Why Kentucky Whiskey Distilleries Are Filing For Bankruptcy

It wasn't long ago that the idea of a Kentucky whisky distillery going bankrupt would have been shocking, but in the world of drink, things change fast. After years of falling popularity, a renewed interest in the all-American spirits of whiskey and Bourbon in the 2000s and 2010s led to a boom in sales and production. The Distilled Spirits Council reports domestic whiskey sales grew from $1.3 billion in 2003 to $5.27 billion in 2023, a roughly 300% increase. But all booms must eventually go bust, and in the last year, three different Kentucky distilleries have filed for bankruptcy as the industry grapples with a slowdown.

The three distilleries that have gone bankrupt are Luca Mariano Distillery, Garrard County Distilling, and Kentucky Owl, which is owned by Stoli Group. The first two distillers were actually very new, with Garrard County being open for only 14 months, while Luca Mariano had just opened in June of 2025 before filing for bankruptcy. Kentucky Owl has been around much longer, being founded in 1879, although it was discontinued for a while before being revived by the owner of the distillery in 2014.

Stoli, best known for its eponymous value vodka brand, bought the revived Bourbon in 2017 as part of its play to get into the Kentucky Bourbon business. But that business has soured in recent years, with sales dropping 1.8% from 2023 to 2024. That may not sound like much, but after years of growth, the industry wasn't planning for a downturn. So what happened?

The drop in Bourbon and whiskey sales is part of a larger overall drop in spirit sales. After booming during the pandemic, the total sales of all spirits fell in 2023 for the first time in 30 years. A big part of this has been changing habits among young drinkers and concerns over alcohol's health effects. Cannabis and non-alcoholic drink sales have surged as warnings about alcohol have grown more intense, and over the past 20 years, the percentage of Americans under 35 who drink has fallen from 72% to 62%, according to Gallup.

At the same time, the whiskey and Bourbon boom in Kentucky led to massive overproduction. The Kentucky Distillers Association reports that Bourbon production increased by 475% from 1999 to 2022, which you'll note is higher than the increase in sales. In 2023 there were 14.3 million barrels aging alone.

And you can see that over-investment in the bankruptcy filings of these distilleries. Despite not even selling any Bourbon yet, the Danville-based Luca Mariano has more than $34.5 million in debt spent building the business. And Garrard County Distilling owes $28 million, after spending a whopping $250 million to build a new distillery in Lancaster, Kentucky. Even if sales weren't declining, those are massive investments. For now, no major Kentucky Bourbon brands are going anywhere, but the collapse of these other companies should be a major warning sign.