Jim Beam Halts Production at Flagship Distillery as Whiskey and Bourbon Markets Struggle

The bourbon giant is closing its flagship distilling operation for all of 2026.

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

The decision by the brand, owned by the Japanese conglomerate Suntory Holdings, is the latest in a series of production cuts, layoffs and financial crises across the wine, beer and spirits sector, which has seen sales drop by about 5 percent over the past year.

The situation will likely get worse as 2025 draws to a close: At the end of October MGP Ingredients, which distills whiskey on contract for other brands, reported a 19 percent drop in sales for the third quarter.

In September, the global drinks company Diageo paused distillation at its Cascade Hollow facility in Tullahoma, Tenn., which produces George Dickel Tennessee whiskey. In January, Brown-Forman, the maker of whiskeys like Jack Daniel’s and Old Forester, announced it was laying off about 650 employees, or 12 percent of its work force, in the face of declining demand.

And over the last year several large 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 that the pause would begin on Jan. 1 and last the entire year. The facility produces about a third of the company’s annual output of approximately 26.5 million gallons.

It also said it would continue production at its two other distilleries in Kentucky and would keep its bottling facility and visitor center open at the Clermont site. It did not say whether the workers at the distillery would be furloughed or moved to other facilities.

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

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

The sudden, steep decline in bourbon sales comes after more than 20 years of expansion in American whiskey, which regularly reached 5 percent in annual growth. It went from about $1.4 billion in sales in 2004 to about $5.2 billion in 2024, according to data from the Distilled Spirits Council of the United States, a trade group.

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

In response, distilleries boosted production, putting aside millions of barrels to age, announcing multimillion-dollar expansions and flooding the market with new products. Today there are an estimated 16.1 million barrels of whiskey aging across Kentucky. A standard barrel holds 53 gallons, though a significant amount is lost to evaporation during aging.

Much, but not all, of that whiskey came from big legacy producers like Jim Beam. But it also came from a relatively new category of distilleries that produce on contract for customers and investors, who saw the quick growth in whiskey as an easy and fun way to make money.

It was likely, industry experts say, that a correction was in order as retailers and consumers, flush with inventory, slowed down their purchases and the market returned to normal after the pandemic buying spree.

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

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

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

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

Polls show that not only are young consumers drinking less, but they are trading up as well, choosing high-proof, more expensive bottles to drink sparingly. That is a big problem for Jim Beam, which relies heavily on its inexpensive, lower-proof White Label brand for sales.

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

That explains why, even as Jim Beam and Jack Daniel’s pull back, companies like Sazerac, which makes luxury whiskeys like George T. Stagg and Pappy Van Winkle, continue to grow. In October, Sazerac announced a $1 billion expansion, primarily at its Buffalo Trace distillery in Frankfort, Ky.

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

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

The result was a decades-long stretch of oversupply and cratering demand, resulting in the closure of dozens of distilleries across the country.

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

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

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