Key Takeaways
- Kentucky whiskey bankruptcies have hit LMD Holdings, Garrard County, and Stoli’s Kentucky Owl.
- Overproduction and $25M+ in distillery debt are common themes.
- Campari and Brown-Forman report declining U.S. bourbon sales.
- Global tariffs, inflation, and shifting tastes compound industry risks.
The wave of kentucky whiskey bankruptcies in 2025 has sent shockwaves through America’s storied bourbon industry. Once a symbol of American craftsmanship and economic strength, Kentucky’s whiskey sector is now facing its most severe reckoning in decades.
LMD Holdings, owner of Danville-based Luca Mariano Distillery, filed for Chapter 11 bankruptcy in July—barely a month after opening its flagship facility. The company disclosed over $25 million in outstanding liabilities, citing the move as a “strategic restructuring.” But the filing has intensified fears of widespread financial contagion across the bourbon sector.
A Chain Reaction in Kentucky
The kentucky whiskey bankruptcies are not limited to new ventures. In April, Garrard County Distilling—a $250 million project—shuttered after defaulting on debt just months into operations. Late last year, the Stoli Group filed for bankruptcy protection alongside its Kentucky Owl brand, blaming a cyberattack and faltering demand.
Now, larger players are faltering too. Campari Group’s half-year earnings showed an 8.1% decline in U.S. sales for Wild Turkey and Russell’s Reserve, citing a “soft trend” in core markets.
“The whiskey industry banked on endless growth,” said Clara Mendel, a beverage analyst at Morningstar. “But now the barrels are full, and the buyers are gone.”
Market Mismatch and Consumer Drift
The collapse of these distilleries underscores how the kentucky whiskey bankruptcies stem not only from poor financial planning, but from a deep disconnect between supply and demand.
Gen Z and millennials are shifting to lighter spirits and ready-to-drink cocktails. Inflation continues to constrain discretionary spending. And a global tariff landscape has made exports unpredictable—cutting off what had been a key engine of growth for Kentucky bourbon.
Brown-Forman, parent of Jack Daniel’s, announced in January that it would cut 12% of its workforce and shutter a Louisville barrel facility, pointing to rising costs and flatlining demand.
Export Tensions, Trade Shocks
Global trade volatility has made it harder for U.S. distilleries to offset domestic losses. The EU’s retaliatory tariffs on American whiskey, briefly suspended in 2022, remain a looming threat. With producers hesitant to ship abroad, supply gluts have worsened at home.
As a result, companies are slashing production, freezing marketing budgets, and delaying expansion. These defensive moves mirror the broader contraction hitting the U.S. spirits industry in 2025.
“Time used to be our greatest asset in bourbon,” said James Hargrove, a bankruptcy attorney. “Now it’s our biggest liability.”
Debt, Aging Barrels, and the End of the Boom
The aging process—once a strategic advantage—is turning into a liability for newer distilleries that borrowed heavily. Distillers like Garrard County bet big on future demand, but as barrels age quietly in warehouses, debt service can’t wait.
The optimism of the early 2010s has faded. What began as a renaissance for Kentucky bourbon has become an overleveraged, oversupplied, and overstretched industry.
Despite this, some insiders maintain hope. “This is a market correction, not a death sentence,” said Bill Samuels Jr., former Maker’s Mark CEO. “But the days of infinite growth are over.”
As kentucky whiskey bankruptcies mount, distillers face a sobering new reality: resilience may no longer be measured in age statements, but in survival itself.
