The booming $9 billion Kentucky bourbon industry has created a boom in something else: Whiskey fungus.
New whiskey warehouses, long a part of the Bluegrass landscape and more recently fueled by tax breaks to encourage growth, are increasingly unwelcome even in rural areas. Opponents worry about the environmental risks — from fire, fish kills and fungus — of so much whiskey in irreplaceable rural landscapes.
Neighbors of proposed bourbon rickhouses in at least three counties — Henry, Franklin and Anderson — have been fighting plans to build warehouse campuses that they fear will inundate their homes, cars, gardens, playgrounds and property with the black mold-like growth.
“That whiskey fungus is everywhere,” said Frankfort resident Rick Hardin, who started to notice an increase after a 2017 Buffalo Trace distillery expansion overlooking the Kentucky River. “When it was just the distillery in the bottom, the fungus stayed in the bottom. Now that there are warehouses on the plain, the fungus is going everywhere else now.”
Hardin said everything began to turn black, including his yard furniture and patio umbrella. At his nearby sister’s house, Hardin noticed that her metal roof is turning gray. So is the new blue metal roof on the nearby Peaks Mill Elementary School, he said. His sister painted her gutters black so the fungus won’t show as much, he said.
Joining the fight against the state’s signature industry is perhaps Kentucky’s best-known agricultural activist, Wendell Berry.
Berry, a writer and former University of Kentucky professor whose family has farmed in Henry County for more than six generations, spoke in protest of a proposed Angel’s Envy expansion at a county meeting earlier this month, saying, “we are being asked to sacrifice this land to tourism and whiskey.”
Having fought strip mines, developers, hydroelectric dams and nuclear power plants, the battle against Big Bourbon feels familiar, said Berry, now 88, in an interview with the Herald-Leader.
“There’s something always that ought to be put out in rural Kentucky because we don’t want it in urban Kentucky,” Berry said. “It’s a long time to have your feet propped against that stuff.”
But the bourbon industry, which has seen exponential growth since 2015, says that distilleries need to grow to meet consumer demand and that whiskey fungus isn’t dangerous.
Whiskey fungus is a touchy subject and no one from any major Kentucky distillery would comment for these stories.
The black mold-like growth of Baudoinia compnianencis is hard to scrub off and comes back year after year. The fungus feeds off the “angel’s share,” the distilling industry term for the alcohol that evaporates from the wooden barrels inside the bourbon warehouses.
The more barrels in warehouses, the more alcohol in the air. And the more fungus on almost everything outside.
Kentucky tax break helped fuel bourbon boom
In the last few years, Kentucky distillers have been putting up warehouses and filling them with bourbon at a phenomenal pace, fueled in part by a tax break created by state lawmakers after years of industry lobbying.
The rebate, which is the focus of the interim legislative Bourbon Barrel Taxation Task Force, lets bourbon makers get back property taxes paid on aging barrels if they use the money for capital improvements. Since the tax break began seven years ago, distillers have poured billions into warehouses and barrels as well as tourism facilities, bottling plants and even new distilleries. Despite that, bourbon makers say the rebate hasn’t worked as well as they’d hoped and are lobbying to have the barrel tax repealed altogether.
Almost 100 bourbon-related projects with total projected investments of more than $3.2 billion have been approved for a variety of state tax incentives since 2015, according to a database prepared by Kentucky Economic Development Finance Authority at the Herald-Leader’s request.
That growth has created friction between a key Kentucky economic industry and communities who don’t necessarily want the new buildings, even as county leaders welcome the bourbon barrel tax dollars that the warehouses bring for schools and county services.
But at least one Anderson County resident who has lived with whiskey fungus for years considers it a fair trade.
Connie Blackwell, a Lawrenceburg real estate agent who lives in Tyrone in the valley below the Wild Turkey distillery, acknowledged that the area is blackened by fungus.
“This little town was built on bourbon,” she said.
“It is a mess, you do have to pressure wash your house once a year,” she said. “You get used to it. Everybody down here in Tyrone tolerates it. It’s just no big deal … for the taxes they bring into our county, it’s worth it, to me. ... I don’t believe the whiskey fungus hurts us. Honest to god, for the amount of taxes ... It really is a fair exchange.”
