Whisky Industry Roundup (Q1 2025): Tariffs, Trade Shifts, and Trends

Tariffs and Trade Policy Shake-Ups

The first months of 2025 brought major twists in global trade policy that sent ripples through the whisky world. Transatlantic tensions re-emerged: In March, the U.S. reimposed tariffs on steel and aluminum, prompting the EU to plan a 50% retaliatory tariff on American whiskey effective April 1 – a dramatic escalation from the previous 25% duty. In response, President Trump threatened a colossal 200% import tariff on European wine, Cognac, and spirits if the EU followed through. These tit-for-tat threats rattled markets and raised fears of a renewed trade war, with American bourbon once again “caught in the crossfire” as a bargaining chip.

Industry groups on both sides were quick to react. The Distilled Spirits Council of the U.S. (DISCUS) warned that a 50% EU tariff would be “the worst-case scenario” for American whiskey exporters. They noted how the earlier 2018–2021 whiskey tariffs had caused U.S. whiskey exports to the EU to plunge by 20% (from $552 million in 2018 to $440 million in 2021)[1]. After a hard-won truce saw exports rebound to $705 million in 2023, the industry is alarmed to be “embroiled” in trade disputes again. Scottish distillers are likewise frustrated – recalling that Scotch whisky lost an estimated £600 million in exports during the 2019–2021 U.S. tariffs on single malts. The Scotch Whisky Association (SWA) urged London and Washington to negotiate a permanent resolution before the current five-year tariff suspension ends in 2026[2]. With SWA officials warning that “the tectonic plates of trade are shifting,” there’s a unified call to return to zero-for-zero tariffs and spare the spirits industry further damage.

Amid these tensions, there was also progress in opening new markets. In February, India – the world’s biggest whisky-consuming nation by volume – agreed to slash its import duty on American bourbon from 150% to 100%[3]. This came after high-level talks between President Trump and Prime Minister Modi, and marks a significant concession in a notoriously protectionist market. U.S. exporters and trade officials hailed the move, noting India’s 150% tariff had “severely restricted access” for Kentucky bourbon for far too long. While a 100% duty is still hefty, the cut is expected to boost U.S. whiskey’s competitiveness in India and was cheered as a step toward unlocking new consumers. Simultaneously, negotiators edged closer to a landmark UK-India free trade agreement. By April, roughly 90% of the deal’s terms were agreed, with outstanding issues including whisky tariffs nearly resolved[4]. British officials hinted that “dramatic tariff reductions” on Scotch whisky exports to India are on the horizon – potentially slashing the onerous 150% import tax that has long stymied Scotch sales in India. The prospect of cheaper Scotch in India (one of Scotch’s fastest-growing markets) has the industry excited; the SWA has consistently lobbied for this, arguing it could unlock £1 billion in new export growth over five years if realized[5].

Public reactions to these policy shifts ranged from anxiety to optimism. European whisky lovers and bar owners braced for price spikes on U.S. bourbon if the 50% tariff kicks in, while American craft distillers feared losing hard-won EU market share again. In the UK, leaders urged calm – Britain, now outside the EU, is not directly subject to Brussels’ whiskey tariff, but any broader U.S.-Europe trade war would still impact the Scotch sector indirectly. UK officials chose diplomacy over retaliation; even as some voices called for a “buy British” counter-campaign, the consensus was that securing new trade deals (like the India FTA) is a better long-term strategytheguardian.comtheguardian.com. The overall picture in early 2025 is a whisky trade landscape in flux: high-stakes disputes threatening to revive tariffs on one hand, and new doors opening in Asia on the other. Industry players are watching closely, engaging in intense lobbying to minimize damage and seize opportunities in equal measure.

