For the last 15 to 20 years the distilled spirits industry has experienced a tremendous amount of growth. Over those years the phrase ‘bourbon boom’ has made a lot of headlines. For the last year or so, the phrase bourbon boom has been replaced with the word ‘headwinds’.
In early 2025 those headwinds were articulated when the Distilled Spirits Council of the United States – DISCUS released one of the first data sets that showed a slowdown in distilled spirits sales. The DISCUS report showed that in 2024 the industry saw a 1.1% decline in year over year revenue growth. After many years of hyper buying during the Covid years, things had started to slow or as some would say, normalize to a pre-Covid growth cycle.
What is a Headwind?
Here is how Merriam-Webster defines ‘Headwind’
Headwind — /ˈhed.wɪnd/
1. a wind having the opposite general direction to a course of movement
2. a force or influence that inhibits progress
Headwinds Cause Kentucky Distillers to Cut Back on Bourbon Production
The new “Economic and Fiscal Impacts of Kentucky’s Distilling Industry, 2024-2025” biennial report just released by the Kentucky Distillers’ Association shows that Kentucky distillers saw the writing on the wall and began to cut back on bourbon production after a peak in 2023. Overall, 2024 was still a record year for bourbon production but not as many barrels were filled as the previous year.
Kentucky Distillers’ Association – Barrels of Bourbon and Other Spirits Produced and Warehouse Inventory from 1970 to 2024
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Distillers filled 3.03 million barrels of bourbon in 2024, down from 3.2 million in 2023. Nonetheless 2024 production was still 12% higher than production in 2022, 25% higher than 2020 and 135% higher than 10 years ago. Production has risen dramatically since the turn of the century, up more than 560%. Production data for 2025 will not be available until the fall of 2026.
”Reports of my death have been greatly exaggerated” ~ Mark Twain
The above quote is often cited. It turns out the actual 1897 Mark Twain quote was, “The report of my death was an exaggeration.” In a similar fashion, the distilled spirits industry may be seeing some headwinds but the reports of the death of bourbon have been greatly exaggerated. Bourbon is still a huge economic driver in the commonwealth of Kentucky.
Kentucky Bourbon Contributes $10.6 Billion in Economic Impact
As outside threats continue to jeopardize its future growth, Kentucky Bourbon remains a key and substantial contributor to the state’s economy, as a $10.6 billion signature industry supporting nearly 24,000 jobs according to the new biennial report.
Distillers in Kentucky know that making great Kentucky bourbon takes skill and patience. Kentucky distillers have that part pretty well figured out after 200+ years. The hard part is to look into their distilled spirits crystal ball and try to predict how much bourbon, rye and American whiskey they’ll need to make for the next 10 to 20 years. No easy task as long-term fortunes remain a roller coaster of uncertainty and unpredictability, threatened by a volatile global trade arena, shifting generational consumer tastes, soaring barrel taxes, and evolving market and geopolitical conditions that have slowed alcohol sales and slashed exports.
“This comprehensive analysis demonstrates the economic impact of Kentucky’s homegrown and historic Bourbon industry, which remains significantly ahead in jobs, investment and stature from over a decade ago,” said Eric Gregory, President of the Kentucky Distillers’ Association.
“Bourbon is a long-term business, and the data shows that its Kentucky foundation remains strong,” he said. “But we also must remember that its future isn’t guaranteed and this data is a snapshot in time.
“We need the support of elected officials at every level of government to help create a stable, competitive environment so Bourbon can produce more American jobs, satisfy the global thirst for our signature spirit and continue to invest in our Kentucky home.”
Top 10 Findings from the 2025 State of the Bourbon Industry in Kentucky Report
Here are the top 10 findings from the latest report on the distilling industry in Kentucky.
- The distilled spirits industry contributes $10.6 billion in annual economic impact to Kentucky, up from $9 billion in the previous study released in early 2024.
- Supports 23,935 jobs with $2 billion in salaries, wages and benefits, an increase of more than 800 jobs in the last two years despite recent cutbacks.
- Generates $372 million in local and state tax revenue every year, an increase of $200 million over the last 10 years alone.
- Reports plans to invest another $1.45 billion in the next five years.
