What’s the Future of the Whisky Industry?

The whisky category is in a weird place in 2024.

How did we get here? Our modern brown spirits boom reached recent highs during the Covid pandemic, as people stuck at home bought lots of bottles. Everyone joined whisky groups on social media and followed influencers. Suddenly, everybody became an expert.

Single barrel picks from stores and clubs flooded the market. Consumer interest there has certainly peaked, with many picks now sitting on retail shelves, accumulating dust. People amassed huge whisky collections during and immediately after the pandemic. Nowadays, drinkers are far more selective about what products they purchase.

Sales numbers reflect these developments. While still growing, the American whiskey industry has cooled off significantly in terms of U.S. sales. Explosive growth during the Covid era has settled into single-digital annual gains, or even flat revenue.

At the same time, many distilleries have invested significantly in expanding production and/or erecting enormous brand homes. In Kentucky, a number of newly built production facilities went up not necessarily to produce house brands but to provide sourced spirits for smaller independent companies — ala MGP. But how many sourced brands can this market support?

The same question goes for finishes and other experiments. While innovation is critical for an industry to survive and thrive, too much of it can confuse and turn off consumers. Look at what happened in craft beer. Over-innovation and too-many releases in that category proved problematic.

Will the same happen in whisky? For answers, Distill Ventures (a drinks accelerator backed by Diageo) recently assembled an impressive panel of top whisky authors and retailers. Comprising the panel in the bottle-lined basement of NYC’s Brandy Library were the writers Noah Rothbaum (Art of American Whiskey), Clay Risen (New York Times), Aaron Goldfarb (Dusty Booze) and Holly Seidewand, founder of First Fill Spirits.

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“I remember asking the brewers, ‘Why are you making so many beers that nobody wants?’” Rothbaum said, recalling that industry’s issues. “They were brewing beers not for consumers, but to show off.”

“I think we’re still scratching the surface in terms of whisky drinkers in America and the world,” said Noah Rothbaum. | Photo by @SayHelloToMyPeatedFriend

Is whisky in a similar situation now? “I think we’re still scratching the surface in terms of whisky drinkers in America and the world,” he said. “People are buying whisky with peanut butter or cinnamon spice mixed in. That’s a good sign to me, because those people are going to graduate to better whiskies as they get older.”

Which raises the question: Will Gen Z drinkers eventually put down their canned cocktails and nonalcoholic beers for a premium whisky? The problem there may be their parents.

“There’s politics in what you drink,” said Risen. “People rage against the assumption of what their elders drank. People will reject entire brands completely if their parents drank them. Gen Xers and Millennials drink bourbon. Gen Zers want something different. There’s opportunity for other whisky brands to come in.”

At her whisky store in Saratoga Springs, NY, Seidewand sees younger people approaching whisky in a similar way that Millennials previously tore through craft beer.

“They come in saying, ‘What’s the newest bottle? What’s the newest finish?” she observed. “It’s drinking chaos.”

This is the same attitude that gave rise to ruinous over-innovation in craft brewing: I never want to drink the same beer twice. Will whisky fall into a similar trap?

“I think innovation can slow down,” Seidewand said. “There doesn’t need to be something new coming out from a distillery every six months. You don’t need eight new expressions every year.”

Yet, distillers can grow restless and bored, Rothbaum said, when they make the same core product, day in, day out. It’s a tricky balance: building out core products for a base audience while innovating for aficionados.

“I think you have two kinds of whisky consumers,” Risen said. “On one hand, you have the kind that are extremely online, aware of all the new trends, and they drink based on that. On the other hand, there are lots of people who know what they want and what they like and that’s all that they drink.”

“I think social media has exacerbated all this,” he continued. “And I think it’s a fool’s errand for brands to put all their money into experimentation. It can become very confusing for consumers, and you can lose brand equity.”

Risen considered the industry’s slowing sales.

“Is this a cyclical downturn or just a blip?” he asked. “I think it’s more the latter. I think people are confused in this economy. There are headwinds. Inflation is putting pressure on consumers. But the basic interest in whisky will stick around. I think whisky is here to stay, and individual players will win or lose based on where they’re positioned.”

Seidewand sees similarly at her store.

“Instead of leaving with two bottles, now people leave with one,” said Holly Seidewand, founder of First Fill Spirits. | Photo by @SayHelloToMyPeatedFriend

“Instead of leaving with two bottles, now people leave with one,” she observed.

Seidewand was asked: What is the ideal retail price for whisky bottles today?

“$50 to $70,” Seidewand answered. “That’s the range where it feels premium, and people can live with the risk to try it. If a risk can be lowered, people will try it.”

Noting other modern trends, Seidewand said, “People don’t ask about [a whisky’s] age anymore. It doesn’t seem like anyone cares anymore.”

For the future of the industry, she emphasized the importance of “nurturing the new wave of people who are just discovering whisky now.”

That’s why it’s so critical for retail staff to hand-sell bottles through liquid to lips, education and storytelling. Perhaps as much as a good-tasting bottle, consumers today have an enormous thirst for knowledge. This is what drives so many sales and drinking occasions: the all-important information. Otherwise, folks can feel lost and intimidated.

“People drink out of fear,” Rothbaum said. “The worst thing anyone can hear at a bar from the bartender is, ‘What goes into that cocktail again? I forget how to make it.’ For whatever reason, with spirits and cocktails, people feel an inferiority complex that they don’t feel with food. When they’re in a liquor store, if they don’t have the knowledge of a brown spirit, they’re going to leave with a liter of vodka.”

“That’s why sharing the stories behind these products is so important,” he added. “Where is the distillery located? How do they make the whisky? Who makes it? Something that a consumer can say to a friend while they both drink that bottle.”

Kyle Swartz is editor of Beverage Dynamics. Reach him at kswartz@epgmediallc.com. Read his recent pieces, The 2024 Spirits Growth Brands Awards — Top Spirits Trends and How Long Can Tequila’s Growth Last?

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