Mergers, Acquisitions, and Brand Moves

The Famous Grouse Scotch whisky was one of the brands acquired by William Grant & Sons in early 2025[6]. Several notable deals and corporate moves reshaped the whisky industry in Q1 2025, reflecting both global consolidation and local ambitions. Here are some of the most significant developments:

• William Grant & Sons Buys The Famous Grouse & Naked Malt: In a blockbuster Scotch deal, family-owned William Grant & Sons (owner of Glenfiddich) agreed to purchase The Famous Grouse and Naked Malt brands from Edrington. UK regulators launched a competition review in January and ultimately approved the acquisition by March[7], finding it posed no substantial lessening of competition. The Famous Grouse – a top-selling blended Scotch – and its sister brand Naked Malt will join the William Grant portfolio. Edrington’s CEO framed the sale as a strategic exit from the lower-priced blend category to “focus on…ultra-premium spirits” like The Macallan. William Grant, for its part, praised Famous Grouse’s 125-year heritage and sees “potential for innovation and international growth” under its ownership[8]. This handover of a venerable Scotch label underscores how even iconic brands are changing hands amid shifting company priorities.
• Redwood Empire Acquires Savage & Cooke Distillery: Across the Atlantic, California-based Redwood Empire Whiskey[9] made waves by acquiring the Savage & Cooke distillery in Mare Island, CA. The deal, announced in early January, gives Redwood Empire its first dedicated distillery to scale up production. Redwood Empire’s craft whiskeys have surged in popularity – the brand saw 30% growth in 2024, reaching ~55,000 cases. To meet this “soaring demand,” owner Derek Benham purchased Savage & Cooke’s facility (which includes a state-of-the-art Vendome still and visitor center)[10]. Company leadership noted this expansion will allow Redwood Empire to increase output while preserving quality, calling it a move that “solidifies [our] position as a serious American whiskey player”. The acquisition illustrates the continued appetite for investment in the craft whiskey segment – successful upstarts are scaling up to bridge the gap toward becoming national brands.
• India’s Allied Blenders & Distillers Goes Premium: In India, one of the country’s spirit giants, Allied Blenders & Distillers (ABD), undertook strategic acquisitions to premiumize its portfolio. In February, ABD (known for mass-market whiskies like Officer’s Choice) spent ₹39.5 crore ($4.65M) to acquire Fullarton Distilleries’ brands, including Woodburns Indian whisky and Pumori craft gin. The deal gives ABD a foothold in India’s burgeoning high-end craft spirits segment. Simultaneously, ABD invested ₹9 crore ($1.1M) for a 51% stake in a startup producing premium rum. These moves – completed by Jan 31 per stock exchange filings – show India’s spirits firms moving upmarket, anticipating that as Indian consumers trade up, having recognized single malts, gins, and premium blends in-house will be key. ABD stated it will “build, buy, and partner” to drive growth in premium and luxury categories, mirroring a broader global trend of premiumization.

Notably, beyond outright acquisitions, some big players forged partnerships and new ventures. For example, there were reports of American bourbon producers seeking overseas joint ventures to expand distribution, and Japanese whisky makers investing in increased capacity ahead of anticipated demand. While those were less publicized in Q1, the M&A activity we did see underscores a healthy dynamism: legacy companies pruning and refocusing their brand portfolios, while emerging and regional players scale up or consolidate. These strategic moves in early 2025 set the stage for new product offerings and tougher competition in key markets.

Closures and Bankruptcies

The first quarter of 2025 has witnessed several notable closures and bankruptcy filings within the whisky industry. Economic pressures, changing consumer preferences, and unresolved financial obligations have impacted distilleries large and small across the United States. Below are key summaries:

·       Westward Whiskey (House Spirits Distillery), Portland, OR: Filed Chapter 11 (April 6, 2025), facing liquidity challenges due to declining bottled spirit demand, rising costs, tariff pressures, and overexpansion-related debt. Court filings revealed stark numbers. In 2024 Westward incurred a $9.8 million net loss on only $3.44 million in sales– indicating very high costs relative to revenue. The company’s biggest unsecured creditors included a distributor owed $101,000, an insurer ($43,000), and even the U.S. Alcohol Tax and Trade Bureau ($34,000 in taxes). These figures underscore the severe cash-flow issues. Management admitted to “overproduction… and overcapacity”.[11]

