Americans are drinking less — and that shift is colliding with trade fights, tax bills and a decades-old production rhythm that can't be turned on or off overnight. The result: a surprising string of Chapter 11 filings and closures in 2025, from tiny craft labels to household names pausing production.
The numbers that changed the math
A Gallup survey this year found just 54% of U.S. adults say they consume alcohol, the lowest level in the polling firm's nearly 90-year trend. Consumption intensity is down too; the average number of drinks over a seven-day period is at multi-decade lows. For producers who price product and plan barrels years — not months — ahead, fewer drinkers means inventory piles up and revenue forecasts crumble.
On top of shifting tastes, exports have slipped. The Distilled Spirits Council reported a roughly 9% drop in U.S. spirit exports in the second quarter of 2025 compared with a year earlier. Markets that had buoyed the industry — the European Union, the U.K., Japan — showed declines, and Canada saw the steepest fall after retaliatory tariffs and provincial restrictions: an eye-watering plunge that left quarterly U.S. shipments to the country at a small fraction of previous levels.
That combination of softer domestic demand and damaged foreign markets has tightened cash flow for many producers.
Who's been hit
The year’s filings read like a cross-section of the industry. A.M. Scott Distillery in Troy, Ohio, filed for Chapter 11 in late December; earlier in 2025, Luca Mariano Distillery and its holding company sought protection, and other distillers — JJ Pfister, Devils River, House Spirits, Boston Harbor and Lee Spirits — also moved into bankruptcy. Breweries and restaurant-brewer chains felt the squeeze as well: Rogue Ales & Spirits closed locations and filed for Chapter 7 this year, and several regional brewpubs sought court help.
Not every casualty is solely a market story. Some smaller operators faced legal and operational problems that accelerated collapse. But the shared themes are unmistakable: fewer customers, rising costs, and disrupted international sales.
When a good year's output becomes a liability
Bourbon and other aged spirits create another headache unique to the sector: inventory ages in warehouses for years. Kentucky, for example, reported a record high of more than 16 million aging barrels in storage. That long tail has financial consequences — storage taxes and carrying costs accumulate even when bottles aren't selling.
Distillers' trade groups and state associations have warned that barrel taxes and related fees are adding tens of millions to industry bills. For producers juggling payroll, distribution agreements and ingredient costs, that kind of fixed overhead can quickly tip margins into negative territory.
Big brand belt-tightening and local heartbreaks
Even large players have adjusted. Jim Beam announced an indefinite pause at its Clermont, Kentucky, main distillery beginning in January 2026, saying it was aligning production with demand and investing in site improvements. When a major distillery idles a facility, the ripple effects reach cooperage suppliers, trucking firms and tasting-room staff.
On the craft side, closures are more personal. Heritage Distilling Company said it will close all tasting rooms and cease production at several locations on December 31, moving spirit production to a third party. Tasting rooms had become community hubs — gathering places where people met friends, joined clubs and discovered small-batch labels — and their loss is felt locally.
Policy, politics and the international market
Trade policy has not been a neutral backdrop. Tariff disputes between the U.S. and trading partners triggered retaliatory measures that effectively shut American bottles out of some shelves abroad. Industry leaders warn that sustained trade frictions encourage foreign consumers to switch to domestic brands, a habit that can be hard to reverse once market share is lost.
With exports down and some provinces in Canada imposing distribution bans for months, many distillers lost the international lifelines that had balanced uneven domestic sales cycles.
What producers are doing about it
Companies large and small are recalibrating. Strategies include pausing distillation to avoid piling on more aging barrels, selling or outsourcing production, slimming tasting-room footprints, and rethinking product mixes (ready-to-drink and low- or no-alcohol offerings have been bright spots). Retailers, meanwhile, are rationalizing shelf space as consumers narrow their buying.
Not every brand is doomed; the category is consolidating. Stronger labels with diversified channels — travel retail, direct-to-consumer clubs, robust export networks — are better positioned to weather short-term shocks. For many craft operations, though, surviving will mean tighter balance sheets and hard choices.
This moment is less a sudden collapse than an industry correcting after a decade of rapid expansion and a global market that recently flipped. Distillers make spirit on a calendar measured in years; consumer habits, politics and taxes can change overnight. That timing mismatch helps explain why so many companies found themselves at the bankruptcy courthouse in 2025.