Bourbon Update

Last couple of weeks have seen some brutal reports for the bourbon industry.

In response to a question from a stock analyst about the major stock plunge, Whiting said that three of the biggest factors remain the impact of GLP-1 drugs like Ozempic, legalized cannabis and the decline of drinking in Gen Z-age drinkers. “I don’t think there’s a lot of newness to necessarily add to that conversation. I mean, I’ve seen more and more people with it’s the same big three … and we’ve been saying that for a year and a half now,” Whiting said. Other big factors: the overall economy and tariffs. “The consumer and their wallet just doesn’t have as much money in it,” he said. “They’re spending money on things like vacations and lodging, and other things like that. But then when it trickles down and they go to the grocery store, I think in some cases, spirits have fallen out of the basket a little bit.” Industry-wide, bourbon sales are “basically flat,” Whiting said, but so far that has not resulted in lower prices. Instead, consumers are sizing down. Whiting said industry figures show that 80% of the growth in sales has been in the smaller size. “That’s unusual,” he said. That shows consumers still want the products, they are just “coming to the store with a $10 bill rather than a $20,” he said. President Tump’s tariffs continue to have an impact, particularly in Canada, where American whiskey remains largely off the shelves.

Numerous small distilleries have come under severe pressure as investment dries up.

Brown-Forman, Suntory (of Jim Beam and Maker’s Mark), Sazerac (owner of Buffalo Trace and Barton 1792), Heaven Hill (owner of Evan Williams), Wild Turkey and Four Roses will just make less and hold onto what they have for longer. Small craft distillers that sell what they make will not be impacted, he said. “Like the big guys, if they sell only what they make and make everything they sell, the oversupply problem doesn’t affect them either,” Cowdery said. But excess whiskey is a bigger problem for those distillers who are contract distillers, especially those who were producing for investors, as Garrard was planning to do. Likewise, MGP Ingredients, which makes whiskey in Indiana that is sold under many different independent labels, including Penelope Bourbon, is facing lawsuits from investors who say the company misled them about slowing demand and sales. “The flow of capital driving much of the over-investment in new capacity and warehouse-filling is bound to slow,” Cowdery said in January.

Bourbon is obviously a much bigger deal in Kentucky than just about anywhere else and thus captures the attention of the local media, but I’m also curious about the prospects of the local distillers that have popped up all around the country over the last few years. I haven’t cracked my bottle of Salt City yet (and before you snark about Utah bourbon note that High West is quite good) but I generally do make an effort to sample the local offerings whenever I travel…