Kentucky bourbon industry tallies $10.6B economic impact as volatility grows
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- Kentucky bourbon industry grew to $10.6 billion impact and added 800 jobs.
- Distillers plan $1.45 billion investment over five years despite inventory glut.
- Trade disputes and softened demand forced production cuts and export declines.
Kentucky’s signature bourbon industry has grown to more than $10.6 billion in economic impact even as volatility grows for American whiskey, according to a new report.
The Kentucky Distillers’ Association on Feb. 2 released its biennial economic update on the impact of the industry.
According to the eighth version of this report, prepared for the distilling industry, their impact grew by almost 18% in the past two years, from $9 billion to $10.6 billion. That growth resulted in 800 more jobs in the past two years despite recent cutbacks, according to the distillers’ association.
The industry also plans to invest another $1.45 billion in the next five years, according to the report.
But the distillers said their long-term future remains uncertain as generational consumer tastes have shifted, slowing domestic alcohol sales amid trade turmoil.
What the Kentucky Distillers’ Association says
“This comprehensive analysis demonstrates the economic impact of Kentucky’s homegrown and historic bourbon industry, which remains significantly ahead in jobs, investment and stature from over a decade ago,” Eric Gregory, president of the Kentucky Distillers’ Association, said in a news release.
“Bourbon is a long-term business, and the data shows that its Kentucky foundation remains strong,” he said. “But we also must remember that its future isn’t guaranteed, and this data is a snapshot in time.
“We need the support of elected officials at every level of government to help create a stable, competitive environment so bourbon can produce more American jobs, satisfy the global thirst for our signature spirit and continue to invest in our Kentucky home.”
According to the report, the distilling industry is generating $372 million in state and local tax revenue, including sales tax and individual income taxes. Some of the taxes on property supports county and city schools, fire departments and other local services.
The distillers lobbied successfully a few years ago to repeal the “barrel tax” on aging spirits in warehouses; it will begin sunsetting this year, but distillers have a record 17.1 million barrels of spirits, including 16.1 million barrels of bourbon, as of 2024, the latest figures available.
Increasing challenges from trade war
Study authors Mike Clark and Barry Kornstein said the industry is “facing mounting headwinds” due to retaliatory tariffs and “other trade police countermeasures imposed in 2018 and 2025,” without ever explicitly naming President Trump.
“With inventories increasing and demand softening, compounded by uncertainty over trade disputes, Kentucky distillers are already taking necessary steps to realign record barrel inventories. Jim Beam recently announced that it would pause operations at its main distillery early in 2026 and several companies have cut back or paused some production shifts. In two extreme cases, one newly built licensed distiller in Kentucky filed for bankruptcy, while another distiller closed after one year and is in receivership,” the report said.
“This trend is not limited to Kentucky, though. Nationally, production of distilled spirits fell 28 percent during the first eight months of 2025 compared to the same period in 2024 forcing several smaller distillers in other states to close their doors. Distillers in other countries, including Scotland and Ireland, also are pausing production as global supply outpaces demand.”
The report noted that the challenges could cause distilleries to cut employment and postpone planned investments. Employment has plateaued since June 2024, the report noted and has slipped slightly since then.
Kentucky’s exports of distilled spirits are down significantly and exports of used bourbon barrels have plummeted as well.
