The Bourbon Industry Is in Turmoil. Could Tech Provide the Shot It Needs?

In case you missed it, the American whiskey industry is seemingly in free fall. The once untouchable bourbon business has seen many big brands abruptly retreating, with sales of Bulleit down 7 percent and Wild Turkey down 8 percent in the first half of this year. Brands like Kentucky Owl and Garrard County Distilling have filed for bankruptcy. Uncle Nearest, one of the “it” bourbon brands of the past few years, went into receivership in August.

All of that is a long way to say that the present makes for an awfully inauspicious time to launch a new Kentucky distillery, but for bourbon veterans David Mandell and John Hargrove, cofounders of Whiskey House, industry chaos equals opportunity—thanks in part to a massive investment into tech to bring an often antiquated industry into the 2020s.

Whiskey House has the bones of a classic distillery, but it operates more like a modern food manufacturing plant, leaning heavily into automation, sensor-based control, and real-time analytics, all of which guide every aspect of production. Mandell says the scale at which technology is being used here has never been done before in the spirits industry.

If you’ve never toured a whiskey distillery, the experience can be uncommonly old-fashioned. While newer distilleries thrive on automation, many still tout their “by hand” operations as a defining characteristic, a heritage that gives them street cred. Many distilleries are downright smug about the lack of computers or even climate control in any facet of their operations—even if this means things don’t always go according to plan. Easily preventable errors are chalked up as a cost of doing business, perhaps adding to the romance of whiskey-making while draining the budget.

Mandell says that while the influence of a seasoned master distiller is great, there’s a real risk in eschewing technology when it comes to the finished product. “What many of the other guys get is just inconsistent,” he says, “because they have less control over the process.” And that inconsistency, he adds, can often be felt down the line, in the quality of their whiskey.

Like many industries, whiskey is very incestuous, and the distillery named on the label may not really make the liquid inside the bottle. In fact, that distillery may not exist at all. For example, you can’t visit Redemption Whiskey’s distillery, because there isn’t one; the brand sources all its stock from MGP Ingredients in Indiana.

There are two primary ways to get whiskey without distilling it yourself. Sourcing usually involves buying barrels that have already been made by someone else. Contract distilling happens when whiskey is distilled to order for a client’s specifications. Both are commonplace.

Mandell is a veteran of Bardstown Bourbon Company, a well regarded operation he helped to launch in 2014. Bardstown made (and still makes) its own whiskeys, but like many distillers it also produces for others on contract. These contract distilling services are where the fast money is made. Whiskey produced today won’t be sold until it’s properly aged—for years—but unlike consumers, contract customers have to pay up front. Bardstown has been able to thread the needle and do both sides successfully—though without its thriving contract production business and the hiring of Hargrove (who now leads the Whiskey House production team) to fix some quality issues, Mandell implies that Bardstown might not have been so fortunate in its early days.

When Mandell and Hargrove departed Bardstown around the time of a private equity buyout a few years ago, they got to work on a new business almost immediately. The concept, Mandell says, was simple: “What if we could start over, take everything that we learned, and create the distillery and the system from scratch,” he says. “What’s needed out there? What problems can we solve?”

It turns out there were a lot of problems to solve, and a lot of demand. After all, the many so-called non-distiller producer brands—including most of the “celebrity” whiskeys that now crowd the market, like Beyonce’s SirDavis—have to be made somewhere.

Whiskey House was born to be a 100 percent contract distilling operation, designed to serve customers like this. It doesn’t have a consumer brand and doesn’t bottle or sell any whiskey, and it doesn’t allow visitors. In fact, WIRED’s visit marked the first time a reporter had been invited in, where we were given full access to its operations, engineering team, and tech stack. (Full disclosure: Whiskey House covered the travel expenses for my trip to its facility.)

The gleaming building, located 50 miles outside of Louisville, Kentucky, looks more like a data center than a distillery. In many ways, that’s what it is. Inside, every second of every step of whiskey production has been fine-tuned and automated to the limits of today’s technology, all with the goal of minimizing the chance of an error or a human screw-up while maximizing efficiency.

What immediately strikes you when walking through the five-story, 110,000-square foot facility is how pristine it is, how uninhabited it feels. Distilleries can often be messy, chaotic spaces, filled with scurrying staff. But each 12-hour shift at Whiskey House usually includes just seven people, only three of whom are active in production. The rest work in the chemistry lab, barreling, or maintenance.

Whiskey House is clean like a hospital but loud like the factory that it is, capable of cranking out a maximum of 120,000 barrels of whiskey a year that get started in massive, three-story fermentation tanks. It can also produce experimental spirit runs for customers in batches as small as 50 barrels.

The few production staff members on site spend most of their time behind sprawling displays that visualize insights from Whiskey House’s model predictive control systems, responsible for monitoring every aspect of operations. Data flows in from the 1,500-plus sensors installed across every piece of equipment on the production floor. Temperature gradients across plates in the column still, vapor-liquid equilibrium dynamics, reflux ratios, and more are all tracked and logged in real time. Operators use these sensors and analysis software to make decisions rather than relying on the intuition upon which an old-guard distiller might lean. A centralized data exchange allows any system in the plant to communicate with any other, so if something goes amiss, it can be spotted immediately and from anywhere.

