Kentucky's bourbon industry is in a paradoxical state, with distillers like Heaven Hill Brands cutting production due to lagging demand while simultaneously investing billions in expansion. Heaven Hill, known for Evan Williams and Elijah Craig, recently completed a $200 million distillery that adds 155,000 barrels of capacity.
University of Kentucky economist Michael Clark reports that whiskey makers have committed at least $1.45 billion to expansion projects by 2030. However, the industry faces headwinds from soaring living costs, declining alcohol consumption among younger consumers, and tariffs that have driven up input costs and dampened overseas demand.
Governor Andy Beshear, a Democrat, blames tariffs for making supplies more expensive and complicating access to new markets. However, many distillers downplay political factors, attributing the downturn to cyclical elements like inflation and the difficulty of forecasting demand for aged spirits. Heaven Hill Executive Chairman Max Shapira noted the company has 'gotten demand right over 90 years... zero' times.
Former President Donald Trump's 'Liberation Day' tariffs, struck down by the US Supreme Court in February, had caused Kentucky whiskey exports to fall 15% in 2025, compounding a 26% drop from his 2018 tariffs. Greg Hughes, CEO of Jim Beam owner Suntory Global Spirits, views the situation as temporary, blaming inflation rather than tariffs.
In Bardstown, where bourbon underpins the local economy, business owners like Jeane Noland acknowledge its importance but largely do not blame Trump for broader struggles. Susanna Buscemi, co-owner of Volstead Bourbon Lounge, tries to keep politics out, stating, 'In here, we're about having a good time and drinking.'
The uncertainty, coupled with Trump's actions against Iran driving up energy prices, raises concerns about the cost and availability of corn, bourbon's primary ingredient. Shapira voiced worries about farmers having 'enough fertilizer? ... And if so, at what price?'