·       Boston Harbor Distillery, Dorchester, MA: Filed Chapter 11 (March 31, 2025), impacted by post-COVID economic downturn, consumer shift toward healthier drinking habits, rising inflation, and high production costs. According to bankruptcy filings, Boston Harbor Distillery listed only $500k–$1 million in assets against $1–$10 million in liabilities. Notably, its largest creditor is Cheers Investment LLC, owed over $1 million (apparently an investor’s personal investment). This suggests the distillery relied on outside investment which it now cannot fully repay. The need to honor gift cards and event deposits in bankruptcy indicates cash flow had become tight enough to require court permission to continue normal customer obligations.[12]

·       Montana Distillery, Stevensville, MT: Permanently closed (March 15, 2025) after over a decade, citing prolonged financial stress exacerbated by pandemic-related impacts, operational challenges, and supply issues.[13] The Montana Distillery had to declare bankruptcy in 2024 and sell off its assets. While specific financial figures were not made public, the owners cited a litany of challenges in a frank farewell note – “long hours, equipment issues, building issues, supply issues, … bogus legal issues… you name it”. In short, the business was no longer viable.

·       Garrard County Distilling Co., Lancaster, KY: Shut down in early 2025 after just 15 months due to severe financial mismanagement, construction disputes totaling over $2.3 million, unpaid taxes, and operational overextension. The scale of this failure is unusually large for a craft whiskey endeavor. The project’s construction cost was pegged around $250 million (according to an industry publication), a massive outlay that implies significant loans or investor funding. With lawsuits totaling over $2.3 million and tax arrears, it’s evident the distillery had become insolvent by late 2024[14].

·       Forge & Foundry Distillery, Stillwater, MN: Permanently closed (January 18, 2025) voluntarily after 4.5 years due to financial sustainability challenges, potentially driven by rising costs and local market saturation.[15]

·       Stoli Group USA / Kentucky Owl, New York, NY & Kentucky: Filed Chapter 11 bankruptcy (November 17, 2024), influenced by geopolitical issues, tariff-related economic pressures, and underperforming investments in high-end whiskey ventures, casting uncertainty on Kentucky Owl's future. Stoli Group’s bankruptcy appears to be driven by macroeconomic and geopolitical factors. The company had been navigating the fallout from the Russia-Ukraine conflict (Stoli rebranded itself to distance from its Russian origins), as well as tariffs and supply chain disruptions affecting imported spirits. Domestically, the super-premium bourbon market like Kentucky Owl may have cooled off; high-priced bottles face softer demand in a tighter economy. Essentially, “titans like Stoli USA… filing for bankruptcy” reflects how even large players felt the squeeze of tariffs and market contraction.

These closures underscore significant ongoing challenges in the American whisky industry, highlighting the importance of financial prudence and adaptive market strategies for sustainable growth.

Evolving Regulations and Production Insights

Changing laws and standards in Q1 2025 also stood to impact how whisky is made, labeled, and sold:

• American Single Malt Gets Official Recognition: After years of advocacy by distillers, the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) finally established “American Single Malt Whisky” as an official standard of identity. A new federal rule, published in December and effective January 19, 2025, defines American single malt as whiskey made at one U.S. distillery from 100% malted barley, distilled to max 160 proof, aged in oak (with barrels up to 700 liters, allowing used cooperage), and bottled at 80 proof or higher[16]. Notably, the regulation permits the term “Straight” for American single malts aged at least 2 years. This is a milestone for the growing cadre of U.S. single malt producers, as it provides clear labeling standards and legitimacy akin to Bourbon or Rye. The American Single Malt Whiskey Commission and distillers celebrated the news, expecting it to boost consumer understanding and export prospects for this category. They now have a 5-year transition period to adapt labels, but many are already proudly embracing the designation in 2025.
• Health and Labeling Debates: Regulatory scrutiny of alcohol health impacts intensified. In the U.S., the outgoing Surgeon General sparked discussion by proposing new cancer warning labels on alcohol bottles, similar to those on tobacco. While this was only a proposal (and would require legislation to implement), it reflects a public health momentum that the industry is monitoring warily. (Notably, Ireland passed a law to mandate broad health warnings on alcoholic beverages – though it doesn’t take effect until 2026, its spirit echoes in these U.S. proposals.) Major whisky companies have been preparing strategy in case such labeling becomes reality, weighing how to balance consumer education with not unduly frightening customers. As one might expect, spirits makers argue moderation and education are preferable to graphic warning labels, but the conversation in early 2025 shows regulators’ focus on alcohol’s risks is growing.
• Tax and Production Costs: Distillers also faced rising production costs from new government policies. In the UK, excise duties on spirits were hiked in mid-2023 (after being frozen for a few years), and producers entered 2025 still digesting those higher taxes. The SWA noted that British consumers have been hit with a 14% increase in Scotch whisky duty over 18 months, squeezing sales at home[17]. On top of that, new environmental rules – like enhanced “extended producer responsibility” for packaging waste – threaten to add costs for producers. The SWA has been lobbying the government to reconsider or offset these burdens, warning that distillers “are being stretched to breaking point” by tax and regulatory pressures. This domestic policy backdrop is an important counterpoint to the international trade talk: while tariffs grab headlines, local taxes and rules can equally shape the industry’s economics.