What distillers say about whiskey fungus
The distilling industry points to studies indicating that the fungus isn’t a health concern.
“Baudoinia has been studied a decent bit, and it’s not hazardous,” said Matt Dogali, president and CEO of the American Distilled Spirits Alliance, which includes spirits companies like Brown-Forman, Campari America, Heaven Hill Distillers, Luxco, Sazerac and Stoli Group that own some of the biggest brands in bourbon.
The bourbon industry generally shrugs off concerns about blackened surfaces.
“From an aesthetic standpoint, if there are people experiencing issues, it’s naturally occurring. It’s everywhere,” Dogali said. “I’m not an expert or a scientist but the concentration dissipates quickly by distance. ... From our experience it doesn’t spread that far from rickhouses.”
Dogali said that much of the objection to warehouses comes down to “not in my back yard.”
“How much of this is grabbing onto something easily Google-able and discussed many times to be a NIMBY (Not In My Backyard) and attempting to prevent the development, period? A lot of it is just simply ‘I don’t want it in my backyard, let me find the reason,’ ” he said. “The reality is these need to be built and the growing demand for the product is good for Kentucky … if the counties prevail, how do we the industry trying to provide consumers with the whiskey, meet that demand?”
But others, like Berry, have different questions.
“If they came in here and paid a lot of tax money we could find a use for it, there’s no question about that. A larger question is what kind of a neighbor are they going to be when they get here?” Berry said. “This pits the people living here against absentees, a corporation. They’re going to make all kinds of promises, be ready to promise anything … but what are they going to give us, to bond themselves … how will they be held to their word?”
Angel’s Envy plans bourbon campus in Wendell Berry’s back yard
In Henry County, near the family farm where Kentucky writer Wendell Berry grew up, Angel’s Envy is planning to turn a former premier Angus cattle-breeding farm into a bourbon campus.
Glenview Farm would become home to up to 25 bourbon barrel warehouses, a VIP overnight lodge and cabins, an amphitheater, event space for bourbon tastings, a tourism and visitors center, helicopter pad and more “all while preserving the rural character of the area,” according to the proposal by Bacardi-owned Angel’s Envy.
“But this makes 1,200-acre industrial installation right in the middle of the county,” Berry pointed out in an interview.
Angel’s Envy is “taking on a responsibility to see that they don’t hurt us outside the boundary,” he said. That means the entire neighborhood, including the nearby farm where he and his wife Tanya have lived for 60 years, he said.
“What I fear is this will be a continuation of an old Kentucky story, in which outsiders come in, take as nearly as they can what they can, what they want, and give as little back as they possibly can,” Berry said.
“The bulldozers will be there before anybody else to give the land a new shape that it’ll never get over, not in human times.”
Would Angel’s Envy plans impact farming?
In its request to rezone the land to industrial, Angel’s Envy said “the bourbon operations will have little to no impact on surrounding existing property owners.”
But the application also points out that in 2018, a 400-acre adjoining property already was rezoned for bourbon storage and an Angel’s Envy distillery.
With the “tremendous increase in the bourbon business in Kentucky ... Henry County is poised to further develop based on its strategic location between Lexington and Louisville ... and Cincinnati,” the proposal said.
That’s exactly what Joseph Monroe is worried about. He and his wife, Abbie and their three children farm Valley Spirit Farm in Campbellsburg with Caleb and Kelly Fiechter and their three children. Their farm, which is protected from development under a conservation easement, shares about 3,700 feet of property line with the farm that would become the Angel’s Envy bourbon campus. Warehouses would sprout up just beyond his main garden.
“We’re really concerned it will change the character of the county forever. We’re an agrarian county,” Joseph Monroe said. “We don’t think it’s in line with what our county is about and we don’t think they are acting in good faith.”
He worries that the black whiskey fungus will doom his high tunnels, plastic-covered beds that let him keep growing during the colder months. “It does grow on greenhouse plastic, and you can’t power wash it.”
He’s talked with officials with Angel’s Envy and said they’ve pledged to replace his plastic periodically and to pressure wash his house.
They’ve also pledged to plant trees and establish a 750-foot buffer zone.
