Growing Bourbon Sales Internationally

Episode 20:  Today, Omar Ayyash, President & CEO of the World Trade Center Kentucky interviews Eddie Smith, CEO & Founder, Kentucky Exports, LLC and Bourbon Kings UAB.  Eddie and his brother started in Elizabethtown and now Eddie lives in Lithuania, where he’s focused on growing sales and distribution of bourbon throughout the region.

Meet Eddie Smith

Eddie’s brother, Steve Smith, attended an International Trade Certification Program with the World Trade Center Kentucky, a few years ago.  This is how Omar became aware of what he and Eddie were doing with Kentucky Exports, LLC.

Originally from Elizabethtown, Eddie moved to Louisville for 20+ years, before going to Lithuania.  He worked in IT for Humana, served as an Adjunct Professor (CIS) at the University of Louisville, and later did international development for Papa Johns.

While at Papa Johns, Eddie’s area of focus included identifying potential franchise opportunities in the Baltic region.  He traveled there and to Russia.  He loved the people and culture of the region.  He’s lived in Lithuania for the past 5 years, beginning in 2019.  Initially, he lead an IT team for Danske Bank.

Getting to Know Lithuania

Eddie explains he didn’t really have language training in Lithuanian.  However, he recounts how getting an ice cream one day lead to his desire to beginning learning it.  Interestingly, given the history of the area, Eddie points out that if you’re over 40, you probably speak some Russian.  If you’re younger than 40, you most likely speak English.  He notes that when he travels to Warsaw, there aren’t as many English-speakers, but there are plenty in Budapest.  English tends to be the language of commerce.

Omar asks Eddie to describe life in Lithuania.  It was the first state to break away from the USSR.  It’s an interesting mix of people who remember being part of the USSR and the younger generations that have no memory of that history.  He mentions it’s at the intersection of history and progress.

Kentucky Exports, LLC

Eddie and his brother, Steve, are co-founders and partners in the business.  Eddie noticed that there were only 9 bourbons/whiskeys available.  Interestingly, Steve owns a bourbon bar in Elizabethtown that’s ranked as one of the best bourbon bars in the world.  It’s called the Bourbon Barrel Tavern.  They have 400 bottles of bourbon available.

As Eddie traveled across Europe, he noticed Jim Beam and Jack Daniels, but not many others.  He began to look into why there weren’t many others.  Back in Elizabethtown, Eddie’s friend Brent Gooden, is the distiller at Boundary Oak Distillery in Radcliff.  The two of them began exploring the situation.

According to data obtained from the Distilled Spirits Council of the United States, the Kentucky Distillers Association and others, craft bourbon has a double-digit share of the market in the US.  However, it accounts for less than 2% of all exports.  The lightbulb when on, so to speak.

It’s a way for Eddie to remain connected to his Kentucky roots and our unique culture, while sharing it with the rest of the world.

What Is Craft Bourbon?

Eddie explains how many people are familiar with the larger brand producers.  However, there are many small batch producers making limited runs of high-quality bourbon.  Many of the craft distilleries are family owned, small businesses.  These are the clients Eddie works with, because they typically don’t have international distribution.

The Bourbon Journey in Europe

Omar asks about the current stage of business and what the market looks like in Eddie’s region.  Eddie begins by recognizing Steve’s participation in the International Trade Certification Program a couple of years ago was the start of this journey.

Small and craft bourbon producers typically don’t have the supply chain expertise and the distribution the larger brands leverage.  Kentucky Exports, LLC has helped the smaller distilleries export using consolidated loads and multiple producers on a single container.  This aspect begins to make global expansion much more possible.  Steve works with the producers to get them export-ready, including funding via the Kentucky STEP Grant and the support of the US Foreign Commercial Services.

Eddie heads the EU-side of the shipments for sales, marketing and distribution, via an entity called Bourbon Kings, UAB.  They import into Lithuania and Latvia.  He mentions how Poland is a big market for them.  They’ve recently begun distributing into Hungary.

As a controlled substance, there are approvals, permits and other various types of documentation required for entry into foreign ports.  Eddie and his network handle that for the craft distillers.  This includes shipping partner, excise warehouses and last-mile transportation to get the product to the various venues.

Overcoming a Market Perception

While bourbon has had a presence in the European Union, the average consumer often considers Jim Beam and Jack Daniels what the students drink to get drunk.  The European distributors aren’t familiar with craft bourbon, so they don’t really understand how to handle this segment.  It’s not the same as they would do for the larger brands.

