The bourbon bubble has burst

Tight budgets and health concerns have slowed U.S.
bourbon sales. (Photo by Thomas Park, Unsplash)

After years of sales growth and production expansion, bourbon distillers and barrel cooperages have seen their businesses shrink as Americans tighten their purse strings, explore sober-curious lifestyles or choose hangover-free options like cannabis and THC beverages, reports Laura Cooper of The Wall Street Journal. "The Trump administration’s trade wars have dented U.S. alcohol exports."

Bourbon's renewed popularity began around 2010, as craft cocktail designers used it as an elevated staple, followed by the pandemic lockdowns, when "Americans heavily stocked their bar carts … with bourbon and other spirits," Cooper explains. "But after peaking in 2022 at 31.2 million nine-liter cases, consumption of American whiskey — including bourbon, Tennessee whiskey, rye and single malts — has slowed."

In Kentucky, where 95% of the world's bourbon is made, the spirit's sinking sales are leading to closed stills, employee layoffs and labor-hour reductions. The state is "awash" with unsold bourbon, Cooper reports. "Kentucky is sitting on roughly 16.1 million barrels of bourbon — the equivalent of around 300 million cases. That’s the largest reserve ever, enough to last as much as 10 years."

Because U.S. law requires bourbon to be aged in new, charred barrels of oak, the bourbon boom became a barrel boom. At its zenith in 2023 and 2024, distillers were "paying upward of $285 per barrel. Since then, prices have dropped significantly, industry players say," Cooper adds. Some large spirit companies have announced plans to sell their cooperages because barrel production isn't needed.

Since bourbon distillers can only use a barrel for bourbon once, when barrels are emptied, they are "often resold to distillers in Scotland or Ireland, where they can find a second act storing scotch, rum or other spirits, over a lifespan of some 80 years," Cooper explains. Used barrels that would have fetched "more than $200 at the end of 2024, now go for around $50, as liquor demand has also plummeted."

Quick hits: Growing local rye for bourbon; winter's delights; farm radio plays on; a new way to support local journalism

Rye from thousands of miles away is used in many KY 
bourbons. (Graphic by Adam Dixon, Ambrook Research)

Bourbon's ingredients are relatively simple and most can be locally grown. But as history tells it, grain farmers in Kentucky, where 95% of the world's bourbon is produced, quit growing rye, reports Daniel Walton of Ambrook Research. "While its water is drawn from limestone-filtered springs, and its corn from nearby farms, the ingredient that gives good bourbon its distinctive pepper and herbal notes is shipped in from thousands of miles away. . . . In the interests of sustainability, supply chain resilience, and good old-fashioned local pride, the bourbon industry now wants to bring rye back to Kentucky."

Squirrels can provide winter
entertainment. (Unsplash photo)

Is it too soon to start planning springtime projects? For people who would like to build a chicken coop, heading into winter is a great time to learn what's required and start gathering supplies. If you're lucky enough to have any indoor building space, getting started now is ideal. Lisa Foust Prater of Successful Farming provides a step-by-step primer on building an idyllic home for your spring chicken flock.

The days of winter darkness are coming. Some call it dreary, others get ready to hibernate, and still, others continue to wear shorts in what appears to be a total denial of summer's end. "It’s not all dark mornings and bulky coats," writes Jancee Dunn of The New York Times. From making lists of books you want to read to exploring "slow hobbies" experts shared with Dunn how to "open yourself up to the delights of the season. . . .Take note of the birds and squirrels as you take a walk, or look at the moon or the changing sky outside your window."

Farmers love to "tune in from their tractors" to their ever-reliable and ever-useful farm radio station, reports Sarah Murphy of Ambrook Research. In fact, "83% of farmers with at least $100,000 of gross farm income listened to farm radio five days per week or more in 2023, according to a National Association of Farm Broadcasters survey. But even as the medium faces changes from podcasts to streaming services, farm radio's "staying power is impressive."

Journalism comes in many forms, but reporting on music may be one of the most challenging. Enter in NPR's "From the Top," which lets music do the reporting and highlights young musical talent from around the country, including students from rural America. In this episode, a 15-year-old violinist from the small coastal community of Damariscotta, Maine, and a talented young banjo player from the foothills of Leicester, North Carolina, are shared.

