back an additional 350,000 barrels of warehouse capacity.

But even more warehouse capacity was needed and the distillery purchased 200 acres of farmland adjacent to their existing property for that purpose. The new, insulated warehouses would each hold just over 58,000 barrels. The first one was completed at the end of 2017 and they are scheduled to build another one every four months for up to the next 10 years.

When I visited the distillery early in 2016, I was told that they were producing 800 barrels per day. I assumed that they were producing five days per week with an eight week summer break, which would yield 176,000 barrels (probably the equivalent of the 200,000 barrels filled in 1973, since they used to add more water to the raw spirit and fill barrels at a lower proof back then). By 2017 they were running seven days a week, and by mid-2018 they were on track to produce 200,000 barrels for the year.

The boiler, which dated to 1951, was just replaced. A new bottling hall should be completed any time now, and the old bottling hall building will be used to add more production equipment. Planned for the summer of 2019 is the addition of new mash cookers that will have twice the capacity of the existing ones and four new fermentation tanks. These will each hold 92,000 gallons, matching the size of the 12 existing fermenters that they will join.

The visitor center facilities will be expanded as well, in spite of the fact that they were just renovated in 2015. All of this is part of a $1.2 billion investment that the Sazerac Company will make in the distillery over a 10 year period.

While the Age International brands are not owned by Sazerac, Blanton’s, and to a lesser extent Elmer T. Lee and Rock Hill Farms, are of great importance to the company and an integral part of the distillery and its history. I suspect that Sazerac would love to buy those brands back if given the chance. But even if the brands can’t be bought and the production contracts were to expire I’m sure that the mutually beneficial relationship between the two companies would continue indefinitely.