The American whiskey industry is facing an unprecedented wave of bankruptcies, marking a sharp reversal after years of impressive growth. Once seen as a booming market with rising sales and new distilleries opening across the country, recent trends reveal mounting challenges that threaten the sector’s stability.

A primary factor behind this downturn is shifting consumption habits, especially among younger consumers. Generation Z is drinking significantly less hard liquor, with many opting for alternatives like cocktails, ready-to-drink beverages, or abstaining from alcohol entirely. This new generation’s different tastes have eroded the whiskey industry’s long-standing customer base, causing a noticeable decline in sales. After two decades of steady growth, American whiskey sales dropped by 0.4% in 2023, followed by a steeper 1.8% decline in 2024. While these numbers may seem small, they strike hard in an industry used to regular expansion.

Complicating matters further, the whiskey sector was caught off-guard by this shift in demand. Distilleries had invested heavily in capacity, assuming continued growth. As sales weakened, expensive inventories accumulated and overhead costs rose, pushing several operations toward insolvency. In recent months, high-profile bankruptcies have included both well-established brands and newer ventures—Kentucky’s famed Luca Mariano Distillery, Garrard County Distilling, Kentucky Owl, and Westward Whiskey have all filed for bankruptcy or faced takeovers.

International factors have also played a role. New or increased tariffs have hit American whiskey exports, particularly impacting small and mid-sized distilleries that rely on global sales. These trade barriers, coupled with domestic headwinds, have forced some producers to shut down altogether. Even prominent craft labels and large employers in the industry are reducing workforce or closing facilities in a bid to survive.

The once-booming American whiskey market now illustrates a broader lesson: rapid expansion and evolving consumer preferences can quickly transform industry fortunes. For distilleries, the challenge ahead is learning to adapt or risk being left behind.