Overall, early 2025 saw a mix of encouraging regulatory news and ongoing challenges. The formal codification of American Single Malt was cheered as a sign of spirits regulation keeping up with innovation. Yet, the push for health warnings and the reality of higher taxes remind whisky makers that compliance costs and social responsibility issues are mounting. How producers adapt – through price adjustments, lobbying, or boosting efficiency – will be pivotal in the coming years.

Global Market Trends and Consumer Shifts

Beyond policy and corporate moves, fundamental market trends in Q1 2025 have been influencing the whisky industry’s trajectory:

• Scotch Export Growth Stalls: After a post-pandemic surge, Scotch whisky exports hit some headwinds in 2024, and those effects carried into 2025. New SWA figures showed that global Scotch exports in 2024 fell by 3.7% in value (to £5.4 billion) even though volumes actually rose about 3.9%. In other words, producers shipped more whisky but at lower average prices. This reflects a shift in consumer buying patterns: blended Scotch (generally cheaper) is on the rise, while pricier single malts saw a downturn. Blended Scotch exports grew 4.4% by value in 2024, making up 59% of the total, whereas single malt export value dropped 17%, now just 31% of total exports. Industry analysts tie this to economic belt-tightening – with high inflation, many consumers traded down from single malts to more affordable blends. The sharp decline in China’s Scotch demand was a big factor: exports to China plummeted by 31.5% in value as that market worked through oversupply and economic slowdown. Meanwhile, India was a bright spot – Scotch exports to India jumped nearly 14% in value, as the expanding middle class developed a thirst for whisky. The net effect is a complex picture: Asia-Pacific is now the largest regional destination for Scotch at £1.57bn ($2B), but within the region growth is uneven. Mature markets like France, Spain, and Germany also dipped in value (France was down 11.6% by value, and the U.S. – Scotch’s top single-country market – saw a 3% drop in value to £1.2bn in 2024. Scotch executives describe the environment as “challenging” with consumers in the West cutting non-essential. The takeaway is that the boom of 2021–2022 has tempered; global Scotch demand is still growing in volume.
• American Whiskey’s Moment of Correction: On the other side of the pond, the U.S. whiskey sector is also experiencing a recalibration after years of rapid growth. Distillers report that 2023 saw the first decline in American whiskey sales in over 20 years, and 2024 “was even worse” in volume terms. Headlines have declared that the long-running bourbon boom is over[18]. Several factors are at play. Economic uncertainty and higher prices have made consumers a bit more frugal, slowing the high-end bourbon frenzy that characterized the last decade. More intriguingly, producers and analysts are observing an impact from the rise of new pharmaceutical weight-loss drugs like Ozempic. These popular drugs suppress appetite (and, anecdotally, the desire for alcohol), and there’s growing evidence this is denting overall alcohol consumption as some would-be drinkers cut back . At the same time, legal cannabis continues to expand as an alternative recreational substance, adding competition for the happy-hour occasion. Large distillers like Brown-Forman and Beam Suntory have acknowledged softer demand and are adjusting growth forecasts. However, this is not a panic moment so much as a plateau. After years of production ramp-ups (with many new distilleries built in the 2010s), the industry now finds itself with ample inventory. The good news: there’s no sign of a global whiskey glut yet, as brands are proactively scaling back production to match the new normal, however the same cannot be said for American Whisky Producers, just as we saw above with some major players declaring bankruptcy and we are likely to see many more simply stop operations over the coming years. Distillers who can are wisely pulling back on output before oversupply becomes a crisis. American whiskey’s long-term global prospects (especially as tariffs hopefully ease) still look strong, but that is not the case for small craft distillers and 2025 is shaping up as a year of consolidation, inventory management, and retooling marketing strategies to emphasize quality and authenticity over volume.
• Premiumization vs. Value: A common thread globally is the balancing act between premium and value segments. Premiumization – consumers buying “better, not more” – has driven much of whisky’s growth in recent years, but inflation and economic stress are testing that trend. In markets like the US and EU, we see some trading down (standard bottlings selling faster than luxury editions). Yet, in many emerging markets and among affluent connoisseurs, high-end whiskies still shine. Japanese and Taiwanese whiskies, for instance, continue to command strong interest at auction and in duty-free channels. And in the travel retail sector, with international travel rebounding in 2025, distillers are optimistic that duty-free sales of premium malts and blends will pick up again. It’s a nuanced picture: whisky consumers are becoming ever more segmented. Enthusiasts will splurge on limited releases and single casks, while casual drinkers might be perfectly content with a value blend – especially if prices climb. Brands are responding by diversifying their lineup: releasing both no-age-statement affordable whiskies and special cask-finished editions for aficionados. This bifurcated strategy aims to capture both ends of the market. Early 2025 data suggest it’s working in volume terms (as seen in Scotch’s rising bottles exported, but maintaining profit margins is tougher when the mix shifts to lower-priced products.

