Brown Forman closing its in-house cooperage amid job cuts

Whiskey is in a very tough spot right now, as consumption post covid has declined people are working through what they stockpiled and there has been a huge slow down. Even MGP is having issues getting smaller craft distillers to fulfill their purchase commitments.

This is tragic. Scotch whisky needs the corn likker seasoned casks!

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Unfortunately they will be just fine on casks given the huge loss trends for Scotch.

The Scotch Whisky industry ALWAYS zigs when it should zag. The last time there was a downturn in whisky sales, many distilleries pulled back on distilling and, as a result, there is an ocean of NAS crap in the marketplace. Nothing can substitute for cask aged whisky. Top dressing with a few drops of the good stuff fools some of the people, but not all of the time. The current whiskies in the marketplace are generally terrible.

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I would argue almost everyone is using ex bourbon or sherry barrels. The legal limit is a maximum of 700 Liters and those are mostly used for blended scotch and not single malt, and even then the top blended scotches are just blends of younger single malts.

I should have been clearer; I was referring to SMS. The distilleries mothball/reduce distillation when times are bad, which saves them money in the short term. Long term, they have insufficient aged whiskies and have resorted to NAS mediocrity or worse. Distilleries attempt and fail to recreate distillery character by blending NAS crap with some aged whiskies. There are no shortcuts aging in barrel for aged whisky with distillery character.

Blended whisky is a different animal and more flexible. Look at Johnnie Walker Black for example. The component whiskies have changed dramatically over the decades, while the flavor profile has been very consistent.

It’s unfortunate for many who jumped in too late, but it’s been fairly obvious for a long while what’s happening is not sustainable.

Trying every slight variation in craft beer lead right to the same endpoint. Selling $80-$250 bottles of whiskey with a new finish is not a sustainable model.

Wild turkey or xyz charging multiples for a single barrel. Saw Woodford cask strength today on the shelf for $150!

2700+ craft whisky distillers/bottlers now. Of course they can’t charge $25 per but MGP has to realize they can’t price their barrels so they have to charge $80 either.

I’m looking forward to the day when we can get back to 12 yr old whiskey for a fair price.

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A telling excerpt from the Mark Brown report.

America’s Bourbon Boom Is Over. Now the Hangover Is Here.

After years of rising sales, distillers are contending with waning demand and a glut of supply

Source: https://www.wsj.com/

Saabira Chaudhuri

January 14, 2025

When Rob Masters listed 400 barrels of two-year-old bourbon for sale online at $900 apiece, he expected them to be gone within days.

Eight months later the barrels are still there. “We aren’t even getting a sniff,” said Masters, head distiller at The Family Jones distillery in Denver.

Just two years ago Masters could rake in $2,000 for similar barrels. “Back then two phone calls and I could have them gone,” he said.

America’s bourbon boom is over and businesses big and small are starting to hurt, with distillers cutting jobs and shelving expansion plans.

Liquor sales soared during the pandemic as Americans flush with cash splashed out on booze, making cocktails at home and drinking more frequently. Now drinkers are cutting back, plowing through bottles they accrued in recent years and trading down to cheaper brands.

The growing popularity of anti-obesity drugs, cannabis and low- and no-alcohol drinks is increasingly hurting sales, too. The U.S. Surgeon General recently said alcohol should carry cancer warning labels, a recommendation that if enacted could hurt sales for an industry already contending with a pullback in drinking by younger people.

Sales volumes of U.S. whiskey—including bourbon, Tennessee and rye—dropped 1.2% in 2023, marking the first fall since 2002, according to industry tracker IWSR. That drop steepened last year, with volumes down 4% in the first nine months of 2024.

Brown-Forman, which makes Jack Daniel’s and Woodford Reserve, noticed the U.S. whiskey market deteriorating sharply a year ago. “To be honest, it’s not really getting a lot better,” Chief Executive Lawson Whiting said last month after the company reported a 3% fall in net U.S. sales for the six months to Oct. 31.

While big players aren’t immune to the downturn, smaller distillers are being hit hardest because they lack the financial clout to ride out the turbulence. The American Craft Spirits Association said in August that the rate of craft distillery closures had accelerated from the year before.

Liquor makers of all stripes are contending with waning demand: In 2023, the volume of spirits sold in the U.S. declined for the first time in nearly three decades, IWSR said. However, makers of aged spirits have the added challenge of taking a punt on future demand by laying down barrels to age years in advance.

“It is bourbon—there is no right here and now,” said Tom Bard, co-founder of the Bard Distillery in Graham, Ky. “You’re trying to forecast the market five, six, ten years down the road.”

Tariffs threaten to pose additional challenges. A deal between the U.S. and the European Union that paused proposed 50% tariffs on imports of American whiskey into Europe—a response to steel tariffs levied by the first Trump administration—is set to expire at the end of March. President-elect Donald Trump has also said he plans to slap new tariffs on goods from Canada, Mexico and China, which could raise packaging costs and spur retaliatory tariffs.

Distillers fear that tariffs will hurt exports and that American whiskey that can’t be sold abroad will find its way back home, adding to an existing glut.

“The one thing that has everyone here scared to death is tariffs,” said Eric Gregory, president of the Kentucky Distillers’ Association.

