Glut Hits Bourbon Producers As Americans Suffer 'Post-Covid Hangover'

Consumption is dropping and there is a concern that a tariff war could create a larger glut in the U.S.

The bourbon market is drying up in the United States as liquor sales slow in the post-pandemic environment.

The hard liquor industry is facing several challenges. Younger generations are not drinking as much, cannabis is growing in popularity and people turning to anti-obesity drugs are shunning booze.

Another issue is the U.S. Surgeon General's suggestion that alcohol carry cancer warnings.

Industry data and intelligence firm IWSR said that the U.S. spirits market saw it first decline in nearly 30 years in 2023 and things have only gotten worse.

The U.S. alcohol market declined more than expected in 2024.

A big part of that is that American whiskey volumes, which includes bourbon, declined by 2%.

IWSR says that it due to pullbacks in core markets such as California, Florida, Michigan and Texas.

"Generally speaking, these states have larger premium price tiers and it's been the softness here that has led to the decline," said Marten Lodewijks, President of IWSR's US Division. "Consumers seem less willing to trade up into this price tier."

Liquor maker Brown-Forman, the fourth largest bourbon distiller in the world, saw a 1% drop in whiskey sales in the first half of the fiscal year and blamed "super-premium" Jack Daniel's products.

The company called it a "challenging economic environment."

Another possible issue for the industry is tariffs.

President-elect Donald Trump has warned he will use tariffs as a major component of his economic policy. That could lead to retaliatory tariffs on U.S. bourbon exports, the Wall Street Journal reported.

There are concerns the tariffs will dampen international demand for bourbon and add to a glut stateside.

"The one thing that has everyone here scared to death is tariffs," said Eric Gregory, president of the Kentucky Distillers' Association told the WSJ.