Jim Beam, a cornerstone in the bourbon industry for nearly 230 years, is temporarily ceasing production at its renowned Clermont, Kentucky distillery. This pause, scheduled for all of 2026, comes as a response to a multifaceted challenge confronting America’s whiskey sector, exacerbated by a Canadian reprisal against U.S. tariffs that has dampened international demand. Despite the halt in distilling, the Clermont facility will maintain its bottling operations, warehouses, visitor attractions, and restaurant. Production will persist at Jim Beam’s larger distillery in Boston, Kentucky, and other locations managed by Suntory Global Spirits, its parent company.

The company conveyed that this strategic pause is part of an ongoing evaluation to align production with consumer demand. Alongside managing workforce assignments to avoid layoffs, Jim Beam plans to invest in and upgrade the Clermont distillery during this downtime. The decision underscores a broader issue afflicting the American whiskey market. The industry is grappling with an overproduction dilemma just as demand has softened, both domestically and internationally, with foreign markets particularly impacted by Canada’s boycott of U.S. whiskey.

Over the past two decades, bourbon producers ramped up production in response to a booming market. The early 2000s saw American whiskey sales more than triple, driven by the rise of cocktail culture, a shift towards premium products, and a pandemic-induced buying spree. Distilleries expanded rapidly, filling millions of barrels that require years of aging. However, this aggressive growth strategy has now led to a surplus. In Kentucky alone, there are 16 million barrels of bourbon aging, a figure more than three times higher than it was 15 years ago. This glut coincides with a broader decline in alcohol consumption among Americans and a reluctance from retailers to add to their existing stockpiles.

Industry data show American spirits exports fell 9 percent year-over-year in the second quarter of 2025, with US whiskey hit especially hard. The steepest drop came from Canada, once one of the industry’s most important markets, where exports collapsed by as much as 85 percent after trade tensions and retaliatory boycotts tied to policies under President Donald Trump. Other major export markets are also buying less. Shipments to the EU, the UK and Japan — which together account for the bulk of US spirits exports — have all fallen sharply this year, cutting off a key pressure valve for producers drowning in too much whiskey.

Americans are also changing how they drink. Polls show people are consuming less alcohol than they have in decades, driven by health concerns, rising prices, and competition from alternatives like ready-to-drink beverages, cannabis products and weight-loss drugs. Younger drinkers, especially Gen Z, are drinking less frequently and tending to buy higher-end bottles in smaller quantities. That shift is particularly painful for brands like Jim Beam, which still rely heavily on high-volume, lower-priced staples such as its White Label bourbon. The slowdown is not limited to Jim Beam.

In recent months, Diageo paused distilling at its George Dickel facility in Tennessee. Brown-Forman, the maker of Jack Daniel’s, announced layoffs affecting about 12 percent of its workforce. Several smaller whiskey companies have entered receivership, and contract distillers say orders have fallen sharply as brands pull back. In August, Luca Mariano Distillery in Danville, Kentucky, filed for bankruptcy under the weight of roughly $25 million in debt. Earlier in the year, the $250 million Garrard County Distilling operation was shut down after it failed to pay its lenders.

And in late 2023, the historic Kentucky Owl brand, founded in 1879, also collapsed, blaming falling sales and a cyberattack that brought production to a halt. Whiskey expert Fred Minnick said the move echoes previous boom-and-bust cycles the industry has seen before. ‘It’s a sad day for bourbon, to be honest with you,’ Minnick told the New York Times. ‘For this to happen is a real punch in the gut.’