By Nicholas P. Brown and Emma Rumney<\/p>\n
BARDSTOWN, KY, April 7 (Reuters) – Like many whiskey distillers, Heaven Hill Brands is rolling back bourbon production this year, as demand lags. Yet, as the American spirit faced a tumultuous market in 2025, the Kentucky company built a new, $200 million distillery in the heart of bourbon country, adding 155,000 barrels of capacity.<\/p>\n
Famous for brands like Evan Williams and Elijah Craig, Heaven Hill exemplifies an industry in whiplash, one struggling and growing all at once. Local cooperages drown in backlogs of unused barrels, distillers are slashing output, and some are laying off workers. Yet tourists still pack plant tours, and whiskey makers have planned \u200cat least $1.45 billion in expansion projects between now and 2030, according to research led by Michael Clark, a University of Kentucky economist.<\/p>\n
Liquor consumption has been falling from steep pandemic-era highs, as the cost of living soars and some younger consumers drink less. Tariffs and inflation have pushed up input costs and punctured bubbling demand overseas. And now, \u200cfallout from the Iran war threatens to increase energy costs.<\/p>\n
But the effects of the downturn are not uniform, and the roots of bourbon’s troubles are hotly debated in this Republican stronghold, Reuters found through more than 20 interviews with distillers, suppliers, business owners, voters and politicians last month.<\/p>\n
Kentucky Governor Andy Beshear believes tariffs are a key headwind. In an exclusive interview, the Democrat and potential 2028 presidential candidate said tariffs not only make supplies more expensive but complicate bourbon makers’ \u200befforts to reach critical new markets overseas.<\/p>\n
Distillers downplay politics, blaming instead cyclical factors like inflation and the difficulty of predicting demand years in advance, as their whiskeys age. “The number of times we’ve gotten (demand) right over 90 years, I jokingly say, is zero,” says Heaven Hill Executive Chairman Max Shapira, adding that current tariffs “really aren’t very impactful.”<\/p>\n
A Heaven Hill spokeswoman said bourbon output would be lower this year than last as the company “paces production” after a decade of booming growth, but declined to provide an exact figure.<\/p>\n
As midterm elections loom in November, the battle to control the narrative about the bourbon industry\u2019s struggle speaks to how complex America\u2019s economic realities are – and illustrates the lasting strength of U.S. President Donald Trump\u2019s grip on America\u2019s rural South.<\/p>\n
A year ago, Trump\u2019s now-defunct \u201cliberation day\u201d tariffs were set. During 2025, Kentucky whiskey exports fell 15%, according to U.S. Census data. That compounded a previous 26% drop dating to the president’s tariffs in 2018, from which overseas demand never fully recovered, according to the Clark-led research, commissioned by the Kentucky Distillers\u2019 Association (KDA).<\/p>\n
Greg Hughes, CEO of Jim Beam owner Suntory Global Spirits, says it’s temporary. Inflation and falling demand in developed countries, rather than tariffs, are the main drivers of headwinds that prompted Jim Beam to cut bourbon output \u200cthis year, Hughes said in an interview. \u201cThe industry will get through this,” and “be absolutely fine,” he said, citing expected growth in newer \u2060markets like Latin America.<\/p>\n
LOCAL BUSINESSES SHRUG OFF TARIFFS<\/p>\n
Behind the scenes, though, whiskey makers are scared, Beshear insisted. Cultivating the new markets Hughes alluded to will be difficult against a backdrop of tariff uncertainty, the governor said, adding that industry leaders complain to him in private about \u201chow these tariffs have hit them hard, how they shouldn’t have to be going through it a second time.”<\/p>\n
Even so, in Kentucky, which Trump visited last month to tout his economic policies, Republicans hold super-majorities in both state legislative houses. That’s unlikely to change in November’s elections, as about half the Republican-held districts in both \u2060houses do not have Democratic challengers, according to state election filings.<\/p>\n
Trump won the state by at least 25 percentage points in each of the last three presidential elections.<\/p>\n
In Bardstown – a timeworn enclave of colonial brick, where public trash cans are fashioned from whiskey barrels – bourbon supports the local economy. \u201cIf we don\u2019t have the bourbon industry, we don\u2019t have a business,\u201d says Jeane Noland, owner of the Cozy Cottage gift shop.<\/p>\n
But local entrepreneurs largely say business is good, and do not blame Trump for broader struggles.<\/p>\n
Susanna Buscemi, part owner of Bardstown’s Volstead Bourbon Lounge, tries hard to keep politics out of her bar. “In here, we’re about having a good time and drinking,” she says.<\/p>\n
Though she admits tariffs have increased the costs of certain whiskeys, she says they’re “a good thing for consumers.”<\/p>\n
RUM TO THE RESCUE?<\/p>\n
Though Trump\u2019s Liberation Day tariffs were struck down by the U.S. Supreme Court in \u200bFebruary, Trump \u200bhas vowed to replace them, and has imposed a new worldwide tariff in the meantime. Democratic governors – including Beshear – have sued, calling the new tariffs illegal.<\/p>\n
As uncertainty swells, other policy challenges are cropping up. Trump\u2019s attacks \u200bon Iran have sent energy prices soaring, stirring concern that inputs like fertilizer for corn, bourbon’s primary ingredient, could grow expensive or scarce.<\/p>\n
\u201cWe worry \u200cabout getting ready to plant this year’s corn crop, and are the farmers going to have enough fertilizer? \u2026 And if so, at what price?\u201d said Heaven Hill’s Shapira.<\/p>\n
Rising costs of living have limited disposable income, while aging baby boomers are being replaced with Gen-Z consumers who, either health-conscious or cash-strapped, aren’t drinking as much. The emergence of weight loss drugs and cannabis drinks is also having an impact.<\/p>\n
