How Kentucky Bourbon went from boom to bust

As American as the apple pie, Kentucky Bourbon was booming after the end of the last recession. But as the economy decreased after Pandemic – and with multiple commercial wars on the horizon – the market can dry up.

Although whiskey, which is traditionally made with corn and aged in charred oak barrels, has roots that returned to the 18th century, it was not until 1964 that it became an emblematic element of Americana, when Congress adopted a law declaring as a “distinctive product of the United States”.

But the trends in alcohol consumption come and go, and at the end of the 20th century, Bourbon was considered a little old – a game of words wanted.

“You often see these kinds of generational changes where people do not want to drink what their parents drink,” said Marten Lodewijks, American president of the IWSR, who collects data on alcoholic beverages and provides industry analysis.

Then, while the world recovered from the 2008 recession, the drinkers seemed to rediscover this classic spirit, for some different reasons.

To start, the price was good, which made bar managers attractive to buy and integrate into cocktails and for younger drinkers. Then, in 2013, a law was adopted in Kentucky which allowed companies to buy and more easily resell vintage bottles, opening a high -end collection market. Add to that the increase in the nostalgia for the middle of the century fed by emissions like Mad Men, and Bourbon owed a complete rebirth.

Bourbon sales increased by 7% worldwide between 2011-2020, which represents more than three times the growth of the decade before, according to the ISWR industry.

Soon, some bourbon distillers were becoming quasi-celemeries, and people were starting to buy Bourbon bottles not to drink, but as an investment.

“Everyone became crazy on the Bourbon market and dealing like a commodity, like a stock,” recalls Robin Wynne, managing director and director of drinks for Little Sister in Toronto, Canada, who has been director of the bar for about 25 years.

“People were going as a prospector to turn the bottles for two to three times the value.”

But like most market bubbles, it had to break out. Sales of Pandemic locking bars, and inflation made that many potential bourbon drinkers choose cheaper options – or give up drinking all together. Among Gen-Z, many 20 years ago drink less than their older brothers and sisters and the parents did it at their age.

These factors contributed to the drop in alcohol sales, bourbon sales slowing specifically at only 2% between 2021-2024, according to ISWR data.

President Donald Trump’s world rates were the final straw. The EU has announced reprisals against American products, including Kentucky Bourbon and Californian wine, although the implementation has been delayed by six months.

Meanwhile, most Canada provinces have ceased to import American alcoholic beverages in retaliation. The country represents approximately 10% of whiskey and bourbon activities of $ 9 billion in Kentucky (6.7 billion pounds sterling).

“It is worse than a price, because it literally removes your sales, completely removing our products from the shelves … It is a very disproportionate response,” said Lawson Whiting, CEO of Brown-Forman, who produces Jack Daniels, Woodford Reserve and Old Forester, in March when the Canadian provinces announced their plan to buy us Booze.

Trump said prices will strengthen American companies.

But the Republican Senator Rand Paul, who represents Kentucky, said that prices harm local businesses and consumers in his country of origin.

“Well, the prices are taxes, and when you put a tax on a business, this has always passed as a cost. So there will be higher prices,” he told ABC “this week” in May.

These economic pressures have created a growing list of victims.

The Diageo alcohol giant reported that Bulleit sales, a Kentucky distillery which makes bourbon, rye and whiskey, where this exercise drops 7.3%.

Wild Turkey – A Kentucky Bourbon belonging to Campari – Sales have dropped by 8.1% in the past six months.

Although major international brands will probably be able to resist the storm, the success of sales has led to a growing list of victims.

In July, LMD Holdings filed a bankruptcy file in Chapter 11 – Only one month after opening the Luca Mariano distillery in Danville, Kentucky.

This spring, the distillation of the county of Garrard entered the session.

And in January, Jack Daniel’s parent company closed a barrel manufacturing plant in Kentucky.

The bottom of the barrel has not yet been reached, warned Mr. Lodewijks.

“I would be extraordinarily surprised if there were no more bankruptcies and more consolidation,” he said.

Partly, Bourbon has become a victim of its own success – the increase in sales of Bourbon and the growth of the premium market, helped to fuel many small distilleries. Because bourbon has to age in barrels for years, which is on the market today was planned a few years ago, which means that there is currently an excess offer, which makes prices lower.

But although these economic conditions are hard, Mr. Lodewijks said that history has shown how much time can create innovation. The Scottish whiskey was quite simple, a mixture of Tipples in the middle of the road. But when sales decreased in the second part of the 20th centuries, the distillers began to age their excess bottles, which has helped to create the market that we now have for a superior Scottish whiskey.

In Canada, where bourbon imports slowed down in a net, local distilleries began to experiment with bourbon manufacturing methods to give Canadian whiskey a similar taste.

“The tariff war has really made a positive for Canadian spirits activity,” noted Mr. Wynne.

“We have a lot of grains to do these whiskeys without having to count on states.”