Jim Beam is halting production because the whiskey market is struggling

Jim Beam, the nation’s largest bourbon maker, has announced a one-year production pause at its flagship plant in Clermont, Kentucky, a stunning move that underscores the immense challenges facing the American whiskey industry after more than two decades of rapid growth.

The decision by the brand, owned by Japanese conglomerate Suntory Holdings, is the latest in a series of production cuts, layoffs and financial crises in the wine, beer and spirits sector, where sales have fallen about 5% in the past year.

The situation is likely to worsen as 2025 draws to a close. At the end of October, MGP Ingredients, which distills whiskey under contract for other brands, reported an increase of 19% drop in sales for the third quarter.

In September, global drinks company Diageo halted distillation at its facility Cascade Hollow Facility in Tullahoma, Tennessee, where George Dickel Tennessee whiskey is produced. In January, Brown-Forman, the maker of whiskeys such as Jack Daniel’s and Old Forester, announced that this was the case lay off approximately 650 employeesor 12% of the working population, despite declining demand.

And in the past year, several major whiskey companies have gone into receivership, including the Garrard County Distilling Co. in Kentucky and Uncle Nearest in Tennessee.

In a statement, Jim Beam said the pause would begin Jan. 1 and last the entire year. The plant produces about one-third of the company’s annual output, about 26.5 million gallons.

It also said it would continue production at its two other distilleries in Kentucky and keep open its bottling plant and visitor center at the Clermont site. It did not say whether the distillery employees would be laid off or transferred to other facilities.

Both the Clermont Distillery and another, larger plant, located in nearby Boston, Kentucky, produce most of Jim Beam’s subsidiaries, including Knob Creek, Booker’s and Basil Hayden. The third, much smaller distillery, also located in Clermont, is intended for experimental and limited edition brands.

It will also continue production at the Maker’s Mark Distillery in Loretto, Kentucky, which it also owns.

The sudden, sharp drop in bourbon sales comes after more than two decades of expansion for American whiskey, which regularly achieved annual growth of 5%. Sales went from about $1.4 billion in 2004 to about $5.2 billion in 2024. according to data of the Distilled Spirits Council of the United States, a trade group.

American whiskey proved particularly popular during the pandemic. Consumers stuck at home with extra money and time fueled an explosion in collecting and buying bottles through auctions and online through informal (and often illegal) markets.

In response, distilleries have ramped up production, set aside millions of barrels for aging, announced multimillion-dollar expansions and flooded the market with new products. Today, an estimated 16.1 million barrels of whiskey are aged throughout Kentucky. A standard barrel holds 53 gallons, although a significant amount is lost to evaporation during aging.

Much, but not all, of the whiskey came from major producers like Jim Beam. But it also came from a relatively new category of distilleries producing under contract for customers and investors, who saw the rapid growth of whiskey as an easy and fun way to make money.

Industry experts say a correction was likely in order as retailers and consumers, stretched thin, slowed their purchases and the market returned to normal after the pandemic buying spree.

Analysts also cite recent economic challenges related to President Donald Trump’s tariffs. A backlash from Canadian consumers and provinces, which control alcohol sales, has virtually halted sales of American whiskey in what was once one of the industry’s biggest export markets.

Overall, American whiskey exports are down about 9% from 2024, according to the Distilled Spirits Council.

At the same time, the president’s erratic approach to tariff policy has made it difficult to expand into new markets, especially South Asia, sub-Saharan Africa and Southeast Asia, three regions where the major U.S. whiskey distillers had once hoped to become reliable destinations for millions of bottles a year.

Consumer behavior has also changed rapidly in recent years as the first members of Generation Z reach drinking age.

Polls show that young consumers are not only drinking less, but they are also trading down their money and opting sparingly for high-quality, more expensive bottles. That’s a big problem for Jim Beam, which relies heavily on its cheap, less reliable White Label brand for sales.

“The data shows that people don’t want an 80-proof whiskey like Jim Beam White Label,” says Fred Minnick, a whiskey expert and author of the forthcoming book ‘Bottom Shelf: How a Forgotten Brand of Bourbon Saved One Man’s Life.’ “What they continue to buy are high-quality brands.”

That explains why, even as Jim Beam and Jack Daniel retreat, companies like Sazerac, which makes luxury whiskeys like George T. Stagg and Pappy Van Winkle, continue to grow. In October, Sazerac announced one $1 billion expansionprimarily at the Buffalo Trace Distillery in Frankfort, Kentucky.

Minnick added that in many ways this was a story Kentucky distillers have heard before.

By the mid-1960s, bourbon production was at a similar record level, fueled by the copious alcohol consumption of the “Mad Men” era. But as baby boomers came of age, they turned away from whiskey in favor of vodka and rum, or alcohol altogether.

The result was decades of oversupply and declining demand, resulting in the closure of dozens of distilleries across the country.

Given the ongoing economic and cultural headwinds, the pause at Jim Beam is both a sign of how bad things have become for the industry and a harbinger of more closures to come.

“It’s a sad day for Bourbon, to be honest with you,” Minnick said. “For this to happen is a real punch in the gut.”

This article originally appeared in The New York Times.