**The Rise and Fall of Kentucky Bourbon: Economic Turbulence in the Spirits Market**

The bourbon market, once thriving post-recession, faces significant challenges due to inflation, tariffs, and changing drinking trends among younger consumers.

Kentucky bourbon, historically a cornerstone of American culture, has witnessed a dramatic shift from explosive growth to significant decline. Following a post-Great Recession renaissance, the bourbon industry experienced notable growth, but recent economic fluctuations, rising inflation, and evolving consumer preferences are eroding its market foundation.

Originating as far back as the 18th century, bourbon’s identity was cemented in 1964 when Congress declared it a distinctive American product. However, trends can be fickle; by the end of the 20th century, bourbon was perceived as outdated. As economic recovery from the 2008 recession took hold, interest in bourbon surged. A combination of good pricing, the passage of a law in 2013 that facilitated the resale of vintage bottles, and a cultural revival sparked by nostalgia fueled bourbon's return to popularity, with sales increasing by 7% globally from 2011 to 2020.

The industry saw bourbon distillers gain a celebrity-like status, transforming bottles into highly sought-after commodities. "People treated bourbon like stocks," stated Robin Wynne, beverage director of Little Sister in Toronto. However, this market was fragile. Lockdowns during the pandemic crippled bar sales, and rising prices have prompted consumers to opt for cheaper alternatives. The younger Gen-Z demographic, showing less interest in alcohol consumption than previous generations, further adds to the industry’s woes.

Data from the IWSR predicts bourbon sales will only grow by 2% from 2021 to 2024, a steep decline compared to previous years. Compounding this issue, trade tariffs under former President Trump's administration on US goods have led to retaliatory measures from the EU and Canada, crippling Kentucky bourbon exports. Lawson Whiting, CEO of Brown-Forman, lamented the impact of the Canadian import ban – which accounts for 10% of Kentucky's bourbon business – stating that it results in a drastic reduction in market presence.

Despite the resilience of major brands, significant players like Diageo reported a 7.3% decline in sales of Bulleit bourbon, with Wild Turkey's sales down 8.1% recently. This decline has triggered a wave of bankruptcies and consolidations within the industry, with predictions of further closures likely. Mr. Lodewijks warns about the potential for many more distilleries to go under due to oversupply and market saturation.

Nonetheless, the downturn might inspire innovation akin to how Scotch distillers adapted in their challenging times. Similar struggles in the Canadian spirits industry have led local distillers to experiment with bourbon-making techniques, potentially giving rise to a new whiskey wave in Canada. While the bourbon industry grapples with a harsh reality, history shows that difficult seasons often sow the seeds for a new era of creativity in spirits.