“I can talk all you want. I’m just sitting in my truck, watching it rain.”
Lyle Taylor is the president of Woodlands Enterprises in Rome, Georgia. He’s a real logger, too, the kind that still goes out in the woods and cuts down trees. But Taylor also has a BS and MS in forestry from the University of Tennessee and oversees every part of Woodlands Enterprises.
While he waits for the weather to clear up so he can get back to felling trees, he wants to share with me his fears for the bourbon industry.
He’d noticed some things, put together a few puzzle pieces and he thinks there might be a supply problem looming—essentially, we won’t have enough white oak to make barrels to age bourbon in. That’s a big problem.
The folks down the chain—at two cooperages that supply large parts of the bourbon industry—don’t see it the same way, and I also talked to two forest scientists who brought up a lot of interesting points.
I’m not sure exactly what to think but here are all of their arguments. Pay attention, since ten, or even five years from now, the price of your bourbon could depend on this discussion.
“Not many people understand about loggers. If it rains, we don’t work,” Taylor explained, which hearkens back to the barrel shortage that took place a few years ago. That was caused by an exceptional stretch of rainy weather in the white oak forests in the lower Midwest. However, that’s not the problem this time; he’s talking about something more fundamental.
To understand what he’s saying, you first have to understand his business. Woodlands Enterprises cuts down a range of trees, not just white oaks for barrels, although Taylor wishes he could focus on just supporting the whiskey trade.
“We do thousands of truckloads of wood in a year,” he explained, “and maybe ten to 15 is white oak good enough for staves. I wish it all was, because the money’s so good. If I could find four loads of white oak a week, I’d get out of the [rest of the timber] business and just do that.”
Stave-quality white oak sells for a premium, and that’s the key. “Maybe it’s just a generalization,” Taylor said, “but the wood we cut, the pine and such, the prices are low. You tell the mills every day, y’all aren’t paying enough. Ten, 15 years ago, tires were half the price they are, fuel was less, a new skidder [a heavy tractor] was less. But that’s all gone up, and the price [for wood in general] hasn’t. But the white oak, the prices are high, so that tells me the supply must be tight, so they’re paying more. Why would you pay $150 to $200 a ton for wood if you could get as much as you want? When they were paying $60 to $80 [a ton] ten years ago? To me, that means the volume’s not there.”
When I mention to him that the people running the cooperages, the people buying the white oak for their stave mills, say there’s plenty of wood, he demurs.
“Their studies show that the wood resources are there,” Taylor acknowledged but explains that there are other challenges to consider. “My partner looked at 37 acres [of white oak] just this morning, and it looked good. But I don’t give a shit how dry it gets, I can’t get it to the mill! I can’t get a skidder in there. The ground’s too steep. I look at the rate we’re cutting white oak, I question it all the time, and I just think, ‘Damn. Is there going to be enough?’”
Taylor is not a disinterested party in the greater picture, either. He’s a bourbon drinker. “I like Weller,” he told me. “It’s not a real premium bourbon, like Pappy Van Winkle, but it’s good. Bought a bottle six months ago: $27. Bought one last week: $36! Why has the price gone up? There’s a lot of factors in there, but hell! That’s what guys like you figure out.”
Indeed, and we do it by checking other sources. So, I got in touch with some tree scientists about this potential wood shortage.
“Recently, we have seen a decline in oak seedling establishment across much of the eastern U.S. forests,” said Dr. M. Ross Alexander, a dendrochronologist (someone who studies tree growth rings) with Midwest Dendro in Chicago. “That’s likely due to a combination of the following factors. Today’s forests are experiencing much different weather and climate conditions than they did when those forests established. There is competition between species [particularly between oaks and maples]. Land-use change has led to more fragmentation and less large tracts of forest that may impact natural cycles. And we have largely removed fire from these ecosystems.”
He also noted the increase in deer population as recreational hunting declines; more deer eat more acorns, which then won’t become oak trees. The same applies to predation by squirrels and mice. “This results in a forest that has large established oaks in the canopy,” he said, “but the seedlings are mostly maples (either sugar or red maple depending on the region).”
That’s a direct effect, but it’s not the only factor. “Tree-ring reconstructions tell us that today we are experiencing wetter conditions than occurred before European settlement,” said Dr. Alexander. “Generally oaks compete better during relatively dry conditions and maples during wet conditions. Oaks and maples [also] associate with different types of fungus, and these fungi can also alter their ecosystem. It’s all one interconnected Rubik’s cube.”
“The influence of these factors is highly site specific,” he cautioned. “The reason for decline in one location, such as Chicago, may not be the exact same reason for oak decline in Tennessee.”
If there is a white oak supply problem, is there a plan to approach it like they do in Europe, managing our forests more closely? Apparently not, at least not with oak, according to Dr. Christine Rollinson, Forest Ecologist at The Morton Arboretum in Lisle, Illinois.
“Typically, hardwood species like oak are not planted and the forest is left to come back on its own,” she said. “Pines need to be replanted, that’s part of why pine production is often in plantations. There’s talk of maybe doing some planting to aid the regeneration [of white oak] in places it’s struggling, but right now there’s not general consensus if the cost-benefit is there.”
Dr. Rollinson also pointed out that barrel makers face competition for each oak log. “Oak generally is used for a lot of things,” she said. “Many of the properties that make it great for barrels also makes it great for general construction.”
