US Spirits Industry Confronts Sobering Reality with Major Brand Closures
The American spirits industry is facing a profound reckoning as shifting consumer habits and international trade tensions create a perfect storm of challenges. Two prominent casualties of this trend are Stoli vodka and Kentucky Owl bourbon, both of which are now being liquidated after failed turnaround attempts.
High-Profile Casualties Signal Broader Industry Crisis
Parent company Stoli Group announced on Friday that its US vodka and bourbon operations are being wound down following unsuccessful efforts to revive their fortunes. This development represents the latest in a series of setbacks for premium American spirits producers grappling with changing market dynamics.
Kentucky Owl had cultivated an almost cult-like following through its limited-release bourbons, with some bottles commanding prices as high as $400. Meanwhile, Stoli vodka became a fixture in nightclubs, bars, and retail stores across America, where a standard 750ml bottle typically sold for approximately $20.
Multiple Factors Converge to Create Industry Headwinds
The troubles facing these brands reflect a complex web of challenges affecting the broader spirits sector. Stoli Group specifically pointed to difficulties that emerged following its public support for Ukraine after Russia's invasion. The company reported that its assets were seized in Russia and alleged that a significant cyberattack had compromised its US production facilities.
Beyond these specific circumstances, the industry faces deeper structural issues. Generation Z consumers are drinking substantially less alcohol than previous generations, creating a fundamental shift in consumption patterns that threatens long-term growth prospects.
Excess Inventory and Declining Demand Create Perfect Storm
After years of booming sales, the spirits industry now finds itself burdened with surplus alcohol left over from the pandemic drinking surge. Warehouses across the country are filled with bottles and barrels that consumers are no longer purchasing at previous rates.
Americans are drinking less overall, with younger adults leading this trend toward moderation. Simultaneously, exports have experienced sharp declines as trade tensions and international boycotts have reduced overseas demand for American-made spirits.
Industry Insiders Describe Growing 'Lake' of Unsold Alcohol
The result is what industry experts describe as an expanding 'lake' of unsold alcohol, leading to widespread cutbacks, closures, and bankruptcies throughout the whiskey and vodka sectors. According to Financial Times reports, the five largest alcohol producers - Diageo, Pernod Ricard, Campari, Brown Forman, and Rémy Cointreau - are reportedly holding approximately $22 billion worth of aging inventory.
These corporations represent some of the world's most recognizable spirits brands, including Johnnie Walker, Smirnoff, Absolut, Jack Daniel's, and Hennessy. The current inventory pileup originated with overproduction during the COVID-19 pandemic to meet heightened demand during lockdown periods.
International Trade Conflicts Exacerbate Domestic Challenges
Compounding these difficulties, ongoing trade disputes between the United States and its global partners have led to dramatic reductions in exports. The Distilled Spirits Council of the United States reported in its mid-year analysis that exports declined by 9 percent in 2025, with Canada showing the steepest reductions.
The backlash in Canada against former President Donald Trump's trade policies has been particularly damaging to American bourbon producers. This international friction contributed to the closure of a historic Jim Beam bourbon distillery in Kentucky at the end of 2025.
Smaller Producers Face Even Greater Vulnerability
While major corporations navigate these challenging conditions, smaller producers have experienced even more severe consequences. AM Scott Distillery in Ohio filed for bankruptcy in December, while Luca Mariano Distillery in Danville, Kentucky, collapsed last summer under approximately $25 million in debt.
Stoli and Kentucky Owl initially filed for Chapter 11 bankruptcy protection in November 2024, which allowed them to continue operations while attempting to restructure their finances. These efforts have now proven unsuccessful, with the cases converted to Chapter 7 bankruptcy proceedings that will result in complete liquidation of the businesses.
The closures of these once-prominent brands serve as a stark indicator of the profound transformation occurring within the American spirits industry, where changing consumer preferences, international trade dynamics, and pandemic-era overproduction have created unprecedented challenges for producers of all sizes.
