Compared with Bourbon and Scotch, the rebirth of the rye whiskey segment is in its infancy. Even so, there is still plenty to be excited about as brand owners spread their wings.
It’s easy to forget that rye was America’s original whiskey. Planted by European settlers in the mid-18th Century, it was gradually subsumed and overtaken by a rival: the mainly corn-based whiskey segment that we have since come to know as Bourbon.
As Bourbon became the dominant style in the US, rye became the almost forgotten province of the whiskey geek.
“When we first began working on resurrecting the Michter’s brand during the 1990s, the rye category in the US had nearly faded into oblivion,” recalls Matt Magliocco, executive VP at Louisville-based Michter’s Distillery. “The resurgence of rye since that time, and particularly over the past decade, has been extraordinary.
“From 2012 to 2022, sales of Michter’s US *1 Rye, our flagship expression, grew at an average annual rate of over 30%, resulting in 2022 sales that were more than ten times the size of 2012.”
Michter’s isn’t alone. According to Heaven Hill’s VP of American whiskey, Susan Wahl, the average ten-year growth for the company’s largest rye offerings (Elijah Craig Straight Rye, Pikesville Rye and Rittenhouse Rye), is “about 23%”.
Constellation-owned High West is another rye veteran now reaping the rewards of increased interest in the category. GM Daniel Schear says sales of all the company’s rye whiskies have increased “dramatically” over the past decade – and have more than doubled in the past three years alone.
As volumes in the US have skyrocketed, others have moved to expand their rye portfolios, or to enter the segment for the first time. Luxco international sales director Greg Mefford references Ezra Brooks 99 Straight Rye from Lux Row Distillers, and Ross & Squibb Distillery’s two new Rossville Union Rye Whiskey expressions: a 7-year-old Barrel Proof Straight Rye, and a 6-year-old Bottled in Bond Straight Rye. “Overall demand for our rye whiskies grew by around 53% this year,” he says, “and we’re expecting further growth in 2024.”
Maturity drives diversification and draws in new entrants
For Uncle Nearest, rye is still a novelty. Chief business officer Katharine Jerkens says: “We launched our Straight Rye Whiskey in the winter of 2022, and have seen rye really start to grow in all markets, notably in the on-premise, where there is a great opportunity to educate consumers on rye, as well as experiment with using rye in various classic cocktails. We’ve seen a noticeable effect and increase in Nielsen and other syndicated data.”
As the segment has matured and diversified, more brands have been drawn into its orbit. Just over ten years ago, Brown-Forman launched Woodford Reserve Rye, with Old Forester Rye following four years later, since when growth has been “dramatic”, says master distiller emeritus Chris Morris.
According to Morris, familiarity with the two franchises has helped encourage trial, and adds: “I will say that both brands also have a strong on-trade following and, since rye whiskies are popular with bartenders for use in classic cocktails, this has been a benefit.”
Heaven Hill’s Wahl believes that as brands like Elijah Craig have moved into rye, Bourbon drinkers have been persuaded to give it a try. “Someone who may know the brand for the Small Batch or Barrel Proof recognises the quality of those expressions and then purchases the rye based off name recognition,” she suggests.
Continued growth for the rye segment may be driven by expanding its current demographic, which is broad but, according to many, skewed to younger drinkers in their mid-20s to late-30s — typically on-premise consumers who enjoy rye-based cocktails.
Magliocco believes this demographic bias is in the process of shifting, but Morris feels that more could be done to expand consumption occasions. “Off-trade takeaway has been behind the on-trade, because rye usage has not translated as well into the typical ‘on the rocks’ or ‘neat’ consumption practised most easily at home,” he says. “As a result, rye whiskey development has been centred in markets where a cocktail culture exists.”
Exports a high priority, as non-US brands get in on the act
Expansion into overseas markets is now an increasingly high priority, not least because growth in the US is, perhaps inevitably, beginning to decelerate. Uncle Nearest, for instance, is already beginning to roll out into Canada and the Caribbean, with plans to add more markets this year.
Meanwhile, Vermont-based WhistlePig has benefited from the enhanced distribution muscle offered by Moët Hennessy, with CEO Jeff Kozak reporting good growth in Japan, as well as South Korea, the UK and Australia which, he says, have “strong whiskey and Bourbon markets, so it makes sense that rye will translate well to those countries”.
Kozak adds: “We also see the category continuing to expand as the US market slows and larger brands concentrate their efforts overseas as more inventory becomes available,” noting that WhistlePig’s main priorities lie not so much in countries as in “metro hot spots where we can cover the top 50 bars/restaurants”.
As American rye expands overseas, there’s plenty of competition emerging from other origins. Rye production – for so long confined mainly to the US and Canada – has now sprung up in a variety of locations around the world, including the new wave of Nordic distilleries, and even Scotland.
Most believe the increased competition can only benefit rye whiskey in general – High West’s “thrilled” master distiller, Brendan Coyle, believes a rising tide lifts all ships – while Luxco’s Mefford says: “Yes, they might intensify competition for sales, but this can be outweighed by the intrigue and talkability that these different expressions create. They help more people to discover rye whiskey.”
Meanwhile, Coyle’s High West colleague, GM Daniel Schear, cautions keeping a sense of perspective linked to the relative immaturity of the segment. “I wouldn’t say we’ve seen an impact on the American rye market from this,” he says. “We’re still so early in the life cycle of the rebirth of this category when you look at it compared with Bourbon and Scotch. When my local coffee shop makes rye barrel coffee beans, I’ll know we’ve turned a corner.”
Ramping up rye: Supply and demand
As rye has emerged as arguably the hottest American whiskey segment, aged expressions in particular have become more sought-after – and companies are ramping up production as a result. Brown-Forman has recently completed major expansion projects for Woodford Reserve and Old Forester, but both brands remain on allocation for rye and tightly focused — for now — on the US market, according to master distiller emeritus Chris Morris.
He adds: “With nearly 2,500 distilleries in the US, many producing rye whiskey, I don’t foresee there being a scarcity of rye on a category level. Scarcity will be – and is – found at the brand level.”
At Constellation Brands-owned High West, there are plans for a pot still expansion in the near future, says Coyle, who also mentions a large contract producer set to commence operations in summer 2024. “There’s no sign of slowing down on the capacity side of the equation, so I think you’ll see older offerings expand quite a bit in the next four to seven years and beyond,” Coyle adds.
That may be just as well: High West GM Schear estimates that supply is yet to catch up with demand for anything aged for more than ten years — while Michter’s Magliocco has seen the company’s cult 25-year-old rye offered for sale at over US$40,000 per bottle.
Others are responding to this surge in demand. Luxco international sales director Mefford is “confident” that the company can stay ahead of the curve – but then its Ross & Squibb Distillery claims to be the US’s largest rye producer. The business is also expanding ageing capacity at Ross & Squibb and at Lux Row Distillers over the next year, partly to meet demand for its Rossville Union, Ezra Brooks and Rebel rye whiskies.
Meanwhile, Heaven Hill — home to ryes under the Elijah Craig, Rittenhouse, Pikesville, Square 6 and Parker’s banners — will see extra capacity come on stream in early 2025, when its new Heaven Hill Springs Distillery is due to open.
