Strategy and Allocation

Bourbon Hangover to Shift in Alcohol Market

Bourbon’s pandemic boom has turned into a bust, with Kentucky distillers holding a record 14.3 million barrels. Here’s how to tap the changing alcohol industry trends and invest in the next wave of spirits sector growth.

By Austin Payne

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The U.S. bourbon industry has slammed into a wall. Kentucky’s warehouses are packed with a record 14.3 million barrels, and much of that stock may never find the same eager audience it did just a few years ago. Once riding high on a pandemic-fueled surge in demand, bourbon distillers are now being squeezed by overproduction, shifting consumer tastes, and renewed trade tensions. Some distillers see their debt age faster than their bourbon.

Meanwhile, the rest of the U.S. spirits market remains strong, holding steady at around $83 billion in 2024. The fastest growth is in ready-to-drink (RTD) cocktails and non-alcoholic or low-alcohol options, fueled by wellness, sustainability, and changing social norms.

Why the Bourbon Dog Days Matter

The generational shift is pretty clear: Bourbon’s appeal is fading with younger drinkers. Gen Z is drinking less hard liquor and leaning toward lighter, health-conscious beverages. But the industry is facing a double whammy: Tariffs from ongoing trade disputes are choking off hard liquor exports, particularly to Europe, and Europe perceives bourbon as an American drink that represents a tariff regime they disapprove of, leading EU drinkers to select non-US whiskey options.

Wellness and Inclusivity Reshape the Bar

The fastest-growing spirit in America doesn’t contain spirit. The global market for non-alcoholic spirits was valued at roughly $385.4 million in 2023 and is projected to reach $681 million by 2030, a CAGR of 8.7%. Sustainability is also in focus, and eco-conscious distilleries are commanding premium prices and earning loyalty from younger consumers.

So What’s Your Finance Play?

Bourbon’s pandemic boom ended with record oversupply due to changing consumer tastes and tariffs, while wellness-driven, low-alcohol drinks and sustainable beverages are gaining traction. Investors should rotate from whiskey-heavy exposure into funds and sectors aligned with non-alcoholic growth, RTD cocktails, and ESG-positive consumer staples. Here are your top options:

Bottom Line

Bourbon’s fall from grace signals a shift, not a collapse. ETFs like EATZ, PEJ, and FXG give investors exposure to wellness, sustainability, and RTD growth while reducing reliance on bourbon-heavy producers. This reallocation captures the next consumer cycle in beverages.

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