By Richard Thomas
Shockwaves were felt through not just the world of spirits or drinks, but in the larger media as word broke that Jim Beam, the largest whiskey-maker in America, was suspending production at their Clermont, Kentucky plant for the entirety of 2026. As stunning as that news is, it is not nearly as bad as most coverage is making it out to be. Apparently the mainstream media reporters covering the news missed that Jim Beam has two distilleries in operation, one at Clermont and another at Boston, Kentucky. Of the two, Boston (the one tourists never and journalists rarely get to see) is known as the larger and more important. So, Beam is not ceasing production altogether, as is being implied, but indefinitely shuttering the smaller of its two plants.
Although many observers of the bourbon industry have stated on and off record that the Bourbon Boom and the days of triple shifts and perpetual overtime in the stillhouse were definitely over, no one was predicting a major bourbon producer to turn off the boilers at a major distillery, let alone the biggest company of them all and for such a long period of time.
End of The Bourbon Boom
The move comes when the industry is under pressure from two distinct and separate directions. First, the coming of age of Gen Z has introduced a generational cohort determined to go their own way, in much the same way that Gen X and Millennials doing the same drove the Bourbon Boom in the first place. A similar change in trends led to the Great Whiskey Bust of the 1970s, as Boomers famously steered away from bourbon, which they considered the blue collar drink of their parents, and towards wine and vodka cocktails. Compounded with already thin margins that blocked competitive price cutting and stumbles from the industry, by the 1980s whiskey-makers found themselves in the worst business situation they have ever experienced short of the Great Depression.
But the second factor is one the Trump Trade War, dating back to 2018. Seven years ago and during his first administration, Trump slapped tariffs on metals imported from the European Union. In a move perceived as applying pressure to Republican leader of the US Senate, Kentucky’s Mitch McConnell, one of the EU’s responses was to place a 25% tariff on American whiskey, meaning mostly bourbon. Other countries followed suit. Canada, for example, imposed a 10% tariff.
Whiskey is an easy choice to make for applying tariffs, because it transfers little real pain to the consumer market of the taxing country. Drinkers around the world can choose other foreign whiskies or even other spirits. So unlike a tariff on steel, for example, slapping an import duty on whiskey does little or nothing to drive inflation.
Another mistake that low information people have made (assuming they were even aware of the first Trump Trade War) is that the tariffs ended when Biden came into office. This is untrue. Unlike Trump, who waffles so much that Wall Street dubbed him TACO (“Trump Always Chickens Out), the people who make these decisions for our trading partners are serious people. The EU’s retaliatory tariffs were scheduled to increase; that increase was suspended during the Biden years, but came into effect once Trump began erratically slapping tariffs on islands that have no population. In April 2025, the EU tariff went up to 50%; the Japanese imposed a reciprocal duty (so their tariff mirrors ours); and although Canada lifted its tariff in 2025, a popular boycott is still ongoing.
Learning from their past mistakes, major American whiskey-makers sought to duplicate the export-driven strategy of the Scotch industry and Jack Daniel’s by building their foreign markets as a hedge against a modern repeat of the Boomer’s shift in preferences. By starting a trade war, Trump knocked an entire leg off the bourbon industry’s stool. According to data from ASCA, many of the established small distillers in America were in the midst of pursuing new foreign markets when Trump started his 2018 shakedown of our trading partners, promptly lost their shirts, and have not tried again since. Big whiskey company exports stalled or shrank.
Although the Kentucky Distillers Association (KDA) likes to partly blame the problem of the bourbon industry on high state taxes, they are the principal trade group for the Kentucky bourbon industry and have repeatedly called for an end to the trade war, making the very same point: the industry sees their exports as a hedge against falling sales at home. That hedge no longer exists.
After the Pandemic-driven drinking boom, the impact of many people curbing their habits and the aging-in of the Gen Z cohort caused sales growth to first stall and then contract. That wobbled another leg on the stool.
What Does Beam Want To Achieve?
(Credit: Kentucky Department of Travel and Tourism)
Kentucky now has almost four times as many bourbon barrels as people, a build up of inventory meant to address rising demand at home and abroad. Jim Beam is the single largest individual holder in that inventory. Just how much is undisclosed, but the second largest is Heaven Hill, and they have two million barrels. A few years ago, Jim Beam finally eclipsed Jack Daniel’s as the top-selling American whiskey company, the realization of years of hard work and the development of their many brands not named Jim Beam (Knob Creek, Booker’s, Old Overholt, etc.).
One of the mistakes Beam itself made in the 1970s was not cutting production soon enough, building up an inventory of whiskey that, increasingly as time went on, fewer people wanted to drink. I suspect that by shuttering the Clermont stillhouse, Beam intends to not repeat the mistakes of the past. They are choosing to reduce production to reflect new projections of demand, consume some of their stockpiled “fat,” and equalize their situation.
What Comes Next
With Beam having made this dramatic decision, the door is now open for other “Kentucky Majors” (the state’s big distillers), as well as Jack Daniel’s, Cascade Hollow and MGP, to reduce shifts or also announce production holidays, as well as halt or cancel expansion plans. The most dramatic news possible has already arrived. Anything after this will seem like more of the same, so things like stock prices and consumer confidence won’t be as affected.
The next Federal report on proof volumes, which had already fallen back to 2018-19 levels, will show an even steeper decline. Much will be made of it with clickbait headlines, but that is merely a consequence of the current news and should be expected.
(Credit: Beam Suntory)
Although lay-offs stayed out of the news for the most part, those of us with their ear to the ground in Kentucky bourbon industry were aware that they were taking place throughout 2025 in companies great and small. Jim Beam will now furlough or lay-off a large chunk of their stillhouse team. Bottling, shipping, tourism and the office side of the company will continue as normal, although I would not be surprised if there were (further) workforce reductions in those departments as well, just as I won’t be surprised if those cuts escape the notice of the major media. Kentucky Bourbon has a $9 billion economic footprint in the Commonwealth, and the end of the Boom will be felt outside the bourbon industry itself, most especially in construction.
Finally, this news does not mean Knob Creek 18 Year Old is suddenly going to become available on every corner liquor store for $75 a bottle, as a particularly loathsome corner of the internet has been insisting was coming for seven years now. Demand for ultra-premium bottles vastly outstrips supply and will continue to do so, and the prices commanded by those products place them in a category unaffected by tariffs and declining or collapsing markets. I’ve long maintained that anyone who is willing to pay $175 for Knob Creek 18 would be just as willing to pay $205 or even $255. No market contraction, no matter how steep, is even putting Pappy Van Winkle back on the shelf for MSRP again, and if you want proof of that just look at how pricey top tier Scotch Whiskey continues to be.
