Indeed, bourbon production—and consumption—is on the rise. In Kentucky, where 95 percent of the world's bourbon is made, bourbon production has soared. There were more than 1 million barrels of bourbon produced in Kentucky in 2012, more than double what it was in 1999, according to the Kentucky Distillers' Association.
In fact, in Kentucky, there are more barrels of bourbon than people. Last year total inventory reached 4.9 million barrels; by contrast, there are 4.3 million people.
Among some of the bourbon names Gabelli said he's investing in are Italy's Campari, which owns Kentucky bourbon maker Wild Turkey, Jim Beam and Brown-Forman, which makes several bourbon brands including Jack Daniel's, Woodford Reserve and Old Forester.
"We look everywhere," Gabelli said.
— By CNBC's Cindy Perman. Follow her on Twitter