Kentucky makes about 95% of the world\u2019s bourbon. \u201cAnd the rest is counterfeit,\u201d quipped Beshear. The bourbon industry supports 24,000 jobs in Kentucky \u2013 nearly a third of which are direct distillery roles, the rest split between suppliers and service providers, according to Clark’s research.<\/p>\n
Distillery jobs had fallen 1.7% year-over-year as of last September, the most recent data available, according to Clark. Nearly a third of distillers surveyed by Clark reported cutting jobs – though many also reported adding headcount.<\/p>\n
Barrel inventories are at a record high, Clark found, with 16.1 million aging in Kentucky – a 57% increase from 2020.<\/p>\n
Distillers say that’s not a problem – whiskey gains value as it ages, so they need not rush out old stock. Still, they’ve had to adjust. Brown-Forman, owner of brands like Woodford Reserve, cut 12% of its workforce in 2025, and announced talks in March to merge with French spirits giant Pernod Ricard.<\/p>\n
Lofted Spirits, among the largest distillers of American whiskey, laid off workers last year, though it declined to say how many. The company makes most of its money as a contractor, distilling for other brands, so dwindling orders forced it to reduce bourbon output by “at least half,” CEO Mark Erwin \u200csaid.<\/p>\n
Finding himself with empty fermenters, Erwin decided to pivot to a quintessentially Caribbean spirit: rum, a liquor that need not age as long and can reach the market more quickly. Erwin expects rum to account for nearly \u200bhalf the company\u2019s output this year. \u201cI don\u2019t mind making it,\u201d he says. \u201cIt\u2019s good business.\u201d<\/p>\n
TARIFF RIPPLES<\/p>\n
David Meier, owner of tiny Glenns Creek Distilling in Frankfort, says his bottle costs have risen about 25 cents a bottle due to tariffs – \u200babout a 15% bump – but so far, he hasn\u2019t passed the cost on to consumers.<\/p>\n
Heaven Hill says just 10% of its revenues come from exports. Hughes, likewise, said most of Suntory’s \u200bAmerican whiskey is sold domestically, and that even Canada \u2013 which drew headlines when provinces pulled American whiskey from shelves early last year – represents less than 1% of its bourbon sales.<\/p>\n
Such distillers say reports of bourbon’s death are greatly exaggerated. Still, some suppliers struggle.<\/p>\n
Canton Wood Products, a Lebanon, KY-based barrel maker, sold \u200cabout 7,000 barrels last year, down around 50% from 2022, said Vice President of Operations Melody Pruitt. Tariffs compounded the hit by increasing \u200bthe cost of oak imported from France and Japan, forcing layoffs of 8 of the company\u2019s 38 \u200bemployees – a move Pruitt says gutted her. \u201cTheir livelihood depends on coming to work every day, just like mine,\u201d she said.<\/p>\n
Independent Stave Company, the industry’s biggest barrel supplier whose customers include top producers like Brown-Forman, has fared better, CEO Brad Boswell said.<\/p>\n
His company has cut back production, but is still investing for growth in an industry far bigger than it was a decade ago, he added.<\/p>\n
Overall, Kentucky distillers are still planning $1.45 billion in new buildings, machinery and other expansions over the next five years, economist Clark reported – on top of $2.1 billion in already-completed expansion since 2020 – betting demand will return as economic pressures fade and large overseas markets, like India, develop.<\/p>\n
But, he warned, tariff uncertainty “could have a cooling \u200beffect” on such growth.<\/p>\n
“Given the level of uncertainty, distillers might choose to postpone some of their planned investments,” he said.<\/p>\n
TOURISM ENDURES<\/p>\n
Distillers point to tourism \u200cas a cause for bullishness. Last year’s 2.7 million visits to Kentucky’s so-called Bourbon Trail were roughly flat with 2024, according to trade association KDA.<\/p>\n
Visitors can bottle their own bourbon at Jim Beam’s plant, taste 130-year-old whiskey at $1,800 an ounce at Lofted, and peek into Heaven Hill’s spaceship-like fermenters that hum as they churn out \u200bthousands of gallons of mash.<\/p>\n
Tourism is a key reason many smaller brands – which make most of their money from on-site sales – remain stable. Glenns Creek’s $1.5 million in 2025 revenue was about even with 2024, and higher than 2023, Meier said.<\/p>\n
Bill Peterson, a Chicago-based residential designer who comes to the region twice a year, told \u200bReuters he dropped at least $1,000 on whiskey bottles in one Sunday last month.<\/p>\n
\u201cI’m gonna stay a diehard bourbon guy,\u201d Peterson said.<\/p>\n
(Reporting by Nicholas P. Brown and Emma Rumney; Editing by Anna Driver)<\/p>\n","protected":false},"excerpt":{"rendered":"By Nicholas P. Brown and Emma Rumney BARDSTOWN, KY, April 7 (Reuters) – Like many whiskey distillers, Heaven…\n","protected":false},"author":2,"featured_media":569863,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[8627,28,251368,101,251369,251366,569,251367,942,759],"class_list":{"0":"post-569862","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-andy-beshear","9":"tag-business","10":"tag-distillers","11":"tag-economy","12":"tag-greg-hughes","13":"tag-heaven-hill","14":"tag-kentucky","15":"tag-michael-clark","16":"tag-president-donald-trump","17":"tag-tariffs"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/569862","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=569862"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/569862\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/569863"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=569862"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=569862"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=569862"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}