But Monroe doesn’t really trust Bacardi because the Kentucky Distillers’ Association (Bacardi, like almost all of Kentucky’s large-scale distillers, is a member) continues to lobby to end the barrel tax that has made the project so attractive to the county in the first place.
Monroe said that county officials “are wowed by the property tax dollars. They are so excited about the property tax dollars that this would bring into the county. ... I just don’t know if the property taxes are worth it.”
The Monroes also are worried about other factors, according to their attorneys. Whiskey warehouses are extremely flammable and the runoff can pollute waterways, among other threats.
“In addition to the release and discharge of pollutants on the subject property, the Monroes are also concerned about the noise and vibrations created by large-scale, industrial fans that will be constantly running inside each warehouse as well as the noise from helicopters landing on the helipad,” wrote Randy Strobo and Clay Barkley in 11 pages of comments to the Henry County planning officials.
Angel’s Envy: ‘Addressing all of the concerns’
In a statement to the Herald-Leader, Gigi DaDan, general manager at Angel’s Envy said that the company has incorporated changes to address concerns from the community and planning officials and will do more if necessary.
“Angel’s Envy is following due diligence regarding several items that were raised in a May meeting with the Planning Commission; we listened and are addressing all of the concerns that we heard from the community. We will continue to update the community as plans continue to progress to ensure solutions are being communicated,” DaDan said. “We are looking forward to building and strengthening long-term relationships and driving local impact in Henry County, as well as supporting the future growth of the bourbon industry throughout Kentucky.”
But former State Rep. Jim Wayne, D-Louisville, who sold the 116-acre farm to the Monroes, said the project will threaten two decades of progress small farmers have made.
“It changes everything in Henry County, changes the identity of the county. At this point it’s agricultural, with small farms, most have made successful transition away from tobacco … which is quite remarkable,” Wayne said. “Angel’s Envy is going to establish this huge, polluting facility right in the middle of agricultural areas, it threatens everything. ... The fungus itself is a polluting fungus, and we don’t know what that will do the food.”
The Henry County Planning and Zoning Commission on Aug. 10 approved the zone change by a vote of 6 to 3 to allow Angel’s Envy to proceed. Residents have 21 days to challenge that approval; the next Henry County Fiscal Court meeting is on Sept. 20.
Planner Mike Ray said the approval, according to a story in the Henry County Local, was “based upon the comprehensive plan, and not emotions.”
Angel’s Envy attorney John C. Talbott said the project would generate $168,000 in county property taxes in 2025 and increase yearly to $2.3 million by 2034. He also said Angel’s Envy promises to pay about $350,000 a year for seven years for Henry County Public Schools if the bourbon barrel tax is repealed.
Franklin County: Fight over protecting scenic Elkhorn Creek
Since late in 2021, northern Franklin County residents have been attempting to block efforts by Buffalo Trace Distillery to move into the Peaks Mill area along the Elkhorn Creek. In December, residents began to hear rumors about plans to purchase a farm to build perhaps as many as 20 bourbon warehouses.
No formal proposal has been made outlining exactly what the distillery intends to do on the property off of Peaks Mill Road.
Buffalo Trace declined to comment for this story but in an email a spokesperson said the distillery estimates it would use about 10 percent of a 417-acre tract for bourbon warehouses. A concept rendering the distillery provided to the Herald-Leader shows 18 warehouses, surrounded by fields and woods.
On the southern side of the proposed complex is Peaks Mill Elementary School and a swath of houses. On the eastern side is the 17-mile-long Elkhorn Creek, which according to Kentucky Fish & Wildlife is one of the state’s best areas for smallmouth bass fishing. Kentucky Tourism calls it “one of Kentucky’s loveliest and longest creeks, ideal for canoeing, kayaking and fishing.”
Residents fear that putting rickhouses on a hill overlooking the creek could endanger this natural resource as well as their homes.
