The American alcohol industry is facing significant financial challenges as 2025 draws to a close, highlighted by a wave of bankruptcies and the steepest decline in consumer alcohol consumption in almost a century. In late December alone, seven major distilleries have sought bankruptcy protection, with Ohio’s A.M. Scott Distillery being the latest to file for Chapter 11 on December 22. This follows similar distress among other distilleries throughout the year, including Luca Mariano Distillery in August and JJ Pfister Distilling Co. along with Devils River Distillery in May, among others.
Further complicating the situation, Jim Beam recently announced it would cease operations at its primary distillery in Kentucky for all of 2026. This facility is critical as it produces about one-third of the company’s annual whiskey output, including well-known brands like Knob Creek and Basil Hayden’s.
A major factor contributing to this instability is the noticeable drop in alcohol consumption across the United States. According to a Gallup poll conducted in August, only 54 percent of adults reported consuming alcohol, marking a decline from 58 percent in 2024 and 62 percent in 2023. This figure represents the lowest percentage recorded in Gallup’s nearly 90-year history. The survey indicated a shifting perception towards alcohol, with over half of Americans believing that moderate consumption is harmful to health.
Additionally, American distillers are grappling with international challenges, particularly regarding exports. The American Distilled Spirits Exports 2025 Mid-Year Report revealed a significant downturn in exports to key markets such as the European Union and Canada, which saw an astonishing 85 percent reduction. This downturn can be attributed to retaliatory tariffs and subsequent trade tensions following President Trump’s 25 percent tariff on Canadian imports. Chris Swonger, president of the Distilled Spirits Council of the United States, remarked on the growing trend of international consumers favoring domestically produced spirits or alternatives from other countries.
In Kentucky, the industry is additionally burdened by a historic surplus of whiskey, with 16.1 million barrels aging as of October. This abundance has resulted in an unprecedented property tax bill of $75 million, a 27 percent increase from the previous year, putting further pressure on distillers.
Despite the current hardships, there remains hope for recovery in the industry as shifting consumer preferences could lead to new innovations and products aimed at health-conscious drinkers. Moreover, addressing trade relations might open up new markets and create opportunities for revitalization. As the industry adapts to these challenges, it could emerge stronger and more resilient in the long run.