She had more to say about climate change, too, her specific area of expertise. It is one of the many factors to influence white oak supply in the long term, she said, but “it’s hard to really nail down what effect it will have. U.S. Forest Service predictions for white oak show decreased habitat suitability in Missouri, but increased habitat suitability in much of West Virginia and Pennsylvania.”
But she suggested caution on putting too much on that prediction. “The natural migration of trees in general, and oaks in particular,” she noted, “is very slow, and a shift in habitat quality does not translate to an automatic shift in species distribution and timber availability.”
To sum up then, the tree scientists see the possibility of fewer white oaks and more maples in the future, but they’re not saying anything about what Taylor’s seeing right now. Let’s see what the people who are making the barrels have to say about it.
“We’re not seeing that,” said Jason Stout, vice president for marketing and business development at Independent Stave Co., America’s largest maker of barrels (for both bourbon and wine producers).
“12 months ago, the situation was quite a bit tighter. We were coming off two really rainy years, when they just couldn’t log. Prices were high. But the rest of 2019 was great, fantastic. Our inventories are at a really good position. We’re buying logs across 20 states, and we see plenty of oak.”
Similarly, Greg Roshkowski, the general manager at the Brown-Forman Cooperage told me last spring “there’s more white oak now than there was 40 years ago.” That sounds pretty confident, though it doesn’t necessarily mean we’re in good shape, given that in the 1980s bourbon sales had fallen off the table and now we’re in the middle of a whiskey boom.
Stout explained forest harvesting from the mill’s point of view, which is that timber is a crop, harvested when it’s ripe, essentially. “There are reports put out by Hardwood Market Report,” he said. “White oak continues to grow. Annual growth exceeds harvesting by 70 percent, on a year-to-year basis. It’s about the smaller size timber,” he continued. “You have a slightly declining population of smaller trees. Forestry is about good husbandry. When a tree reaches size, you harvest it. If you don’t cut down those big trees, they don’t just get bigger, they die. We’re trying to develop more sustainability with land owners, what a healthy forest requires. There are more medium and large trees than there were. The number of smaller trees has plateaued.”
That’s forest management; it’s about cutting trees. “There’s this assumption that cutting down trees is bad,” Stout said. “But it’s not. There’s a lot of misunderstanding about the forest industry. At the end, cutting mature trees is the proper thing to do. Most people in the industry are invested in sustainability. It’s their living, their future.”
But that notion of more medium and large oaks also fits the scenario Dr. Alexander outlined. Something else Stout said also echoed Taylor’s comments about the white oak he couldn’t get a skidder to reach. “In the near time,” he said, “it’s going to be physical harvesting issues.” These problems could include heavy rains, which we’ve seen before. But there’s also the fact that white oak likes “harsh conditions,” like the rocky soil found on steep hillsides that are hard to reach.
Then I asked Stout about the price issue Taylor mentioned, and he came back with an answer that again echoed Taylor...but from a different angle.
“Look, when a logger goes out and logs, he’s not just cutting white oak,” Stout said. “Cooperage is only two percent of the hardwood industry. We don’t get to pull the strings. He’s only going to sell some of his white oak to us. The more loggers in the game, it’s a lot easier for us to get the select white oak we need. That was the issue when we came out of the Great Recession as bourbon was exploding,” he explained. “The other [wood] industries still had stock, and no one needed to be logging. You need prices to be up to get people to go out there and harvest the wood. We’re more in tune and prepared for something like that than we were seven years ago.”
Maybe Taylor’s observation about prices means that the stave mills are paying what the white oak’s really worth, and the other woods are over-supplied...or under-valued.
Mostly, I was left with more questions. Taylor told me that, “you get up into Tennessee, West Virginia, there’s a lot more white oak. But there’s limits on accessibility, getting the wood to the mill.” I’ve been told by people in the coopering business that there are white oaks to be cut on the eastern front of the Appalachians, but there are no mills. No mills, no logging: logs are too heavy, too big to be shipped economically. Mills would have to be built in those areas, and mills aren’t cheap.
It’s not impossible, though. Dr. Rollinson told me about Great Barrel Company, a new cooperage located in West Virginia, which has built a stave mill in Union that is west of Roanoke. Speyside Bourbon Cooperage, an offshoot of Scotland’s giant Speyside Cooperage, has built a stave mill in Millboro, Virginia, about 70 miles northeast of Great Barrel’s mill. There are also small cooperages popping up around the country, and we’ll likely see more opening.
I don’t see the expansion of bourbon stopping soon, despite the tremendous headwind to export growth created by the retaliatory bourbon tariffs in the EU. America is drinking every drop we can get, and more people turn to whiskey every week. That means increasing demand for whiskey, and barrels, and white oak. And there are ways to get those trees out; when I start a Google search with “steep slope,” the search engine helpfully suggests “logging equipment” as one of the first options.
But it comes back to Taylor’s main point, the thing that started his inquisitive process. Why is white oak that much more expensive? He’s probably right; it’s because they can’t get as much as they want. But as we found out from $100 a barrel oil, higher prices drive exploration and innovation. If the white oak is needed, and the price is right, loggers will find it. (Whether there will be enough loggers is a huge question on its own; stick a pin in that, we may come back to it.)
Jason Stout, the barrel maker, gets the last word this time. “Fear not, consumers. The bourbon will continue to be produced.” I’ll drink to that.