Bourbon started growing in popularity in the early 2000s after a long stint in the doldrums. Its comeback was helped by television shows like “Mad Men,” which featured 1960s advertising executives sipping on bourbon through the day. By 2015 the industry was so hot that barrels were in short supply, bourbon enthusiasts were stockpiling and distillery workers routinely pulling 80-hour weeks went on strike complaining they were overworked.

Over the past decade production has kept climbing. Kentucky alone produced 3.2 million barrels of bourbon in 2023 and had a record 14.3 million barrels aging at the start of last year, according to the KDA.

While a decade ago bourbon makers couldn’t keep up, now there is a consensus that they have overproduced.

“We’re in a very serious correction right now which is perhaps overdue,” said Ken Lewis, who owns Newport, Ky.-based New Riff Distilling. The Kentucky bourbon industry is making nearly three times as much as it is currently selling, Lewis estimates.

Some investors who jumped into bourbon to make a quick buck when times were good are now dumping stock, exacerbating the glut of barrels.

“The bourbon boom brought a tremendous amount of money into the industry and a lot of that was for the wrong reasons,” said Lewis. “In some ways it’s good riddance.”

Alarm bells rang in the industry back in October when MGP Ingredients MGPI 5.80%increase; green up pointing triangle, a major contract distiller that makes booze for other brands, warned that some of its smaller customers were struggling to make good on their obligations to buy whiskey.

MGP said slower growth and higher inventories were leading to lower prices and that in response it was reducing production and putting less whiskey away to age. The company warned that it expects “even more pressure” on whiskey sales and profitability in 2025. It has since replaced its CEO.

In Colorado, The Family Jones began slowing its rye and bourbon production a year ago, ending its contract with an outside distillery that made some of its alcohol. It has since laid off a distiller and two salespeople from its 24-strong workforce.

Smaller distillers are also suffering as wholesalers run down the pandemic-era stockpiles they amassed to protect against supply disruptions. Brown-Forman said last month that distributors are buying less than usual and favoring the big brands that are more likely to sell.

Some distillers are shifting gears. Statesville, N.C.-based Southern Distilling has paused plans to open a new contract distillery to make whiskey. Instead it is doubling down on bottling and packaging services.

“We’ve been in a post-Covid hangover where everyone was home day-drinking and you had this hockey stick increase in consumption that was not normal,” said CEO Pete Barger.

Not everyone is pulling back. Bardstown Bourbon, Kentucky’s largest contract distillery, added a new still at the end of 2023 and recently expanded its sales force. The company sold out its contract capacity in 2024 and expects to do so again this year, said President Pete Marino.

“We’ve had to show up at more trade shows than we have ever in the past,” Marino said. “But every period of disruption provides opportunities. We’re investing through the downturn.”

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Is the boom over?
Or is the free lunch for shitty (or overpriced) bourbon over? ‘Craft’ distilleries selling 5 year MGP for $100 are having trouble yes, but there are still shortages (or at least selling through, plus a healthy markup) on a ton of ‘good’ bourbon.

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what are some examples of some brands that are showing shortages outside of Sazerac brands?

You mean like Bookers, Little book, Russell’s Reserve, etc? Pretty much any upper tier of a brand (or any kind of store pick) sells through pretty fast. Or do you mean something like Found North?

Yes, but a lot of the price gouging has subsided. Retailers were taking the windfall and now that is drying up. It’s like wine in a way, volume overall is challenged. Someone at the distillery level is going to feel the pain and some of the farmed out labels will suffer. Saint Cloud anyone?

Buffalo Trace adding capacity of 60,000 gallons a day in 2022 will have an impact on the industry over the next few years as those whiskeys age into the mature & ready for sale category.

Case in point is the Benchmark series. Selling these for $15-25 is just a total power move by BT.

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Sure, but saying ‘a lot price gouging has subsided’ is a lot different than ‘there’s a glut of bourbon and the distilleries are in trouble’

The only thing that can save corn whiskey is a Madmen reboot.

I only dabble in bourbon, and drink it very moderately, but walk the aisles of any decent size liquor store and there are a couple hundred brands, most of them with several different bottlings. And prices, even for the readily available bottles, are not conducive to easy buying.

A bottle of wine lasts two nights, between two of us. A bottle of bourbon will last months in my house.

Agreed. Top tier pricing hits the retailer 1st as the distiller sells at their sheet price regardless. But I also said overall volume is challenged and that will certainly shake it’s way out in price (incentives) and financial stress for distilleries and label plays (How’s Metalica and Bob Dylan doing?). The distillers themselves are part of big liquor houses. Stoli went belly up, but Brown Forman is not likely to go bankrupt. I would wager that JD is selling less in volume and in price and that is why there is belt tightening. The go go days of bourbon/Tennessee Whisky are over too.

The boom is over. Allocated whiskey will stay in demand, but overall whiskey volume will drop. I would be shocked if there’s a shortage on any brand that’s in the top 50 volume brands.

There is or will be a glut. The big brands will protect their high margin products though. Brown could make a ton more Birthday Bourbon ect. but it’s not going to happen I’d bet.
As the stocks get older though we are more likely to see Elijah Craig go back to 12yr, Turkey will get aged further, Benchmark 8 being actually 8yr, and Ancient Age might be Ancient again