Jim Beam, the US’s largest maker of bourbon, has announced a one-year pause in production at its flagship facility in Clermont, Kentucky, a stunning move that underlines the immense challenges facing the American whisky industry after more than two decades of rapid growth.
The decision by the brand, owned by the Japanese conglomerate Suntory Holdings, is the latest in a series of production cuts, layoffs and financial crises across the wine, beer and spirits sector, which has seen sales drop by about 5 per cent over the past year.
The situation will likely get worse as 2025 draws to a close: At the end of October, MGP Ingredients, which distills whisky on contract for other brands, reported a 19 per cent drop in sales for the third quarter.
In September, the global drinks company Diageo paused distillation at its Cascade Hollow facility in Tullahoma, Tennessee, which produces George Dickel Tennessee whisky. In January, Brown-Forman, the maker of whiskeys like Jack Daniel’s and Old Forester, announced it was laying off about 650 employees, or 12 per cent of its workforce, in the face of declining demand.
And over the last year several large whisky companies have gone into receivership, including the Garrard County Distilling Co in Kentucky and Uncle Nearest in Tennessee.
In a statement, Jim Beam said the pause would begin on January 1 and last the entire year. The facility produces about a third of the company’s annual output of approximately 26.5 million gallons.
It also said it would continue production at its two other distilleries in Kentucky and would keep its bottling facility and visitor centre open at the Clermont site. It did not say whether the workers at the distillery would be furloughed or moved to other facilities.
Both the Clermont distillery and another, larger facility, located in nearby Boston, Kentucky, produce most of Jim Beam’s subsidiary brands, including Knob Creek, Booker’s and Basil Hayden. The third, much smaller distillery, also located in Clermont, is for experimental and limited-edition brands.
It will also continue production at the Maker’s Mark distillery in Loretto, Kentucky, which it also owns.
The sudden, steep decline in bourbon sales comes after more than 20 years of expansion in American whisky, which regularly reached 5 per cent in annual growth. It went from about $1.4 billion in sales in 2004 to about $5.2 billion in 2024, according to data from the Distilled Spirits Council of the United States, a trade group.
American whisky proved especially popular during the pandemic. Consumers stuck at home with spare cash and time fuelled an explosion in collecting and buying bottles through auctions and online via informal (and often illegal) markets.
Much, but not all, of that whisky came from big legacy producers like Jim Beam. But it also came from a relatively new category of distilleries that produce on contract for customers and investors, who saw the quick growth in whisky as an easy and fun way to make money.
Analysts also cite recent economic challenges related to President Donald Trump’s tariffs. A backlash from Canadian consumers and provinces, which control alcohol sales, has virtually stopped the sale of American whisky in what was once among the industry’s biggest export markets.
The President’s unpredictable approach to tariff policy has made it difficult to expand into new markets, especially South Asia, sub-Saharan Africa and Southeast Asia, three regions that major American whisky distillers had once hoped to turn into reliable destinations for millions of bottles a year.
Consumer behaviour has also changed rapidly in recent years as the first members of Gen Z reach drinking age.
Polls show that not only are young consumers drinking less, but they are trading up as well, choosing high-proof, more expensive bottles to drink sparingly. That is a big problem for Jim Beam, which relies heavily on its inexpensive, lower-proof White Label brand for sales.
Given the continued economic and cultural headwinds, the pause at Jim Beam is both a sign of how bad things have got for the industry and a harbinger of more shutdowns to come.
New York Times News Service