Recently, there was some news from the Louisville, KY, area that caused spit-takes across the bourbon industry. Suntory Holdings, the parent company of Jim Beam, announced it would be scaling back production in 2026, and not just incrementally. One of the label’s distillation locations, in Clermont, Kentucky, was shuttering for the year. It was jarring to hear, that an entire manufacturing location was closing. This was due to swelling storehouse stocks and a severe drop in consumption.
This news was a bellwether, but at the same time not entirely shocking, as the industry has been experiencing a steep downturn, and it is not isolated to Jim Beam... and not only bourbon. The spirits industry is enduring a receding marketplace, and it is a reality taking place on a global scale.
As for Jim Beam and bourbon in general, there are a variety of factors converging to deliver this impact, and the realities behind crafting the spirit make adjusting for the influences a dicey enterprise. This has been a case of changes taking place over the span of five years or so, beginning with the pandemic.
When COVID-19 wreaked havoc and caused people to be sequestered, it proved to be a boon for the alcohol industry. Consumption spiked during that time, and the distillers faced a dual challenge of meeting the demand and ramping up their production. It has long been the challenge for bourbon makers to know how much product to make at any given point, as the conventional spirit requires a four-year minimum of aging, and higher-end labels need even more time.
This means projecting what the marketplace will be years out requires sharp analysis of marketplace trends and a dose of crystal ball pontificating. Coming out of the pandemic was where things began to go sideways. As production houses were cranking out more hooch to fill the rapacious demand, the negative impacts began.
First, as people began to go back to work, the trend of casual drinking naturally ebbed. The inflationary spike over the past four years also impacted buyers, as they could afford less of the products. Seltzers had taken on a prominence at this time, and the reality was that the younger generation of emerging drinkers was showing they were moving away from high alcohol spirits.
Then the tariff fight began in 2025. As President Trump levied these excise charges on various countries as a form of negotiation, it angered many international markets, including Canada. His talk of making that nation an American property added to the disdain, and as a result, Canadian retailers took on a boycott of U.S. spirits. As exports became directly affected in 2025, sales of U.S. bourbon tanked by close to -85 percent.
These were forces unforeseen, and the timing was that crucial factor. Just as Beam, and others, were ramping up production, by that four-year mark, the demand plummeted. Now, distillers are sitting on huge inventories of product, and that alone is a costly inertia. Kentucky still has a bourbon barrel tax – something that is being phased out in the coming years – and the swollen stockhouses with a record amount of aging product are a drain, while revenues are plummeting.
The effects are a widening ripple. When you have an excess amount of stored spirits and scale back new distillations, another thing that is diminished is the need for new barrels. Last year, Brown-Forman announced it was closing its Louisville cooperage facility, affecting hundreds of jobs. Also, fewer truck drivers are required with the drop in shipments.
But this is hardly a bourbon-specific phenomenon. In Scotland, they are seeing production of its venerated product also being curtailed. Irish whiskey, as well, is seeing the spigots turned down. The French are suffering through this global downturn as wine supplies have been swelling, and more alarms are heard in the Cognac industry.
According to one industry report, five of the majors, across several categories – Diageo, Pernod Ricard, Campari, Brown-Forman, and Remy Cointreau – currently are holding onto $22 billion worth of aging stock, a 10-year high for that group. U.S. tariffs are not the only political impact on the drinking environment – those are just the most reported. China has been in on the game as well.
How much of this is cyclical, and how much permanence will be retained in the marketplace, will be something that will take years to grapple with for spirit makers. President Trump may have helped institute at least one potential positive influence on the industry. In January, new nutrition guidelines were put out that pulled back on suggested restrictions of daily alcohol consumption, a seemingly small move that will be lasting to determine its impact on general consumption practices.
Any shift in public practices will be a long-term change. Bourbon makers will see this as not a quick course correction, but something akin to turning a barge, like back in the day when they shipped their product from Kentucky to New Orleans on the Mississippi River. Meanwhile, one probable result for domestic sippers is that we may enjoy some lower price points in the ensuing years.