- Purchases 27.3 million bushels of corn annually, of which KDA members say 84% comes from Kentucky farmers, up from 70% in the previous report.
- Has more licensed distilleries than ever before, with 125 locations owned and operated by 104 companies in 45 of the state’s 120 counties.
- Pays a skyrocketing amount of taxes on aging barrels of spirits, including $75 million in 2025, a 163% surge in the last five years alone.
- Stores a record 17.1 million barrels of spirits, of which 16.1 million are Bourbon.
- Provides the second-highest job multiplier in the state behind the automobile industry, supporting Kentucky farm families, cooperages, truckers and more.
- Dominates the national distilling scene with 27% of both the country’s spirits output and employment, with Tennessee second at 8.4% .
This marks the eighth study of the impact of Kentucky’s distilling industry on the state economy since 2009. The report was conducted by noted Kentucky economist Dr. Mike Clark using the latest data from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, the Kentucky Department of Revenue, the Kentucky Cabinet for Economic Development and more trusted sources. Dr. Clark is Director of the Center for Business and Economic Research at the University of Kentucky and the former Chief Economist for the Kentucky Legislative Research Commission.
“Together, these reports provide a clear, long-term record of Kentucky Bourbon’s growth as a signature industry and the policy challenges that determine its future,” Gregory said.
“Kentucky Bourbon has been around for more than 200 years and overcome its fair share of challenges. By working together, and with the sacred name of Kentucky on every bottle, we must ensure the next report is a toast to progress.”
Mounting Headwinds
Despite this robust growth, the industry faces mounting headwinds. Foreign demand, a major driver of past expansion and success, has been curtailed by retaliatory tariffs and other trade policy countermeasures imposed in 2018 and 2025. Domestically, the market is shifting due to evolving consumer tastes, changes in generational drinking habits, and new competition for leisure dollars, such as legalized recreational cannabis and sports wagering.1 according to IWSRs Shifting alcohol consumer dynamics.
$1.45 Billion in Investments Planned Over Next 5-Years
Kentucky Distillers’ Association (KDA) member distillers are in the middle of a 10-year, $3.55 billion capital investment campaign. KDA members reported that they have invested $2.1 billion in the last five years and plan to invest $1.45 billion over the next five years. Of the $2.1 billion in the last five years, 65% was buildings and 29% machinery. In the new $1.45 billion investment in the next five years, $545 million is machinery, about 38%.
Recent and Planned Capital Expenditures of 55 KDA Members Responding
Planned Capital Expenditures 2025 to 2029 by Type of Asset of 55 KDA Members Responding
There is always uncertainty regarding whether and when planned investments will occur. The recent challenges facing the industry may cause distillers to postpone some of these plans. However, assuming this investment occurs, it would support 1,493 jobs and $97.5 million in income per year spread over this five-year period. This labor income is estimated to generate $8.6 million per year in revenue from state income and sales taxes and local occupational license taxes.
The Kentucky Cabinet for Economic Development reports announced projects that have been approved for incentives. The figures represent announcements of planned investments rather than actual investments. Some announced projects might not occur.
Announced Investments by Kentucky Distillers
How Many Barrels of Bourbon is Aging in Kentucky?
The chart above shows the number of barrels of Bourbon and other aging spirits produced and stored in bonded warehouses throughout Kentucky from all distillers, not just KDA members. The total inventory of distilled spirits aging in Kentucky has increased rapidly in recent years. In 2024, there were 17.1 million barrels aging in Kentucky’s bonded warehouses. This was up 11% from the year before. Most of these, 94% or 16.1 million, contained Bourbon. The rest consist of other aging spirits such as brandy or single malt whiskey. The assessed value of distilled spirits inventory, which includes bulk inventory and cases held for shipment, totaled an all-time high of $10 billion for tax year 2025. This is up 24% from 2024 (or 22% after adjusting for inflation). The barrel inventory and production data for 2025 will not be available from the Kentucky Department of Revenue until the fall of 2026. However, data collected by the U.S. Alcohol and Tobacco Tax and Trade Bureau, U.S. production of distilled spirits fell 28% during the first eight months of 2025 compared to the same period in 2024.