In summary, the whisky market in Q1 2025 is marked by cross-currents: economic headwinds and health trends are tapping the brakes on growth in some regions, even as newfound market access and shifting consumer tastes create fresh opportunities in others. The industry’s long-term premium trajectory hasn’t vanished, but it’s taking a breather. Producers are using this time to innovate, adapt pricing, and emphasize brand stories to keep consumers engaged. From Scotch to bourbon to Indian whisky, the theme is resilience – finding the right balance between aspiration and affordability in a changing world.

Looking Ahead to Q2 2025

As we move into the next quarter, whisky industry watchers have several storylines to monitor. Will cooler heads prevail in the tariff standoff? All eyes are on Washington and Brussels to see if negotiations can avert the April tariff spike on American whiskey – a de-escalation would be a huge relief for distillers on both sides of the Atlantic. Similarly, progress (or delays) in finalizing the UK-India free trade deal will be pivotal: a signed agreement could swiftly lower India’s whisky tariffs and spark a scramble by Scotch and bourbon brands to capitalize on a friendlier Indian market.

On the corporate front, any continuation of the M&A wave bears watching. The second quarter could bring announcements of additional brand sales or partnerships – recent M&A trends suggest activity is picking up again. Moreover, distillers’ Q1 earnings reports and updates will shed light on how consumer demand is holding up. Analysts will be particularly keen to hear if the U.S. makers confirm the extent of the whiskey slowdown and how trends like the impact of weight-loss medications are evolving.

Regulators remain in focus too. In the U.S., keep an ear out for any movement on labeling regulations or alcohol guidelines from the new administration. And in Europe, discussions about health labeling (in the wake of Ireland’s law) could gain momentum. Environmental and sustainability initiatives are also ramping up – for instance, some Scotch distilleries are piloting carbon capture or switching to biofuel; Q2 might bring news on that front as companies strive to meet green targets.

Finally, the carnival of whisky festivals and competitions in Q2 2025 (from Whisky Live events to the World Whiskies Awards) will provide a stage for new product releases and industry sentiment. Will distillers lean into innovation and premium releases despite the headwinds, or focus on solidifying their core range? The answers will shape the narrative for the rest of the year. One thing is certain: whisky has always been a long game. The developments of early 2025 – tumultuous and exciting in equal measure – are setting the foundation for the industry’s next chapter. In the coming months, watch for adaptation and creativity as the global whisky community navigates these changes, ensuring that our favorite dram continues to thrive in a changing world.