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Bourbon's golden era fades as market struggles
Kentucky's signature spirit, bourbon, is experiencing a sharp decline after years of rapid growth, as post-pandemic economic challenges and global trade tensions take their toll. Once a booming industry, bourbon now grapples with falling sales, bankruptcies, and retaliatory tariffs that threaten its $9 billion market.
From revival to recession
Bourbon, a whiskey traditionally made from corn and aged in charred oak barrels, has deep roots in American history. In 1964, Congress officially designated it a "distinctive product of the United States," cementing its cultural status. However, by the late 20th century, bourbon had fallen out of favor, seen as outdated by younger drinkers.
That changed after the 2008 financial crisis. Affordable pricing, a resurgence of mid-century nostalgia fueled by shows like Mad Men, and a 2013 Kentucky law easing the resale of vintage bottles sparked a bourbon renaissance. Between 2011 and 2020, global sales surged by 7%, outpacing the previous decade's growth threefold, according to industry analytics firm IWSR.
Distillers became celebrities, and bottles were treated as investments, with collectors flipping them for double or triple their value. But the boom was unsustainable.
Pandemic and inflation hit hard
The COVID-19 pandemic dealt the first blow, shuttering bars and restaurants, which had driven much of bourbon's growth. Inflation further strained consumers, pushing many toward cheaper alternatives or cutting alcohol altogether. Gen Z, in particular, drinks less than previous generations at the same age.
By 2021-2024, bourbon sales growth slowed to just 2%, IWSR data shows. Major brands have reported steep declines: Diageo's Bulleit bourbon dropped 7.3% this fiscal year, while Campari's Wild Turkey fell 8.1% over six months.
Trade wars add to the pain
Retaliatory tariffs have compounded the industry's woes. The European Union delayed but maintained levies on U.S. goods, including bourbon, in response to American trade policies. Canada, which accounts for 10% of Kentucky's bourbon exports, went further, banning imports of U.S. alcohol in several provinces.
"That's worse than a tariff-it's removing our products from shelves entirely. It's a disproportionate response."
Lawson Whiting, CEO of Brown-Forman (Jack Daniel's, Woodford Reserve)
Kentucky Senator Rand Paul, a Republican, criticized the tariffs, warning they would raise costs for businesses and consumers. "Tariffs are taxes, and those costs are always passed down," he told ABC's This Week in May.
Bankruptcies and plant closures mount
The downturn has claimed several victims. In July, LMD Holdings filed for Chapter 11 bankruptcy just a month after opening the Luca Mariano Distillery in Danville, Kentucky. Garrard County Distilling entered receivership this spring, and in January, Brown-Forman shuttered a Kentucky barrel-making plant.
Marten Lodewijks, U.S. president of IWSR, expects more fallout. "I'd be surprised if there weren't more bankruptcies and consolidation," he said, noting that bourbon's success created an oversupply. Since bourbon must age for years, today's market reflects decisions made before the downturn.
Silver linings and innovation
Despite the challenges, some see opportunity. Lodewijks pointed to Scotch whisky's evolution as a model: when sales slumped in the late 20th century, distillers aged excess stock, creating a premium market. Similarly, Canadian distilleries are now experimenting with bourbon-style whiskey, using local grains to fill the gap left by U.S. imports.
"The tariff war has been a positive for the Canadian spirits business. We've got the grains to make these whiskeys without relying on the States."
Robin Wynne, Beverage Director at Little Sister (Toronto)
For Kentucky's bourbon industry, the road to recovery may hinge on weathering the storm-and adapting to a changing market.