Several distillers slowed bourbon production in 2024 following several years of steady increases. In 2023, distillers produced nearly 3.2 million barrels of bourbon, which was up 17.4% from the prior year. In 2024, they produced just over three million barrels. While this was down from 2023, it was still 12% higher than production levels in 2022. IMPLAN estimates that Kentucky’s Bourbon distilleries produced $6.9 billion in total output in 2024.
Bourbon Barrel Inventory by Year
This chart above shows the number of Bourbon barrels stored in Kentucky’s bonded warehouses by the year they were produced. Just over 70% of the Bourbon inventory in 2024, or 11.4 million barrels, was produced within the past four years. Only 3% of the inventory was older than eight years.
Because Bourbon is aged for years, the inventory available in any given year is partially determined by production decisions made years earlier.
The chart below shows how the inventory of Bourbon at different ages has changed over time. Not surprisingly, as Bourbon production began to accelerate around 2012, Bourbon inventories that had aged less than three years began to increase. During this time, inventories of older Bourbon began to decline. This was likely due to the demand for Bourbon growing faster than production in prior years. In recent years, inventories have increased across all ages.
Kentucky Bourbon Inventory by Age in Years
National Sales of Whiskey
Data on sales of Kentucky whiskey are not available. However, the Distilled Spirits Council of the United States (DISCUS) reports on national spirits sales. U.S. distillers sold 30 million 9-liter cases that generated $5.2 billion in 2024. Total sales began to increase rapidly in 2012 and climbed steadily through 2022, increasing by 85% as increasing demand for high-end Bourbon drove the market. Despite falling in 2023 and 2024, whiskey sales were still 79% higher in 2024 than in 2012. Nevertheless, these recent decreases do reflect a change from the trend of rapid growth that has dominated the market for the past several years. This is a common occurrence in markets as they mature.
While DISCUS has not yet released 2025 sales data, a recent report from NielsonIQ suggests that sales declined further in 2025. While the report only covered off-premise sales, it showed that total value of distilled spirits was down 1.8% in 2025 compared to 2024. On a more positive note, NielsonIQ also reported that total volume was up 2.4%. This suggests consumers increased spirit purchases in 2025 but spent less. It’s unclear to what extent this was due to lower prices or consumers substituting to lower-priced spirits.9
U.S. Whiskey Sales by Branding, Cases of 9-liter Bottles (000s)
The chart above show how the mix of sales has changed across price levels. High-end and super premium whiskeys have experienced the largest growth in revenues and have increasingly dominated the market. In 2024, these high-end and super premium brands accounted for 66% of the cases sold. Because they command a higher price than premium and value whiskeys, they accounted for 81% of whiskey revenues in 2024. This is up from 63% in 2003 and 70% in 2012. Super premium and high-end premium brands have accounted for 89% of the growth in distilled spirits revenue from 2012 to 2024.
Exports of Used Barrels have Plummeted
Kentucky’s exports of barrels – primarily used Bourbon barrels – plummeted across the first 10 months of 2025, down 29% to $162.7 million compared to the same period in 2024. As barrels can be used only once for Bourbon, other whiskey-making countries have become increasingly large purchasers of Kentucky’s used barrels. This trade represents a significant source of income for Kentucky distilleries, especially as production and barrel inventories increased. Kentucky’s barrel exports peaked in 2024 at nearly $267 million, with the United Kingdom, Japan, Canada, Ireland, India and China accounting for the largest sums, respectively.
Founded in 1880, the Kentucky Distillers’ Association is the Worldwide Voice of Bourbon™. Its diverse and growing membership produces the overwhelming majority of the world’s Bourbon, from historic, global brands to emerging micro distilleries that are fostering the next generation of the Commonwealth’s timeless craft. Kentucky Bourbon is a $9 billion economic engine generating more than 23,500 jobs and attracting over 2 million visits annually through the KDA’s Kentucky Bourbon Trail® experience. A 501(c)(6) nonprofit organization, the KDA maintains an open membership policy, champions a strong commitment to the responsible and moderate consumption of spirits, and fights to curb underage drinking and drunk driving.
What Does the Bourbon Industry Need to Spark a Revival?
Clearly, the bourbon industry needs a revival of Mad Men and a good stiff drink. Cheers!
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Full Report: The Economic and Fiscal Impacts of Kentucky’s Distilling Industry, 2024-2025
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