Intro
Remember when it felt like craft whiskey was invincible?
I do.
Just a few years ago, seemingly everyone was opening up a new whiskey distillery to take advantage of increased demand and what looked like inevitable category growth.
Unfortunately, I think we’ll all be able to agree that 2025 was the year those dreams permanently died.
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Intro (continued)
You can see the impacts everywhere if you know where to look.
As iconic distilleries, once full of life, hang “closed” signs and lock their doors for the last time…
As owners and employees alike start dusting off their resumes, knowing they’ll need a new job soon if they’re going to make ends meet…
And as loyal customers stock up on their favorite bottles before production ceases entirely…and permanently.
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What’s happening
Whenever things go sideways, I find people usually try to find someone to blame.
Did a bunch of kids with more money than sense blow it all trying to become alcohol kingpins?
Or is the real story corporate greed – ‘the suits’ pushing too much growth, too fast…with disastrous results?
Or is it tariffs? Interest rates? Real estate affordability? Burdensome new laws?
So let’s take a minute and unpack everything that’s happening here.
Widespread
The first thing you should know is that the losses are widespread and not limited to any one kind of distillery.
Sure, some of the distilleries going bankrupt are new. But some are pretty old.
Some are small businesses; others are corporate (including one owned by Diageo, the conglomerate that also owns Captain Morgan, Tanqueray, Bailey’s, Ketel One, and many other famous brands).
The impacts here are big and diverse enough to defy a simple explanation.
Except for a single, overriding issue:
The market stopped growing
Put simply, the demand just isn’t there.
The domestic whiskey market grew like clockwork for over 20 years – from 2002 to 2023.
And then…the decline began.
Gently at first – a 1.2% volume decline in 2023…
But then things got worse.
In fact, one industry tracker believes that whiskey consumption declined by a whopping 6.8% in the past year.
The tide is going out, fast
The decline is everywhere…
But it’s especially pronounced in mid-tier whiskeys.
Think bottles priced between $30 and $100.
Consumers with money to burn are willing to pay up for the really good stuff…
While practically everyone else is going for the cheapest stuff they can find.
Because, of course, the alcohol market doesn’t function in a vacuum.
The bigger macro picture
You’ve likely heard before that alcohol is a “counter-cyclical” market, where demand doesn’t really dry up even if the US economy tanks.
And that’s true in aggregate.
But within specific groupings, the picture is much more complex.
Your typical mid-tier whiskey customer is middle class or perhaps upper middle class.
With those jobs being threatened thanks to budget cuts, the rise of AI, and all the trade war stuff…
These folks suddenly don’t have the kind of purchasing power they used to.
They’re not cutting back on whiskey consumption necessarily…
But they’re trying to pay less for it. Hence the move to lower-tier brands.
The trade war double-whammy
Personally, I think whiskey distilleries would have been able to navigate all of the challenges above this year, except that the trade war has caused another big headache.
You see, whiskey is a big American export.
Which means it’s ripe for retaliatory tariffs – which will significantly decrease whiskey sales in foreign markets.
So you’ve got cooling domestic demand plus big threats to foreign demand.
A recipe for total disaster.
The longer view
And while the issues I’m describing are specific to 2025…
The bigger trends don’t look good either.
Many younger customers are migrating to a handful of growing beverage categories, including tequila, ready-to-drink beverages (think hard selzers), and nonalcoholic cocktails.
Not great for whiskey distilleries!
So it’s really no surprise that so many are throwing in the towel.
Here are some of the biggest names going under:
Closure #1: Luca Mariano Distillery
Luca Mariano distillery went bankrupt just last month, part of a string of Kentucky distilleries that all folded at around the same time.
Let’s face it – Kentucky has too many distilleries.
It’s a painful loss, but unfortunately just the first of many…
Closure #2: Kentucky Owl
Kentucky Owl is a beloved brand with big backing: It’s owned by Stoli Group, which of course also owns the eponymous Stoli Vodka and Bayou Rum brands.
Unfortunately, even ownership by a big company wasn’t enough to save the distillery from the overall industry malaise, and its direct owner (Stoli USA) filed for bankruptcy in late 2024.
It was, in many ways, the canary in the coal mine.
It told us a storm was coming.
If only more people had listened.
Closure #3: Boston Harbor Distillery
Boston Harbor Distillery is well-known in whiskey circles.
In addition to winning awards for its fantastic products, it was also founded by Boston Beer Company cofounder Rhonda Kallman.
(Boston Beer Company, of course, produces the famous Sam Adams brand of craft beers.)
Boston Harbor Distillery’s bankruptcy filing on April 3rd shocked the industry to its core.
After all…
Emblematic of bigger problems
This distillery wasn’t in Kentucky, where distilleries are a dime a dozen…
It was founded by someone who absolutely understands the power of a craft brand…
It had won awards for a quality product.
If a company like that can slip into bankruptcy…who’s next?
Closure #4: Westward Whiskey
Westward Whiskey is a big name in Portland, Oregon (where it’s based).
It’s also owned by an even bigger name – mega alcohol conglomerate Diageo Brands.
Unfortunately, neither of those huge advantages could save it, as Westward filed for bankruptcy in April of this year.
Closure #5: Garrard County Distilling
The loss of Garrard County Distilling was a heartbreaking loss for the overall whiskey industry…
But even more so for the residents of Lancaster, Kentucky.
After all, Garrard County Distilling had poured $250 million into a brand-new facility which opened to much fanfare in early 2024…only to collapse into bankruptcy this April.
Another sad ending to a company with a bright future.
And while we’re at it…
It’s only begun
Unfortunately, the whiskey industry still has a significant oversupply problem.
So I’m confident we’ll be seeing quite a few more bankruptcies and closures before all is said and done.
It’s a shame.
I know that booms and busts are part of the natural business life cycle, but it just feels like such a waste.
The real victims
There are three groups of people I really want to call out and see in this moment of transition.
To the owners who built these distilleries: I’m sorry that your dreams and passions did not come to fruition. You deserved better than this.
To the affected workers: You came in and did your job, and you did it well – crafting amazing whiskey that helped people build beautiful memories of celebrations and toasts. I hope your next chapter is kinder than this one.
And to the loyal customers: I hope you’re able to find a new brand of whiskey that speaks to you and brings you joy. We could all use a little joy.
Here’s how you can help
If your heart breaks for these distillers as mine does, I’d ask for you to leave a comment on this article.
Maybe it’s a story of a whiskey toast at a wedding or celebration.
Maybe it’s some advice as workers try to retool their lives.
Maybe it’s some extra insight that I didn’t adequately capture in this article.
Please share freely. The only way for us to get through this is together – so let’s make it happen, as one community.