Photo by Max Kabat via The Daily Yonder

To help sustain local journalism, the small town of Marfa, Texas, created a place for community residents, tourists and local news to come together in a shared space, which they named "The Sentinel." The Sentinel's renovated, adobe-style building houses The Big Bend Sentinel and the Presidio International, which provide independent news to area counties, reports Kim Kobersmith of The Daily Yonder. The Sentinel's kitchen serves local food favorites, specialty coffee drinks and regional cocktails. All in all, the space supports independent journalism, while providing a friendly, reliable and delicious restaurant for the community to share.

Farm Bill forestry fund will help bourbon industry

When Kentucky's Senators and Representatives vote on the Farm Bill in the coming weeks, they should remember that it has measures that could benefit the state's bourbon industry, Mark Brown and Tom Martin write for the Courier Journal in Louisville.

Specifically, the Farm Bill funds forestry programs that can help protect oak trees. Federal law specifies that bourbon must be aged in new, charred oak barrels, and American white oak is the preferred wood used to create these barrels. But "the popularity of bourbon will soon outpace the growth of white oaks across Kentucky and the Midwest," Brown and Martin write. "Since it takes about 80 years to grow a white oak, we must begin working on this challenge now."

Not only are there very few new, young, white oak trees ready to replace harvested mature ones, but many white oak tree stands haven't been thinned to remove lower quality oaks and allow the good ones to flourish.

Brown and Martin recommend that the final Farm Bill include funding for

• The Timber Innovation Act and the Community Wood Energy Innovation Act, to encourage research and development of new wood products and expand markets for wood. 
• The Empowering State Forestry to Improve Forest Health Act along with continued support for Good Neighbor Authority to support restoration of white oak trees and encourage work on public and private lands. 
• Strong funding for the Environmental Quality Incentives Program, with continued support for forest owners that need technical and financial help to keep white oaks growing.

The bourbon industry is not the only one that will benefit from these programs; white oak and other hardwood trees are used in flooring, cabinets, furniture and more, and provide an important wildlife habitat for many animals.

Trump announces Chinese tariffs; China responds with its own tariffs on crops, coal, oil, cars, whiskey and more

Despite the Trump administration's announcement last month that the U.S. and China had created the "framework" of a trade agreement, the president announced 25 percent tariffs on $50 billion in Chinese goods that contain "industrially significant technologies." The administration also said it would announce tariffs on another $16 billion in Chinese goods later this summer. China swiftly responded with an announcement that it will slap 25 percent tariffs on $34 billion in U.S. goods such as pork, chicken and soybeans on July 6, and will announce 25 percent tariffs on $16 billion in U.S. goods later this summer, Chris Clayton reports for DTN/The Progressive Farmer.

China's tariffs are carefully calculated to hurt the rural communities that voted for President Trump in 2016. Industries that Chinese tariffs would hurt include soybeans, dairy, alfalfa, seafood, coal, oil, automobiles, and whiskey, Alexander Kwiatkowski reports for Bloomberg.

Agriculture Secretary Sonny Perdue said at a press conference late Friday that the effect of the tariffs won't be immediately apparent, and urged reporters not to pay too much attention to the sharp drop in grain and oilseed commodity futures that accompanied the announcement, Clayton reports. "You can't demonstrate any damage on the day that tariffs are announced," Perdue told reporters. "We're going to look at this very carefully. We're going to calculate -- we have been calculating market impact on a weekly basis on a number of months now, frankly. . . . When we determine, and if we determine, there is legitimate and lasting market impact, based on market disruption of tariffs and retaliation, then we're prepared to take action." The action he may be referring to is whether or not to tap into Commodity Credit Corp. funds to help farmers.

The American Soybean Association called the tariffs "devastating" in a press release, and cited a Purdue University study predicting that soybean exports to China could drop by as much as 65 percent if China imposes its retaliatory tariffs. Davie Stephens, a Kentucky soybean farmer and vice president of the ASA, said in the press release that China buys about 60 percent of all U.S. soybean exports and that "frankly, it's not a market U.S. soybean farmers can afford to lose."

Steel and aluminum tariffs take effect for European Union, Mexico and Canada, sparking retaliatory tariffs

"President Trump on Thursday imposed tariffs on imported steel and aluminum from the European Union, Canada and Mexico, triggering immediate retaliation from U.S. allies and protests from American businesses and farmers," David Lynch, Josh Dawsey and Damian Paletta report for The Washington Post.

