American white oak barrels
filled with new bourbon whiskey rest in a rack house, giving bourbon its well-known copper color
Distilling was most likely brought to present-day Kentucky in the late 18th century by Scots, Scots-Irish, and other settlers (including English, Irish, Welsh, German, and French) who began to farm the area in earnest. The origin of bourbon as a distinct form of whiskey is not well documented. There are many conflicting legends and claims, some more credible than others.
For example, the invention of bourbon is often attributed to Elijah Craig, a Baptist minister and distiller credited with many Kentucky firsts (e.g., fulling mill, paper mill, ropewalk) who is said to have been the first to age the product in charred oak casks, a process that gives bourbon its reddish color and distinctive taste. Across the county line in Bourbon County, an early distiller named Jacob Spears is credited with being the first to label his product as Bourbon whiskey. Spears' home, known as Stone Castle, warehouse, and spring house survive. The home is on Clay-Kiser Road.
Although still popular and often repeated, the Craig legend is apocryphal. Similarly, the Spears story is a local favorite but is rarely repeated outside the county. There likely was no single "inventor" of bourbon, which developed into its present form in the late 19th century. Essentially, any type of grain can be used to make whiskey, and the practice of aging whiskey and charring the barrels for better flavor had been known in Europe for centuries. The late date of the Bourbon County etymology has led Louisville historian Michael Veach to dispute its authenticity. He proposes the whiskey was named after Bourbon Street in New Orleans, a major port where shipments of Kentucky whiskey sold well as a cheaper alternative to French cognac.
Another proposed origin of the name is the association with the geographic area known as Old Bourbon, consisting of the original Bourbon County in Virginia organized in 1785. This region included much of today's Eastern Kentucky, including 34 of the modern counties. It included the current Bourbon County in Kentucky, which became a county when Kentucky separated from Virginia as a new state in 1792.
When American pioneers pushed west of the Allegheny Mountains following the American Revolution, the first counties they founded covered vast regions. One of these original, huge counties was Bourbon, established in 1785 and named after the French royal family. While this vast county was being carved into many smaller ones, early in the 19th century, many people continued to call the region Old Bourbon. Located within Old Bourbon was the principal port on the Ohio River, Maysville, Kentucky, from which whiskey and other products were shipped. "Old Bourbon" was stencilled on the barrels to indicate their port of origin. Old Bourbon whiskey was different because it was the first corn whiskey most people had ever tasted. In time, bourbon became the name for any corn-based whiskey.
Although many distilleries operated in Bourbon County historically, no distilleries operated there between 1919, when Prohibition began in Kentucky, and late 2014, when a small distillery opened – a period of 95 years. Prohibition was devastating to the bourbon industry. With the ratification of the 18th amendment in 1919, all distilleries were forced to stop operating, although a few were granted permits to bottle existing stocks of medicinal whiskey. Later, a few were allowed to resume production when the stocks ran out. Distilleries that were granted permits to produce or bottle medicinal whiskey included Brown-Forman, Frankfort Distillery, James Thompson and Brothers, American Medical Spirits, the Schenley Distillery (modern-day Buffalo Trace Distillery), and the A. Ph. Stitzel Distillery.
A refinement often dubiously credited to James C. Crow is the sour mash process, which conditions each new fermentation with some amount of spent mash. Spent mash is also known as spent beer, distillers' spent grain, stillage, and slop or feed mash, so named because it is used as animal feed. The acid introduced when using the sour mash controls the growth of bacteria that could taint the whiskey and creates a proper pH balance for the yeast to work.
A concurrent resolution adopted by the United States Congress in 1964 declared bourbon to be a "distinctive product of the United States" and asked "the appropriate agencies of the United States Government ... [to] take appropriate action to prohibit importation into the United States of whiskey designated as 'Bourbon Whiskey'." Federal regulation now defines bourbon whiskey to only include bourbon produced in the United States.
In recent years, bourbon and Tennessee whiskey – sometimes regarded as a different type of spirit but generally meets the legal requirements to be called bourbon – have enjoyed significant growth in popularity. The industry trade group Distilled Spirits Council of the United States tracks sales of bourbon and Tennessee whiskey together.
According to the Distilled Spirits Council, during 2009–2014, the volume of 9-liter cases of whiskey increased by 28.5% overall. Higher-end bourbon and whiskeys experienced the greatest growth. During 2009–14, the volume of the value segment increased by 12.1%, premium by 25.8%, high-end premium by 27.8%, and super-premium by 123.8%. Gross supplier revenues (including federal excise tax) for U.S. bourbon and Tennessee whiskey increased by 46.7% over the 2009–14 period, with the greatest growth coming from high-end products (18.7% growth for value, 33.6% for premium, 44.5% for high-end premium, and 137.2% for super-premium). In 2014, more than 19 million nine-liter cases of bourbon and Tennessee whiskey were sold in the U.S., generating almost $2.7 billion in wholesale distillery revenue. U.S. exports of bourbon whiskey surpassed $1 billion for the first time in 2013; distillers hailed the rise of a "golden age of Kentucky bourbon" and predicted further growth. In 2014, it was estimated that U.S. bourbon whiskey exports surpassed $1 billion, making up the majority of the U.S. total of $1.6 billion in spirits exports. Major export markets for U.S. spirits are, in descending order: Canada, the United Kingdom, Germany, Australia, and France. The largest percentage increases in U.S. exports were, in descending order: Brazil, the Dominican Republic, Bahamas, Israel, and United Arab Emirates. Key elements of growth in the markets showing the largest increases have been changes of law, trade agreements, and reductions of tariffs, as well as increased consumer demand for premium-category spirits.