By Elsie Kamsiyochi
America’s signature whiskey is facing one of its most complicated chapters in decades—caught between falling demand, international trade wars, political battles, and an industry that continues to build even as it contracts.
Across Kentucky, the spiritual home of bourbon, distillers are navigating a marketplace defined by paradoxes: shrinking sales alongside billion-dollar expansion plans, layoffs beside record tourism, and fierce debates over whether tariffs or simple economic cycles are to blame.
A Legacy Spirit Meets a Modern Slump
BARDSTOWN, KY — At Heaven Hill Brands, one of Kentucky’s most influential bourbon makers, production is slowing for the first time in years. Demand has cooled since its pandemic-era peak, yet the company recently unveiled a massive $200 million distillery capable of storing an additional 155,000 barrels. The duality mirrors the entire industry’s current mood—uncertain, uneasy, yet still pushing forward.
Across the region, cooperages are piling up unused barrels, distilleries are slashing output, and some companies have initiated painful layoffs. But at the same time, tourists continue to flock to the Bourbon Trail, and major producers remain committed to long-term growth strategies. According to research by University of Kentucky economist Michael Clark, distillers have planned at least $1.45 billion in new expansion projects through 2030, despite short-term headwinds.
Why the Slowdown? A Perfect Storm of Economic Pressures
The bourbon slump is tied to multiple, overlapping forces:
- Consumption of liquor has dropped sharply from pandemic highs.
- Inflation has eaten into disposable income, especially among younger consumers.
- Gen Z drink less overall, often opting for low- or no-alcohol alternatives.
- Energy prices have soared amid global instability, including fallout from the Iran war.
- Tariffs and trade barriers have made exporting costlier and less predictable.
America’s whiskey makers are feeling these effects unevenly—large brands with international reach face different pressures than small shops relying on tourism or local sales. Yet everyone agrees: the market is no longer the easy boom cycle of the 2010s and early 2020s.
The Tariff Debate: Economics or Politics?
In the Republican-leaning heart of bourbon country, the industry’s challenges have become part of a larger political narrative.
Kentucky Governor Andy Beshear argues tariffs are a major drag on the industry, hurting both supply chains and global sales just as producers hoped to expand into markets like India and Latin America. In an interview with Reuters, he insisted that industry leaders privately acknowledge significant damage, even if they downplay the politics publicly.
Distillers, however, offer a more nuanced story. Many maintain that inflation, unpredictable consumer trends, and the long-aging nature of bourbon are far more influential than tariffs alone.
Heaven Hill executive chairman Max Shapira summed it up bluntly: “The number of times we’ve gotten demand right over 90 years is zero.”
Trump’s Tariffs and Their Lingering Effects
Former President Donald Trump’s “liberation day” tariffs, introduced in 2025 and later struck down by the Supreme Court, hit whiskey exports hard. Kentucky exports fell 15% in 2025, compounding a previous 26% drop tied to earlier Trump-era tariffs in 2018.
Although those tariffs were removed, Trump immediately replaced them with a new global tariff—now also facing legal challenges from Democratic governors, including Beshear.
Among bourbon makers, opinions split sharply. Jim Beam’s owner, Suntory Global Spirits, insists the industry will rebound, citing emerging markets and calling current troubles “temporary.” Others remain wary as they watch input costs and global trade tensions rise again.
Small Businesses Feel the Strain, Even if Consumers Don’t
In Bardstown, where even the trash bins are made from whiskey barrels, bourbon is not just a drink—it’s the backbone of the local economy.
Shops, bars, and small distilleries confirm that tariffs have raised costs, but many say business is still manageable thanks to stable tourism and local demand. Some owners even claim tariffs benefit consumers by leveling the playing field for domestic producers.
Others, like the small Glenns Creek Distilling, admit that bottle costs have risen, even if they haven’t yet passed the increases on to customers.
A more severe impact is felt by suppliers:
Canton Wood Products, a small Kentucky cooperage, has seen sales drop nearly 50% since 2022 and has laid off eight workers—cuts that devastated the company’s leadership.
Shifts in Spirits: Rum and Reinvention
With bourbon sitting longer in warehouses and orders slowing, some distillers are pivoting to other spirits.
Lofted Spirits, one of the largest contract distillers in the country, reduced bourbon output by at least half. CEO Mark Erwin turned to rum—cheaper to produce, faster to bring to market, and increasingly popular with consumers. This year, rum is expected to make up nearly half the company’s output.
“We’re in the business of making what people buy,” Erwin said. “And right now, rum is good business.”
Growth and Risk: A Billion-Dollar Bet on the Future
Even with production cuts and workforce reductions (Brown-Forman eliminated 12% of its global staff last year), Kentucky distillers continue to spend billions building new rickhouses, tourism centers, and production lines.
Why? Because bourbon, unlike most consumer goods, ages into higher value. The 16.1 million barrels now aging in Kentucky represent future revenue—value that continues to increase the longer the whiskey sits.
Still, economist Michael Clark warns that tariff uncertainty and unpredictable global costs could delay some of the planned $1.45 billion in new investment.
Bourbon Tourism: The One Bright Spot
If anything keeps distillers optimistic, it’s tourism.
The Kentucky Bourbon Trail welcomed 2.7 million visitors last year—steady with 2024 and near record highs. Visitors pay for tastings, tours, premium bottlings, and once-in-a-lifetime experiences, like sampling 130-year-old whiskey for $1,800 an ounce.
For small distilleries, on-site sales can make or break their business. Glenns Creek reported $1.5 million in revenue last year—stronger than the two years before it.
Tourists like Chicago designer Bill Peterson keep the industry alive on the consumer side. “I spent at least a thousand dollars in a day,” he said. “I’m a diehard bourbon guy.”
A Crossroads for America’s Spirit
As the industry stands today, bourbon faces a rare convergence of:
- cultural shifts
- political battles
- economic uncertainty
- global disruptions
- and decades-long production cycles that complicate rapid change
Yet producers remain confident. They have weathered Prohibition, recessions, trade wars, and changing consumer tastes before.
And despite its challenges, bourbon’s cultural power—and its ability to attract millions of tourists—continues to make it one of America’s most resilient industries.
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