“Imagine the threshold of the Elkhorn Valley dominated by a cluster of fifteen or so four- or five-story monoliths whose sole purpose is to age barreled bourbon. This sprawl is counter to the vision for development described in our Comprehensive Plan. ... It is the hope of many of us who live in the area and for all of us who enjoy the beauty and recreational amenities of Elkhorn Creek and the scenic countryside in which Buffalo Trace proposes to construct its warehouses that such buildings be limited to areas set aside for just such purposes,” wrote Richard Taylor in a December letter to the editor on Kentucky.com. “Maybe we should be asking what artist Paul Sawyier would do to maintain the integrity of a special place that remains much as he saw it over a hundred years ago, a place that is replicated on the walls of nearly every home in Frankfort.”
Joe Sanderson, a former Franklin County planning commissioner, wrote in a March 2022 letter that he’d moved once after Buffalo Trace bought property behind his house on Cedar Cove Hill to build warehouses. “Obviously I didn’t move far enough away because they are doing it again.”
Other residents also have expressed concerns.
“The Commission refuses to acknowledge that whiskey fungus will cause millions of dollars of property damage and lower property values for the 132 homes in Arnold Ridge subdivision,” wrote Franklin County resident Margaret Groves in an email. “They refuse to listen to people’s complaints about the noise from warehouse fans or Buffalo Trace’s refusal to return their calls. They refuse to acknowledge that 1,545 people have signed a petition opposing the amendment change on environmental grounds.”
At a June meeting, county magistrates expressed their own reservations about the new Buffalo Trace project.
“Buffalo Trace is huge in our community; I don’t think anybody wants to say anything bad about them ... the question that’s in front of us is do we move them in different parts of our community, and our community is a lot different with the Elkhorn Creek, the river and things like that. This is one of the biggest decisions that will be in front of us,” said magistrate Michael Mueller. “There’s legislation right now to remove the barrel tax, that’s a huge thing.”
Scotty Tracy, magistrate for the fourth district where the Buffalo Trace project would be built, said he has many concerns, among them whiskey fungus. “No one wants to address black mold. It needs to be addressed,” he said.
After a contentions four-hour meeting on Aug. 11, the planning commission voted to table an amendment that could open up agricultural land throughout Franklin County for barrel warehouses and pave the way for Buffalo Trace to go forward with its project. It’s unclear what will happen next; the planning commission meeting is next scheduled to meet at 5:30 p.m. on Sept. 8.
Anderson County: Buffalo Trace in new territory
On the northern outskirts of Lawrenceburg, Buffalo Trace has pursued a separate property with an eye to building up to 24 barrel warehouses, each with the potential to hold up to 60,000 barrels of whiskey. The distillery announced the plan in April to build on 450 acres on Graefenburg Road.
And that’s when Cody Alexander found out his rural area was about to change. He began organizing the neighbors, who are worried about potential traffic on the two-lane highway and about what whiskey fungus will do to their homes, among other things.
They turned out to speak at hearings and hired an attorney. But on July 19, the Anderson County Fiscal Court voted 4 to 2, over the objections of more than two dozen people who spoke out against it, to approved the zone change, which will allow the project to move forward.
“To say we were disappointed in the outcome is an understatement, but to me what was most striking is when it came time for questions and comments between the court members, only one member asked any questions and made any comment. The rest were completely silent, only speaking when making their vote,” Alexander said afterward in an email. “The fact that they refused to speak to the concerns of citizens and even address legal issues related to spot-zoning was appalling.”
Midway environmental attorney Hank Graddy is working with the Anderson County neighbors on potential next steps to fight the warehouses and on Aug. 18, he filed a lawsuit and appeal in Anderson County Circuit Court on behalf of residents to overturn the zoning change and block the Buffalo Trace project.
Tom Isaac, a developer who lives near the proposed project, said the residents were not happy with the county. .
Isaac got a round of applause at the hearing when he asked the fiscal court: “Is Anderson County for sale to the highest bidder? ... Do we the people even count anymore in the eyes of the county officials when outside interests and money is stake? We’re here for one reason: Money.”
He feels the warehouses are inherently dangerous for a variety of reasons, including the threat of fire, environmental disaster, increased traffic and whiskey fungus.
“The problem is the county officials have been swayed by promise of a lot of tax money from the distillery. The dollar signs have gotten in the way of their better judgment. It’s all about money, not about the health and welfare of the people,” Isaac said.
