BIG UPDATE: Struggling whiskey brand files for bankruptcy, closes
The alcoholic beverage industry has faced significant financial turmoil over the past three years, leading to several bankruptcy filings. The economic challenges for these industries have stemmed from the ongoing effects of the COVID-19 pandemic, rising inflation, higher interest rates, and an evolving industry landscape.
Decline in the U.S. Beer Market
According to the Brewers Association’s 2023 annual report, the U.S. beer market struggled, experiencing a 5.1% shrinkage in volume. This decline reflects broader trends in the beverage industry, with craft brewery closures steadily rising from 97 in 2016 to 418 in 2023. In total, around 2,036 craft breweries have closed over the past eight years.
Struggles in the Spirits Sector
The spirits sector, including whiskey, vodka, and gin, has also faced difficulties. In 2023, suppliers reported stagnant sales with only a marginal 0.2% increase, as volumes grew by just 1.2%. These disappointing results reflect the challenging conditions in the industry.
Lee Spirits Co. Files for Chapter 11 Bankruptcy
One notable example is Colorado-based Lee Spirits Co., a distiller of premium gin, vodka, and liqueurs, which filed for Chapter 11 bankruptcy on March 8, 2023, in the U.S. Bankruptcy Court for the District of Colorado. This filing came after the company ceased all operations four days earlier, including its Colorado Springs tasting room, Brooklyn’s on Boulder Street. In a social media post on March 4, the distiller announced its closure, citing the prolonged impact of the COVID-19 pandemic and “the ever-changing industry landscape” as key factors.
Montana Distillery’s Bankruptcy Filing
Montana Distillery, known for producing a dozen varieties of vodka, gin, and whiskey, filed for Chapter 11 bankruptcy in April 2023 in the U.S. Bankruptcy Court for the District of Montana. Despite relocating from Missoula to Stevensville, Montana, in August 2020 to reduce expenses, the distillery struggled with rising costs, property taxes, and decreased revenues caused by the pandemic. After four years of attempting to succeed in its new location, the company succumbed to negative economic factors.
Mackmyra Svensk Whisky Ceases Operations
Swedish whiskey distillery Mackmyra Svensk Whisky, which had been in operation for 25 years, filed for bankruptcy on August 19, 2023, in the Gävle District Court in Sweden. The company’s chairman, Peter Ski, announced the closure, stating that despite the hard work of the staff and management, it was not possible to continue operations. The distillery, with a total production capacity of about 2.4 million bottles, reported a 13% decline in revenue in its first quarter 2024 results.
Mackmyra had recently entered into a partnership with Microsoft and Finnish tech consultancy Fourkind to create the first artificial intelligence-generated blend and had relaunched in the U.K. on August 15 with Summerton Whisky Club as its distributor. Despite these efforts, the company could not overcome its financial difficulties.
The alcoholic beverage industry’s struggles over the past three years highlight the challenges these businesses face in an increasingly volatile economic environment.
