Why the Whisky Space Is Struggling Right Now

How tariffs, shifting drinking habits, and high-profile bankruptcies are shaking the global spirits market

Just launched your new business and need resources to ace direct marketing at lower costs with higher ROI?

Check out Salesfully’s course, Mastering Sales Fundamentals for Long-Term Success, designed to help you attract new customers efficiently and affordably.

Explore more free courses

---

The global whiskey market, valued at over USD 84 billion in 2024 according to Grand View Research, has long been a pillar of the luxury spirits economy. Analysts expect it to climb toward USD 114 billion by 2030, but those growth projections obscure a more troubling picture: slowing consumption, uneven recovery since COVID-19, and escalating financial stress among producers.

In the United States, where bourbon and Tennessee whiskey dominate, total market size reached roughly USD 17.5 billion in 2024, based on data from the IMARC Group’s U.S. whiskey market outlook. The sector’s heritage brands still carry cultural weight, but its financial footing is wobbling.

Pandemic Effects That Still Linger

The COVID-19 pandemic reshaped nearly every element of the spirits trade. When lockdowns hit, on-premise sales collapsed, gutting revenue from restaurants and bars. At the same time, e-commerce and home mixology briefly rescued sales of mid-tier bottles. Yet, the structural damage remained.

As reported by Fast Company’s analysis of declining spirits consumption, younger drinkers—especially Gen Z—are drinking less, opting for non-alcoholic or low-ABV alternatives. This generational shift has created a demand imbalance that even post-pandemic “revenge spending” couldn’t correct.

U.S. spirits exports dropped 9 percent in Q2 2024, largely due to lower global demand and lingering trade frictions.

Tariffs and Trade Turbulence

Tariffs have proven one of the sharpest thorns in the side of American whiskey makers. After European and U.K. duties were imposed during trade disputes, distillers saw their export pipelines narrow. According to Fast Company’s coverage of whiskey tariffs and exports, U.S. spirit exports to Canada alone plummeted 85 percent in one quarter.

The tariff issue is more than a pricing challenge—it’s a brand perception issue. As trade expert Tom Birchall told Reuters, “American whiskey has lost ground not just because of cost, but because we’ve ceded shelf space in bars we may never get back.”

This environment means even flagship distilleries are looking inward, prioritizing domestic resilience over aggressive export growth.

Corporate Distress and the Uncle Nearest Case

Few events illustrate this better than the ongoing Uncle Nearest receivership. Once heralded as a Black-owned whiskey brand rewriting the narrative of American spirits, the company now finds itself in financial limbo. According to Kentucky.com’s report on the Uncle Nearest court case, the distillery’s future may depend on asset sales or restructuring—an unsettling sign for investors who once saw whiskey as “liquid gold.”

Meanwhile, The Spirits Business investigation into American whiskey turmoil notes that several Kentucky producers are either seeking bankruptcy protection or quietly winding down operations. Overcapacity—combined with slowing sales—has turned barrel warehouses from symbols of optimism into balance-sheet burdens.

The industry’s inventory build-up has outpaced consumption by roughly 15 percent, according to estimates shared by the Distilled Spirits Council in early 2025.

Craft Distilleries and the Squeeze

While large distillers face export exposure, smaller craft whiskey brands are fighting a different battle: cash flow and distribution. As highlighted in Food & Wine’s feature on struggling craft distilleries, many boutique operations that boomed during the 2010s are now shuttering.

Their problem isn’t lack of product—it’s lack of reach. Without the financial muscle to weather tariffs, inflation, or the cost of aging inventory, they’re squeezed from both ends.

Industry analyst Mark Meek, CEO of the IWSR, recently told The Drinks Business that “the whiskey boom of the last decade was built on borrowed optimism; now we’re paying that tab with real money.”

The Structural Challenge Ahead

The long maturation cycle that gives whiskey its flavor also makes it uniquely vulnerable to market timing. Barrels filled during a boom might reach market when demand has cooled or tariffs have risen. That creates capital lock-in—money literally aging in wood.

For brands, the strategic priorities now revolve around export diversification, smarter hedging on raw materials, and digital storytelling that reconnects drinkers emotionally rather than economically.

The whiskey industry’s resilience has always been part myth, part economics. Today, that balance is being tested. From pandemic-era aftershocks to tariff fights and high-profile bankruptcies, whiskey’s current “rough patch” could reshape how future generations define premium spirits.

As one Fast Company headline bluntly summarized: “No one wants to drink U.S. spirits anymore—including Americans.” Whether this is a temporary sobering or a lasting cultural shift remains to be seen.

Just launched your new business and need resources to ace direct marketing at lower costs with higher ROI?

Check out Salesfully’s course, Mastering Sales Fundamentals for Long-Term Success, designed to help you attract new customers efficiently and affordably.

Don't stop there! Create your free Salesfully account today and gain instant access to premium sales data and essential resources to fuel your startup journey.