Kentucky Distilleries Face Bankruptcy Amid Economic Struggles

Danville, Kentucky — The Kentucky whiskey industry is encountering severe financial challenges as several distilleries, including the newly opened Luca Mariano Distillery, filed for Chapter 11 bankruptcy in July.

LMD Holdings, which operates the Danville distillery, submitted its bankruptcy filing in the Eastern District of Michigan on July 17. Owner Francesco Viola explained that the filing aims to maximize asset value for stakeholders, despite the company’s recent launch in June. The debt load includes a claim of over $25 million to a primary creditor, according to court documents.

The Kentucky bourbon industry, worth approximately $9 billion, is struggling with rising consumer costs, shifting drinker preferences away from whiskey, and emerging difficulties in key export markets. This shift is not limited to Kentucky, affecting the broader U.S. spirits market.

Garrard County Distilling, an independent distillery worth $250 million, has also faced challenges and was placed in receivership and closed in April. Similarly, Stoli Group USA filed for bankruptcy for its Kentucky Owl brand late last year, impacted by a cyberattack and declining demand.

The downturn has caused job cuts across the spirits industry. In January, Brown-Forman, the parent company of Jack Daniel’s, announced plans to reduce its workforce by 12% and close a barrel-making plant in Louisville.

Despite the turmoil, Viola maintains a positive outlook, stating, “Luca Mariano Distillery and LMD Holdings have a successful business model and are poised to emerge successfully with the support of employees, customers, and community.”

Bourbon sales, particularly of brands like Wild Turkey, have also suffered, with Campari Group reporting an 8.1% decrease in sales year-over-year due to weaker performance in its core U.S. market.

As the bourbon landscape continues to evolve, stakeholders are attentive to how these financial struggles may impact the future of distilleries and the industry at large.