These are tough times for the bourbon industry. Sales are down and inventories are up.
The bourbon trail has led some distillers into bankruptcy: LMD Holdings, the parent company of Luca Mariano Distillery; Stoli Group USA and its Kentucky Owl brand; and SVG26 LLC, the parent company of The Alton Distillery. Another entity, Garrard County Distilling, closed and is in receivership.
Sales of Bulleit are down more than 7%. Sales of Wild Turkey are down more than 8%. Brown-Forman, which produces Jack Daniels, is cutting 12% of its workforce worldwide.
One cash-strapped debtor’s restructuring plan proposed that it would pay creditors with excess bourbon. The judge rejected that, saying that valuations are too speculative, and that the industry is suffering from a “race to the bottom” in pricing.[i]
The current troubles are a big change for a drink that dates from the 18th century but didn’t become widely popular until well after World War II.
In fact, it took until 1964 before bourbon got its first big boost. That is when Congress passed a resolution stating that bourbon is a “Distinctive Product of the United States.” One of the resolution’s key requirements was that bourbon must be made in the U.S.
It is estimated that 95% of bourbon is made in Kentucky, where distillers operate in 49 of its 120 counties.[ii]
In 2007, Kentucky Senator Jim Bunning called bourbon “America’s Native Spirit.” Not long after that, the Great Recession of 2008 hit. And sales of bourbon increased because it was less expensive than some other spirits. Between 2011 and 2020, bourbon sales grew 7% throughout the world.
Bourbon’s popularity continued during the pandemic, when alcohol sales increased as people were forced to stay home.
But the uptick didn’t last and now the industry is struggling. One factor that hampers the industry is a state-imposed tax that Kentucky places on aging barrels. Bourbon is made with corn and aged in charred oak barrels, which takes time. Barrels filled with bourbon this year won’t be sold for several years.
According to one report, Kentucky’s barrel taxes total $75 million this year, a 24% percent increase from last year, and a 163% increase from five years ago.[iii]
But relief is in sight, because starting next year, the tax will be phased out over a 20-year period. Yet the planned tax decrease in 2026 of 4% will not be enough in the short term to turn the industry around.
Other factors plague the industry. Bourbon’s popularity might have peaked as consumers have been moving to other alcoholic and nonalcoholic options. And Gen-Z is drinking less alcohol than older consumers did in their 20s.
The current trade wars also don’t help. The tariffs imposed by the Trump Administration on Canada prompted many individual provinces to stop selling U.S.-made bourbon and other spirits. In August, the Canadian federal government lifted its ban on bourbon and other U.S. goods. But some of the provinces have not followed and still do not allow the sale of U.S.-made bourbon. The Administration also levied 15% tariffs on products from the European Union. The EU has delayed announcing retaliatory tariffs while trade negotiations take place. Even so, sales of bourbon and other spirits to the EU and elsewhere have fallen this year.
The typical barrel of bourbon holds 53 gallons. Multiply that number by the excess bourbon being stored these days and that’s a lot of gallons that aren’t being sold. The prospects for a near-term improvement in sales don’t look good, given changing consumer habits and tastes, particularly with younger drinkers, and decreased exports to major trading partners.
[i] Hearing on October 3, 2025 in In re Stoli Group (USA), LLC, Case No. 24-80146 (SWE) (Bankr. N.D. Tex).
[ii] Fred Minnick, Record Bourbon Inventory in Kentucky is ‘Mixed Blessing’: KDA, Oct. 9, 2025, available at: https://www.fredminnick.com/2025/10/09/record-bourbon-inventory-in-kentucky-is-mixed-blessing-kda/.
[iii] Id.
