How Kentucky Bourbon went from boom to bust

As an American as an apple pie, Kentucky Bourbon flourished after the last major recession is over. But as the economy is reducing postpartemia – and with numerous commercial wars on the horizon – the market can dry.

Although the whiskey, which is traditionally made with corn and aged in charred oak barrels, there are roots that go until the 18th century, it was not until 1964 that it became an emblematic piece of US when the Congress adopted a law declaring it the “distinctive product of the United States”.

But the tendencies to drink come and go to Bourbon by the end of the 20th century was considered a little old -fashioned – pun.

“You often see such a change of generations where people do not want to drink what their parents drink,” says Martin Loddejid, the US president of IWSR, who collects data on alcoholic beverages and provides industry analysis.

Then, when the world recovered from the 2008 recession, drinkers seem to rediscover this classic spirit for several different reasons.

For starters, the price was good, which made him attractive to bars managers to buy and include in cocktails and for the younger drinkers to try. Then, in 2013, a law was passed in Kentucky that made it easier for companies to buy and resell vintage bottles, opening a high -end collector market. To this, add the growth of nostalgia from the middle of the century, nourished by shows such as Mad Men, and Bourbon is due to a complete renaissance.

Bourbon sales have increased by 7% worldwide between 2011-2020, which is more than three times greater than the growth of the previous one, according to the ISWR industrial company.

Soon, some Bourbon distillers have become quasi-sofas and people started buying bourbon bottles so that they did not drink, but as an investment.

“Everyone goes crazy on the Bourbon market and treat as a commodity as a stock,” recalls Robin Win, a general manager and director of drinks for the little sister in Toronto, Canada, who has been the bar manager for about 25 years.

“People would enter as a prosperity, turn bottles for two to three times larger than value.”

But like most market bubbles, this one had to burst. The locking of the pandemic of tank bars and inflation made many possible drinking bourbon choose more expensive options – or to give up drinking all together. Among Gen-Z, many 20s drink less than their bigger siblings and parents made their age.

These factors have contributed to a reduction in alcohol sales, with bourbon sales delayed specifically to only 2% between 2021-2024, according to ISWR.

President Donald Trump’s global tariffs were the last straw. The EU has announced the vindictive tariffs against American goods, including Kentucky Bourbon and California wine, although the application has been delayed for six months.

In the meantime, most provinces in Canada have stopped importing American alcoholic beverages into revenge. The country represents about 10% of Kentucky’s whiskey and bourbon (£ 6.7 billion).

“This is worse than a tariff as it literally takes away your sales, completely removing our shelves products … This is a very disproportionate answer,” said Lawson Wayting, the CEO of Brown forman, who produces Jack Daniels, Woodford Dauja, and Old Forster.

Trump said the tariffs would strengthen the American businesses made.

But the Republican Senator Rand Paul, who represents Kentucky, said the tariffs would harm local businesses and users in his home country.

“Well, tariffs are taxes, and when you put in business tax, it always transmits as an expense. So, there will be higher prices,” he told ABC this week in May.

These economic pressure created a growing list of victims.

Liquor Giant Diageo reports that Bulleit sales, Kentucky distillery, which makes bourbon, rye and whiskey, where it is 7.3% this fiscal year.

Wild Turkey – Kentucky Bourbon, owned by Campari – sales have declined by 8.1% in the last six months.

Although large, international brands will probably be able to withstand the storm, sales strike has led to a growing list of victims.

In July, LMD Holdings applied for bankruptcy of Chapter 11 – just one month after the opening of Luka Mariano distillery in Danville, Kentucky.

This spring, the distillation of Garard County went into reception.

And in January, Jack Daniel’s mother company closed a barrel production plant in Kentucky.

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

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

In part, Bourbon fell victim to its own success – the growth of bourbon sales and the growth of the premium market has helped to nourish very small distilleries. As the bourbon has to grow old in barrels for years, what is on the market today has been projected several years ago, which means that there is currently over -offer, which is reducing prices.

But while these economic conditions are harsh, Lodewijks said that history has shown how difficult times they can create innovation. The Scottish whiskey was quite simple, a mix of the middle of the road on the road. But when sales decreased in the second part of the 20th century, the distillers began to age their excess bottles, which helped to create the market we have now for a premium, aged Scottish whiskey.

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

“The Tariff War has really made positive for the Canadian spirits business,” said G -N Win.

“We have a lot of grains to make these whiskey without having to rely on the United States.”