Over the past two decades, whiskey has experienced an extraordinary resurgence. Once mired in declining sales through the late 20th century, established categories like Scotch, bourbon, and Irish whiskey made a powerful comeback in the early 2000s. Simultaneously, new entrants emerged from American craft distillers and international single malt producers, helping propel whiskey into a golden era of visibility and popularity. Today, whiskey brands are as likely to be found on a major sports jersey or a hit TV series as they are behind a bar. Celebrities, too, have flocked to invest in or endorse whiskey brands, cementing its status as a cultural touchstone.
Yet, the once-limitless ascent of whiskey is now encountering a sobering reality: saturation. Unlike other consumer goods such as fashion or tech, whiskey production can’t quickly adjust to trends. It requires years of aging, making it inherently prone to mismatches between supply and demand. If interest suddenly spikes, producers can’t deliver aged whiskey quickly. But if demand cools, warehouses start overflowing.
That’s the dilemma currently facing the whiskey industry. A growing surplus is building across the sector. It’s not the first time this has happened—and history shows it can take years to recover.
Scotland’s Storied Surpluses
Scotch has faced these cycles before. The 1980s saw a major glut—dubbed the “whisky loch”—that forced dozens of distilleries to close. Recovery came slowly, helped by an eventual uptick in demand in the 2000s. Distillers responded by dramatically increasing production, particularly of single malt Scotch. Renowned producers like Macallan, Glenlivet, and Glenfiddich invested millions into new distilleries and ramped up output.
Initially, this seemed like the right call. Soaring demand led to supply shortages of aged stock, prompting brands to drop age statements and hike prices. But while total revenue grew, the actual number of bottles sold began leveling off. In recent years, single malt volume sales have stagnated—and even declined—especially in the U.S., the category’s largest export market.
David Stirk, a respected Scotch consultant, points to the sharp rise in warehouse construction over the last decade as a warning sign. “The malt side doesn’t need much more product,” he says. “It just needs to continue as it was.” He emphasizes that profit margins have risen not because of more sales, but because of higher prices—a trend that may not be sustainable.
Analysts like Michael Kravitz have been warning of a surplus for years. Back in 2017, Kravitz predicted that without significant growth in volume sales, the industry would face an oversupply within a decade. His words appear prescient: Scotch exports declined in value by 3.7% in 2024, even as volume rose by 3.9%—a clear signal that consumers are opting for less expensive products, particularly blends over single malts.
Meanwhile, the Scotch Whisky Association (SWA) has become less transparent about production figures, further clouding visibility. But the overall picture is evident—there’s too much whisky in storage compared to what’s being sold.
Bourbon’s Boom and Slowdown
Bourbon’s rise came a few years after Scotch’s, and it has enjoyed a similarly enthusiastic embrace from consumers and investors. But now, the signs of strain are showing.
While the bourbon slowdown is more recent, the effects of overproduction are already visible. MGP, one of America’s largest contract whiskey distillers, announced in late 2024 that it was cutting back production due to reduced demand from clients. Its profits plummeted by 68%. Diageo, another major player, temporarily shuttered its Kentucky facility—opened just three years ago—highlighting a widespread pullback.
The most dramatic evidence comes from the contract whiskey market. Barrel prices have dropped steeply. In 2022, 4-year-old Kentucky bourbon fetched around $4,000 per barrel. Today, similar barrels are selling for as little as $1,200. Rob Arnold, president of Advanced Spirits, explains that there’s now a glut of high-quality aged whiskey, especially in the 6- to 8-year range, selling at “corrected” prices.
A key driver of this excess was the speculative “investor barrel” trend. Many new distilleries opened with business models that assumed steady income from selling capacity to non-distiller producers (NDPs)—startups or investors looking to launch whiskey brands without building a distillery. In the mid-2010s, when few contract options existed, this made sense. But as more distilleries entered the space and more investors bought barrels without a clear plan, the market became saturated.
Dixon Dedman, founder of Kentucky Owl and 2XO, likens it to the California gold rush. “Everyone ran west, staked their claims, leveraged everything they had… and it didn’t happen,” he says. Many assumed there would be endless demand for 4-year-old bourbon at inflated prices. That bet is now unraveling.
Some distilleries built around this model are shutting down. Garrard County Distilling closed in April, facing unpaid taxes and millions in debt. Others, like Blue Run, have delayed or paused planned expansions. Even established producers like Green River have laid off staff and cut back production.
What’s Next?
Despite these adjustments, the industry’s supply-demand imbalance will take years to work through. A report from Bernstein in 2023 modeled various scenarios based on 2022’s production levels. Even if demand grows by 9% annually—an optimistic forecast—there would still be an oversupply of nearly half a million barrels by 2028. With sales now slowing, the actual surplus will likely be much greater.
This doesn’t mean the entire whiskey industry is doomed. Larger companies with strong brands and diversified offerings are better positioned to weather the storm. Smaller or newer producers, however, may struggle—especially those heavily reliant on contract clients or speculative investors.
Yet, where some see risk, others see opportunity. With barrel prices falling, savvy buyers may find high-quality aged whiskey available at a fraction of recent prices. As Dedman notes, “If you have the vision and stomach for it, there’s a real opportunity to acquire some barrels at a great price that are likely going to be very valuable one day.”
Ultimately, the outcome will depend on how quickly producers can adapt, whether consumer preferences shift again, and the broader economic climate. But for now, the golden age of whiskey appears to be entering a sobering new chapter—one marked by caution, correction, and recalibration.
