Three Kentucky bourbon distilleries have filed for Chapter 11 bankruptcy in recent months, sending shockwaves through the state’s $9 billion spirits industry and putting more than 23,000 jobs at risk.
A mix of heavy debt, falling demand, and shifting consumer habits has brought an industry boom to a grinding halt.
Luca Mariano Distillery, Garrard County Distilling, and Kentucky Owl are the three producers now in bankruptcy.
While Kentucky Owl has roots going back to 1879, the other two are newer businesses that expanded aggressively and are now weighed down by debt.
High Debt, Low Sales
Luca Mariano filed for Chapter 11 in July 2025, just weeks after opening its new Danville distillery.
The company owes more than $34.5 million, despite not yet selling any bourbon. Its parent company, LMD Holdings, is registered in Michigan but based its operations in Kentucky.
Owner Francesco Viola said in a statement to the Lexington Herald-Leader that the bankruptcy filing, which came just weeks after the distillery’s June launch, was intended “to maximize the value of the assets for all stakeholders,” and that the company was “poised to emerge successfully, ideally with the support of its employees, customers, community and creditors.”
Garrard County Distilling, which launched operations in early 2024, was placed in receivership and shut down in April.
It reportedly owes $28 million after spending $250 million to build its facility in Lancaster, Kentucky.
Kentucky Owl, now owned by Stoli Group, also filed for bankruptcy in late 2024 after bourbon sales dropped and a cyberattack hit its operations.
Stoli had acquired the revived brand in 2017 as part of its expansion into the bourbon market.
A Nationwide Industry Problem
Industry experts say the trouble isn’t limited to Kentucky.
“This has been an extremely difficult time for distillers across the country who are dealing with increased production costs, a slowdown in spirits sales in the U.S. marketplace, and a significant disruption to spirits exports,” said Lisa Hawkins, spokesperson for the Distilled Spirits Council of the United States, in a statement to Newsweek.
Boom Turned Bust
The roots of the downturn trace back to a major boom in the 2000s and 2010s.
Between 2003 and 2023, domestic whiskey sales jumped from $1.3 billion to $5.27 billion, according to the council.
That surge led many distilleries to expand rapidly. Bourbon production in Kentucky rose 475% from 1999 to 2022, far outpacing actual sales.
Now, demand is slipping. In 2023, overall spirits sales declined for the first time in three decades. Among younger Americans, drinking habits have changed dramatically.
A recent Gallup poll found that the percentage of Americans under 35 who drink fell from 72% to 62% over the last 20 years. At the same time, sales of cannabis and non-alcoholic beverages are rising.
Even Big Brands Are Struggling
Even legacy brands are feeling the pressure.
Wild Turkey and Russell’s Reserve, both owned by the Campari Group, saw U.S. sales drop 8.1% year-over-year, the company reported in its 2025 midyear results.
Trade Uncertainty Adds Pressure
In addition to falling sales, distillers are also facing uncertain global trade conditions.
“The majority of provinces in Canada, the U.S. spirits sector’s second largest export market, continue to keep American spirits products off store shelves,” Hawkins said.
She added that “ensuring permanent zero-for-zero tariffs on distilled spirits with our major trading partners will give U.S. distilleries… the stability and certainty they need to plan for the future.”
Industry-Wide Cuts and Layoffs
Beyond the bankruptcy filings, the broader spirits industry is shrinking.
Brown-Forman, the parent company of Jack Daniel’s, announced in January that it would cut 12% of its workforce and close a barrel-making facility in Louisville.
A Cautionary Tale for the Bourbon Boom
While no major bourbon brands have collapsed, the failures of these three distilleries show the risks of rapid growth and overproduction.
For an industry that once seemed untouchable, this may be the clearest warning yet.