Eddie spends a lot of time educating the distributors, clients and consumers about the premium-position of craft bourbon products.  He likens it to how they may already be marketing high-end scotch.  There’s a market with a desire to learn more and enjoy the product.

Overcoming a Unique Supply Chain Dilemma

Eddie recounts a problem he encountered as they were beginning to import craft bourbon into Lithuania.  Bourbon Kings is a pioneer in this developing sector.  Along with that comes a variety of issues.

Chemical shipment samples of the product are required to be sent, prior to its leaving Kentucky.  Upon arrival at the Lithuanian port, random samples are taken.  The analysis didn’t match, because the samples were taken from different barrels.  The fact that there was a discrepancy raised a red flag.  The authorities were going to seize the entire shipment.

Eddie contacted the US Commercial Service and the US Embassy.  It actually got escalated to the EU, where it was finally resolved.  As Eddie explains, this event helped to pave the way for other craft producers.  Eddie worked with the Foreign Ag Service in Warsaw to help communicate the information, which has helped to smooth the way for continued imports into Poland.  Eddie truly is “The Bourbon King.”

Promoting Craft Bourbon In-Country

Eddie explains that Europe is comprised of a lot of distinct markets.  Poland, for example, is made up of 4 individual markets around key cities.  The marketing strategy for Hungary is entirely different.

Typically, distributors rely on push-marketing.  It’s introduced into the distribution chain and it gets pushed out.  However, craft bourbon is priced as a premium- to ultra-premium product.

The marketing approach involves a heavy focus on education and tastings.  In Hungary, they’ve partnered with a Mangalitsa pork producer to hold tasting events in Micheline-star restaurants, in conjunction with the US Embassy.  These events offer an opportunity for people to engage with the product and the stories from the craft bourbon distilleries.

Bourbon Kings, UAB decided to only deal with Kentucky products, to maintain the authenticity of the offerings.  Nonetheless, they are beginning to get inquires and pressure to include other regions.  Eddie brings the credibility of having grown up in Kentucky and being able to vouch for the owners of the producers, because he knows them personally.

Trade Policy Considerations

Omar transitions the discussion into trade policy and specifically tariff issues.  Eddie spends a lot of time focusing on the impact of tariffs and retaliatory tariffs levied by the EU and individual countries in the region.

The EU has already place a retaliatory tariff on American whiskey going into the Union.  It’s up for renewal in March.  It was paused during the Biden-administration.  The Distilled Spirits Council of the United States and the Kentucky Distillers Association, among others, are lobbying aggressively to combat the situation.  The tariff will impact the price the consumer ultimately pays for craft bourbon.

How Does Foreign Exchange Impact the Business?

Currency fluctuations impact every market Bourbon Kings operates in on a regular basis.  Lithuania is on the euro.  Poland is on the zloty.  Hungary is on the forint.  Eddie trades in the euro with his Polish partners in an attempt to insulate his business from foreign exchange fluctuations.  However, there’s a lot of fluctuation in dealing with the forint in Hungary.

They are working on a more strategic approach to manage foreign exchange issues.  There’s also the issue of repatriating the funds back in to the US as US dollars.  Right now, they’re simple keeping everything in euros and haven’t begun repatriating funds.  That’s an issue on their radar.

Omar mentions that the World Trade Center Kentucky can assist in both the strategy development as well as relationships with organizations who deal specifically with foreign exchange.

Advice for Those Thinking about Starting a Business and Growing It Internationally

The biggest piece of advice Eddie offers is about choosing the right partners.  For Kentucky Exports, LLC and Bourbon Kings, UAB, they’re fortunate to have a Kentuckian on both sides of the business.  They trust each other and a similar level of trust is forged with the producers.

Vet your partners and confirm they have the same level of passion and zeal you have.  Entrepreneurship often involves a 24/7 mindset.  Go in with your eyes wide open and give it everything you’ve got to be successful.

 

To Contact Eddie Smith: 

Website:  https://www.kentuckyexports.com

Website:  https://bourbonkings.eu/

 

Upcoming WTCKY EVENTS:

• 01/29/25 – Trade Chat: Investing in Workforce Development for a Brighter Future
• 02/18/25 – Global Executive Forum: Navigating the Evolving Landscape and US-China Commercial Relations

 

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