Spirits industry faces bankruptcies from economic pressures, legal battles, and shifting demand.
The spirits industry has been undergoing financial trouble in 2024, with several prominent brands filing for Chapter 11 bankruptcy. A combination of lasting impacts from the pandemic, inflation-driven costs, declining demand for alcoholic beverages, as well as various legal challenges, has pushed companies into unsustainable positions, and for some, years of financial strife have led to closure or drastic restructuring efforts.
Colorado-based Lee Spirits Co., for example, known for its premium gin, vodka, and liqueurs, ceased to operate in early March before filing for bankruptcy. The company cited pandemic aftershocks and shifting market demands as the primary factors behind its inability to sustain operations. Weeks later, Montana Distillery followed suit. Relocating in 2020 to cut costs and survive proved insufficient against rising property taxes and reduced revenue. Despite its efforts to rebuild, the economic pressures proved overwhelming, leading to bankruptcy in April.
Another beverage provider, Never Forget Brands, which produced GameDay Vodka and canned cocktails, filed for Chapter 11 in July. The company owed significant advertising sums to multiple NFL teams, including over half a million dollars to the Buffalo Bills. Mounting debt and legal judgments against the distiller made financial recovery unlikely, forcing operations to halt.
The latest casualty is the iconic vodka distributor Stoli USA. Facing over $78 million in secured debt and still trying to recover from a ransomware attack earlier in the year, the company filed for bankruptcy protection in November. Stoli listed assets between $100 million and $500 million but faced liabilities of up to $100 million. Its financial issues were made worse by operational disruptions caused by the cyberattack, which left internal systems paralyzed and forced employees to use manual processes across its global operations.
Stoli’s challenges also include a long-standing legal battle with the Russian government. The dispute over vodka trademarks dates back decades, with recent geopolitical tensions further increasing the conflict. In 2024, Russian authorities seized Stoli’s last two distilleries in the country, citing the company’s support for Ukrainian refugees. This move dealt a significant blow to the brand, both financially and operationally.
The company’s decision is particularly noteworthy due to significant market footprint. Beyond vodka, the company’s portfolio includes bourbon, tequila, rum, and other beverages, sold both in the U.S. and internationally. The fallout from its legal and operational challenges draws attention to the fact that even the biggest players in the industry aren’t immune to folding.
These filings also highlight broader trends within the spirits industry. A noticeable decline in demand for alcohol since 2023 has impacted even well-established players. Inflation has driven up production costs, while property taxes and operational expenses continue to rise. In addition to these concerns, evolving consumer preferences, including a growing shift toward nonalcoholic beverages, have reduced market share for traditional distillers.
The spirits industry is at a crossroads, shaped by external pressures and internal shifts. Companies that adapt to changing consumer habits, invest in innovation, and address systemic vulnerabilities may be able to hang on amid these widespread changes. However, for those unable to navigate the complex economic and operational landscape, bankruptcy represents the harsh reality of the current market, and unfortunately, there are no signs of this slowing down anytime soon.
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