The European Union responded by saying it would follow through on threats to impose tariffs on American-made products from politically strategic areas, like bourbon from Senate Majority Leader Mitch McConnell's home state of Kentucky and Harley-Davidson motorcycles, which are popular in Europe. Mexico said it would impose tariffs on American pork bellies, apples, cranberries, grapes, some cheeses and types of steel. Canada said it would impose $12.8 billion in tariffs on American steel and aluminum, along with coffee, candy, quiche and pizza. Canada also rejected a U.S. ultimatum to renegotiate all North American trade deals every five years.

"Mexico's retaliatory tariffs target pork legs, apples, grapes and cheeses as well as steel - products from U.S. heartland states that supported Trump in the 2016 election," report Michael O'Boyle and Frank Jack Daniel of Reuters.

Economist Douglas Irwin, author of a history of U.S. trade policy since 1763, told the Post, "It’s more than highly unusual. It’s unprecedented to have gone after so many U.S. allies and trading partners, alienating them and forcing them to retaliate. It’s hard to see how the U.S. is going to come out well from this whole exercise."

With the steel and aluminum tariffs looming, some businesses with government protection have added jobs, but other industries such as chemical manufacturers, brewers, footwear makers and auto manufacturers say the jobs lost because of the tariffs will outweigh the jobs saved or created.

"This is dumb. Europe, Canada and Mexico are not China, and you don’t treat allies the same way you treat opponents," Sen. Ben Sasse (R-Neb.) said. "We’ve been down this road before — blanket protectionism is a big part of why America had a Great Depression. 'Make America Great Again' shouldn’t mean 'Make America 1929 Again'."

China announces, but doesn't schedule, tariffs on crops and other products that seem to target Trump's rural base

The day after President Trump announced tariffs on more than 1,300 Chinese products, China escalated the trade war, saying it would levy 25 percent tariffs on $50 billion worth of U.S. products. The import taxes will likely hurt the rural areas that voted for Trump. There is time for the U.S. and China to negotiate; Trump's latest tariffs won't take effect until after a public comment period ends May 11, and China has not said when the tariffs it announced today will take effect.

"China’s Ministry of Commerce on Wednesday said it plans to impose 25 percent duties on the commodity in addition to other U.S. agricultural produce including wheat, corn, cotton, sorghum, tobacco and beef," Alfred Cang and Phoebe Sedgman report for Bloomberg. "They’re among 106 products ranging from aircraft to chemicals targeted by Beijing in retaliation for proposed American duties on its high-tech goods." Other targeted products include tobacco, whiskey and orange juice, Don Lee and Jonathan Kaiman report for the Los Angeles Times.

China is America's biggest customer for soybeans and cotton, importing about $14 billion in soybeans alone last year. The announcement triggered a drop in soybean, corn and cotton futures, with soybeans falling as much as 5.3 percent to $9.835 a bushel. Sorghum has not yet been targeted for tariffs, but it's another vulnerable item, since China buys about 80 percent of U.S. sorghum exports, worth about $957 million in 2017. China pointedly began investigating sorghum imports from the U.S. after Trump imposed tariffs on steel and aluminum.

This round of tariffs seems to target Trump's rural base: "Trump won eight of the U.S.'s top-10 soy-exporting states in his 2016 election, according to the U.S. Department of Agriculture. Wisconsin and Michigan, both crucial swing states in the election, are also major soybean exporters," Lee and Kaiman report. "Whiskey, to take another example, is a prime product of Kentucky, the home of Senate Majority Leader Mitch McConnell, who has already expressed reservations about Trump's tariff policies. Orange juice is heavily produced in Florida, a key swing state."

Citing an analysis by the Brookings Institution, Greg Sargent of The Washington Post writes, "Agricultural communities are right to worry about what’s happening, but that’s not all: The data also show that other targeted industries should be worried as well. And it reveals that those who are vulnerable to negative impacts from these trade tensions are mostly concentrated in counties carried by Trump." Brookings analyzed the impact on "seven industries producing the products targeted by China’s retaliatory actions, which include fresh and dried fruit and nut farming, stainless steel pipes, pork products, modified ethanol, scrap aluminum and wineries," Sargent reports.

