Why is 95% of the world’s bourbon made in Kentucky?

I have two questions for you today. Number one, why does 95% of the world's bourbon come from one small part of Kentucky? And number two, who do you think wins the war between bourbon and buzzballs? Most products can be sold pretty much as soon as they're made, which is important if you are in the business of making things because you can start to immediately recoup your investment right away. But some products require a further investment of time. Sometimes years worth of time. Certain cheeses come to mind, wine occasionally, but probably the most famous example is spirits like scotch whiskey. The older the barrel, the deer the bottle. And the most famous American example would be bourbon. I don't happen to drink that much bourbon, but I did start to get interested in the bourbon industry when we were making a three-part series on the horse industry. It's called the horse is us, if you want to check it out. And one interesting feature of the thoroughbred horse market is how relatively concentrated it is around one small geographic area, the bluegrass region around Lexington, Kentucky. Can you guess another industry that is heavily concentrated in one small part of Kentucky? Correct. Bourbon. So, we thought we'd poke around that industry to see what we can learn. Just one episode though, not three. We will look to see how time functions as an investment input. Along the way, we will ask a lot of questions like what makes Kentucky so good for bourbon making. — They talk about the limestone, the same thing that makes fast raceh horses. — But do we detect a note of protectionism there? You do have to admit it's a bit convenient. — That said, the industry has a problem. — We don't have a quality problem. We have a quantity problem. — Demand for bourbon is shrinking. New tariffs are scrambling global trade and bourbon is getting a little bit gluty. — Currently, there are 16 million barrels of bourbon aging in the state of Kentucky. — So, how concerned is the bourbon industry? — Well, it should be very concerned. The good news is that there will be a lot of very well-aged bourbon in the future. So today on Freconomics Radio, let's pour one out for things that age well, even people that age well.