Jim Beam Halts Production at Kentucky Distillery for One Year
Bourbon maker Jim Beam (STBFY) is halting production at one of its distilleries in Kentucky for at least a year as the whiskey industry navigates tariffs from the Trump administration and slumping demand for a product that needs years of aging before it is ready, Associated Press' Jeffrey Collins reports. Jim Beam said the decision to pause bourbon making at its Clermont location in 2026 will give the company time to invest in improvements at the distillery. The bottling and warehouse at the site will remain open, along with the James B. Beam Distilling Co. visitors center and restaurant, the author notes. Other publicly traded companies in the space include Brown Forman (BF.A, BF.B), Diageo (DEO), Constellation Brands (STZ), and MGP Ingredients (MGPI).
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Jim Beam to temporarily halt operations at Kentucky distillery due to declining bourbon demand
Production Suspension: Jim Beam will halt production at its Clermont, Kentucky distillery for a year due to sluggish spirits sales, high import tariffs, and changing consumer preferences, while planning to invest in site enhancements during this period.
Market Challenges: The spirits industry is facing significant challenges, including a 90-year low in adult alcohol consumption and a sharp decline in exports to key markets like Canada, the UK, and Japan, which are crucial for compensating for declining domestic sales.
Industry Response: Companies like Brown-Forman and Diageo are adjusting their sales forecasts and strategies in response to a weaker U.S. consumer environment, focusing on efficiency and adapting to changing market conditions.
Bourbon Supply: Despite the production cut, bourbon drinkers will not face supply issues as Kentucky distilleries are currently aging a record 16.1 million barrels of bourbon, the highest since the repeal of Prohibition in 1933.
Jack Daniel's Producer Brown-Forman Faces Challenges in Difficult Spirits Market
Quarterly Earnings Decline: Brown-Forman Inc reported a decline in quarterly earnings and sales, with earnings per share at 47 cents, missing analyst expectations, and sales down 5% year-over-year to $1.036 billion.
Brand Performance Insights: Whiskey sales remained flat, while tequila sales declined by 3%, with specific brands like Herradura experiencing an 11% drop in net sales due to competitive pressures.
Financial Position: The company ended the quarter with cash and equivalents of $319 million, down from $444 million, while long-term debt was reduced to $2.072 billion.
Outlook and Guidance: Despite the challenges in the operating environment, Brown-Forman reaffirmed its full-year guidance, indicating that performance trends were in line with expectations.