How much could European tariffs hurt U.S.? Ky.'s bourbon and auto plants are a case study, but so is aluminum

The European Union has threatened to retaliate with tariffs on American-made products like Harley-Davidsons, bourbon and Levi blue jeans if President Trump proceeds with his plan to place tariffs on steel and aluminum imports.

Jean-Claude Juncker, president of the European Commission, "said the plans to tax the American goods, produced in the home states of key Republican leaders, had not yet been finalized, but amounted to treating them 'the same way' that European products would be handled if the metals tariffs go through," Melissa Eddy and Chad Bray report for The New York Times.

A tariff against Levis would impact few American jobs, since most Levis are made in Thailand. Levis are only mad"e in America by one factory in Greensboro, North Carolina.

Harley-Davidson has four factories in the U.S. and another four in Australia, Brazil, India and Thailand. Shifting production to these foreign factories could help the company skirt tariffs. "Europe also accounted for 16 percent of Harley's worldwide motorcycle sales last year. . . making it the second biggest market behind only the U.S.," Rich Duprey reports for The Motley Fool. Many of Harley's new models are Softails, a line popular in Europe than in the U.S. Because the company is investing so heavily in those models, losing sales because of higher tariffs would hurt the company quite a bit. The bottom line, Duprey writes, is that Harley-Davidson might survive the tariffs, "but it would also take on heavy damage at a time it can ill afford to do so."

Tariffs on bourbon would hurt Kentucky, home of Senate Majority Leader Mitch McConnell. The drink has become more popular internationally, Mitch Herckis reports for Route Fifty. A 2017 study at the University of Louisville said the bourbon industry brought $190 million in revenue to the state and local economies in 2016. It said "The industry is responsible for between 15,000 and 17,500 jobs in the state, annual payroll of nearly $800 million, and total economic output of $8.5 billion" and added 2,000 jobs in the past two years.

Kentucky is also a leader in the automobile industry, which uses imported aluminum and steel, but is also the leading U.S. producer of aluminum and home to "a mostly idle aluminum plant [that] has become the poster child for President Trump’s decision," Chris Otts reports for Louisville's WDRB-TV. "Thus the Bluegrass State, which voted overwhelmingly for Trump in 2016, now becomes a test case for his protectionist policies. . . . Chicago-based Century Aluminum Inc., which has two plants in Kentucky, has been among the most vocal supporters of Trump’s action. Once Trump finalizes the tariffs, Century Aluminum will invest $100 million in its aluminum smelter in Hawesville, Ky., and double the plant’s employment by adding about 300 jobs, said Jesse Gary, Century Aluminum’s executive vice president, in an interview Monday."

Logging industry struggling to provide enough wood for barrels for booming bourbon industry

A boom in the bourbon industry is good news for Kentucky—the state produces 95 percent of the world's bourbon—but has spelled trouble for the struggling wood industry, which has had a difficult time providing enough oak for bourbon barrels, Roberto Ferdman reports for The Washington Post. (Kentucky Department of Tourism photo)

Bourbon sales increased more than 70 percent from 2009 to 2013, says the Kentucky Distillers' Association, Ferdman writes. "And that's actually a bit of a problem. Bourbon barrel production is a particular process, which requires the use of only higher quality wood. As it happens, that fancier wood isn't as easy to come by."

Jeff Stringer, a professor at the University of Kentucky who studies hardwood silviculture and forestry, told Ferdman, "Very little of the wood out there is fit to be used for bourbon barrels. Only a small fraction of stave logs are high enough quality. That makes it really hard for the wood industry to adjust."

Ferdman writes, "Stave logs are the oak planks that barrel-makers piece together and then hold in place with metal loops to make the bourbon barrels. Part of the reason it will be difficult to continue to supply enough stave logs to meet the demand of the bourbon industry is that chopping down trees is contingent on the ability to use all the wood—not just that which is fancy enough for bourbon barrels."

To complicate matters, barrels used to make bourbon are only used once, Ferdman writes. "But this problem could also, eventually, prove to be a blessing for the industry down the road. Growing demand from a skyrocketing bourbon boom . . . means there will be an opportunity for loggers so long as they can supply the demand. White oak staves, in response to the rush to supply bourbon barrels, are selling for more than 20 percent above what they were at the start of the year." (Read more)