In this Aug. 14, 2014 file photo, a Diageo employee walks by barrels of whiskey stored in a new warehouse at the George Dickel distillery near Tullahoma, Tenn. An oak shortage could severely impact the bourbon industry. (AP Photo/Erik Schelzig)
A looming tree shortage could prove catastrophic for the bourbon industry.
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In a recent podcast episode, Bloomberg brought on Penn State University forestry professor Calvin Norman to discuss the possibility of a shortage of white oak, which is used to age bourbon and other whiskeys.
By law, bourbon must be aged in new charred oak barrels. Most distilleries opt to use white oak because it's the option most conducive to building a watertight barrel.
According to Norman, this incredibly valuable resource may soon become scarce.
"You have to have white oak on good sites growing well, and we have a lot right now," Norman said. "But when we look to the next generation of white oak, there's very little. We're looking at like a 77% population decline if nothing changes today."
Norman explained that coopers (i.e., barrel makers) can't just use any white oak. They have to be high-quality, straight trees without any turn in the shape.
At the moment, Norman said, we actually have something of a surplus of white oak from farms that were abandoned during the Great Depression.
However, that won't last, primarily due to white oak being a high-maintenance tree.
"White oak is difficult to manage. You have to put a lot of time, thought, effort, and money into it, and then you see that return way down the line," Norman said. "So the economics from the system that we have don't make a lot of sense because if you do invasive species management, which you have to do to regenerate white oak, it costs you $80 an acre today, and then you don't get to recoup that value financially for a hundred years."
The bourbon industry has the most to lose from this shortage and is taking steps to battle it, such as the White Oak Initiative. Still, things aren't looking good, according to Norman.
"The future is not great unless we take action today," Norman said. "Using what we have on the ground today, you're looking at a 70% decline if we don't take action today. . But if we take action and we start doing good management, we can get those numbers up. We can see white oak regeneration get up. It just takes getting out there and cutting trees, burning the forest, fencing deer, killing invasive species - it just takes action. And that's where things get fun."
To Norman, the fact that this isn't an unsolvable issue is uplifting.
"I think that we can really solve some of these problems," he said "Not every problem can be solved, but at least white oak is solvable. There is at least something we could do about it."
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