Hargrove believes it’s working. “Thanks to our design and our technology, we can achieve the quality and consistency of production of a massive system, while having the flexibility to produce custom runs, all turning out the highest-quality distillate,” he says.

Though barely a year old, Whiskey House now has 35 customers and is making whiskey for brands including Calumet Farms, Redwood Empire, High N’ Wicked, and Clyde May’s—none of which may be household names, but all of which are well known in the bourbon enthusiast world. More importantly, behind each label is a very different product, and that was part of the sell for Whiskey House: Absolute customizability, unlike what any other distillery can offer.

Various grain samples on display. Customers can choose the ingredients that go into their whiskeys.

Photograph: LEANDRO LOZADA

In just over a year, Whiskey House has made spirits for its customers using 56 different mash bills, the blend of grains, yeast, and other nutrients that ferment before being distilled. At one point, it produced 11 of those mash bills in the facility over a two week span. That may not sound impressive to you, but most distilleries have no capacity for such variety. To put it in perspective, since 1954 Maker’s Mark produced whiskey with only one mash bill—until 2025, when it added a second.

For Heather Greene, CEO of Texas bourbon producers Milam & Greene, Whiskey House provides options, and it does so on her terms. Milam & Greene produces whiskey in multiple states and frequently blends barrels from all of them, but, as Greene puts it, they’re her barrels no matter where they’re made. “It’s like using someone else’s kitchen,” she says. “I’m bringing in my mash bill, my yeast strain, my aging process. It’s complicated, so I need good partners.”

Greene contracts with both Bardstown and Whiskey House and says that both are giving her “fantastic whiskey” that aligns with her exacting expectations, though it will be at least three more years before Whiskey House’s juice has aged enough to be bottled.

“Whiskey House can create the exact profile that’s unique to this brand,” she says. “We’re really able to create something really beautiful, something with providence and a sense of place and identity.”

Distillation is only one piece of the puzzle; Whiskey House customers don’t just have control over production inside the distillery, they also have web-based insight into their products after they are barreled and placed in one of the facility's three onsite rickhouses. (More are being built.) A typical distillery will keep tabs on barrels manually, with batch numbers and production dates scribbled on the barrel head by hand and all of it tracked via spreadsheet. Whiskey House’s barrels are each marked with a QR code, printed with a custom wax ink that won’t degrade in the heat of the rickhouse over multiple years before being fed into its database.

QR codes are printed on each barrel in custom wax ink that won’t degrade over time.

Photograph: LEANDRO LOZADA

Whiskey House can locate any barrel and monitor rickhouse conditions immediately, all thanks to a virtual rickhouse visualization driven by, you guessed it, hundreds more sensors in each building. These track everything from temperature to humidity to airflow velocity and direction. Whiskey House can even monitor the evaporation of whiskey lost to the “angel’s share” inside each barrel thanks to an embedded sensor, virtually as it happens.

The next step is a machine intelligence program being developed by the company’s VP of engineering and technology, Roger Henley, that’s not yet quite off the ground; his team is still collecting and cleaning the data needed to create the models to power it. Subject matter expert AIs are being built to oversee production and make suggestions to engineers about areas where process improvements can enhance efficiency. And AI clustering algorithms are being developed to identify the spots in each rickhouse that provide the optimal aging conditions for “honey barrels,” the highest-quality whiskey barrels in the room, based on gigs of sensor data. Henley says his team is about a year away from getting his AI programs out of the lab and into production.

Ultimately, the AI initiative could raise the stakes on Whiskey House’s promise to its customers, he says. “The goal is to consistently produce high-quality distillate at the lowest possible cost,” says Henley. “That's the whole thing.”

Meanwhile, the American whiskey market continues to writhe as it attempts to find its new normal—though issues like retaliatory tariffs and boycotts and ongoing concerns over the health impacts of alcohol aren’t helping provide stability.

Mandell isn’t fazed. “There are certainly challenges in the industry right now,” he says. “There’s too much production capacity in the contract market and too few customers to sustain all of it. Our focus is on consolidating the best customers into Whiskey House, the brands that need this kind of focused, custom production. And we’re seeing that taking place. It's why we’re continuing to grow.”

“The whiskey industry is at a crossroads,” says Jeff Hopmayer, a retired spirits industry executive best known for founding the Brindiamo Group, which was at one point the largest provider of bulk whiskey in the world. He stresses that the next five years are going to be rough for bourbon producers due to a massive oversupply of barrels without buyers.

And while the short-term may be awfully rocky, Hopmayer says, the long-term presents an opportunity for those who invest in the right places.

“Technology is changing the way spirits are created around the globe,” he says. “The more tech and AI you can bring into the operation, the more efficient it becomes. We’re getting so freaking efficient and consistent in both fermentation and flavor, it's just amazing.”

Hopmayer stresses that he has no financial stake in the company, but that he has tasted Whiskey House’s output, and it has made him a fan. “I’ve bought barrels,” he says. “I believe in the product.”