Why Did Suntory Botch Its Jim Beam Announcement?

 

Major brands in the portfolio of Suntory Global Spirits.

Whiskey is unlike most manufactured products in a way that even close watchers of the business have trouble grasping. Unlike most things we buy, whiskey made today will not be sold next week, next month, or even next year. Hardly any of it will be sold before 2030. Some of it will go unsold, deliberately, until 2034 or later. That's the nature of the whiskey aging cycle.

That's just for American whiskey, which usually sells after four to five years of maturation. For scotch it's longer, more like eight to ten years. Irish and Japanese whiskies are more like scotch. Canadian whisky is more like bourbon with regard to how long it's aged.

So, when distillery production planners decide how much they will distill today, tomorrow, and next year, they're not thinking about market conditions in 2026. They're trying to imagine market conditions in 2030 and beyond. A lot can change. Taylor Swift may be president by then. 

In their data pile is evidence that bourbon's long "boom" has ended. Sales have declined for the last few years and inventories, both in barrels in maturation warehouses, and in bottles in the warehouses of distributors and retailers, are too high. Many household inventories are too high too.

But the bourbon industry is not collapsing, it is adjusting. Across the board, production cuts are ranging from 25 to 30 percent. Unofficially, Vendome's business making stills and other distillery equipment also is off about 25 percent. 

Remember, you're trying to compensate for two things, about five years of overproduction and about three years of declining sales. 

So, considering that all this is pretty much normal business, why did Suntory Global Spirits botch its announcement so badly, giving the impression that Jim Beam has paused production altogether?

I've often felt Diageo, despite its size and broad portfolio, is just Guinness and Johnnie Walker at heart and that's how they think. They fundamentally misunderstand American whiskey.

Suntory may be in the same boat. They sure were caught flat-footed when announcing their decision to significantly reduce production of Jim Beam Bourbon. 

It appears Suntory was forced to make the announcement, on the Saturday before Christmas, because reporters at Louisville Business First heard chatter from distillery folks that the shutdown was coming.

It's a small world down there. Clermont is in Bullitt County. The top government official in Bullitt County, Jerry Summers, was Director of Community Relations at the Beam distillery for 39 years. He's a member of the Kentucky Bourbon Hall of Fame. I'm not saying Summers talked to reporters before the announcement was made, but I guarantee he knew what was coming. Plenty of other people did too.

Suntory's statement made it clear the decision came from New York and was conveyed to the Kentucky teams in recent days. It said nothing about layoffs, which led to speculation about pre-Christmas firings. Today the company said, "employees in our distillery department are being reassigned within the company, and as of now, there are no layoffs." That should have been in Saturday's announcement.

So, Suntory rushed out a statement that made it sound like no Jim Beam Bourbon would be made in 2026. You had to read it carefully to realize that, in fact, only the smaller of Beam's two plants would not produce in 2026, which would reduce production of Beam whiskey by about 25 percent. A former Beam insider pointed out to me that the distillery they're "pausing" is about 50 years old and due for either a major overhaul or retirement. 

One of the best articles on the subject so far is in the New York Times, written by Clay Risen. Although Risen's primary beat is obits, he is a serious student of American whiskey and, like any good journalist, strives to provide perspective. For example: "The sudden, steep decline in bourbon sales comes after more than 20 years of expansion in American whiskey, which regularly reached 5 percent in annual growth. It went from about $1.4 billion in sales in 2004 to about $5.2 billion in 2024, according to data from the Distilled Spirits Council of the United States, a trade group."

Most stories have not been so balanced. Many attribute the shutdown to Trump's tariffs. Uncertainty about future sales in non-U.S. markets is certainly one of the factors production planners are considering, but it's far from dispositive or even the most important factor. It's probably fourth or fifth on the list.

It also should be noted that while Clermont is Beam's "main" distillery, that term suggests it is where all, or at least most, of the whiskey is produced but that's not true. The Booker Noe Distillery in Boston, Kentucky, makes all the same products and has about double the capacity of Clermont.

So, why did Suntory flop? Maybe the scandal involving the CEO of their parent company has their PR department distracted. Maybe they thought they could wait and make the announcement after the holidays. Without evidence to the contrary, it looks like they made the decision and transmitted it to staff at the affected facilities without a messaging plan of any kind. That seems incompetent.

Prove me wrong.

Jim Beam Won’t Distill at Clermont in 2026. So What?

 

Fred and Freddie Noe at the Beam Distillery in Clermont, Kentucky.

As reported today by the Kentucky Herald-Leader, Louisville Business First, and other sources, Suntory Global Spirits, parent company of Jim Beam, has issued the following statement:

“We are always assessing production levels to best meet consumer demand and recently met with our team to discuss our volumes for 2026. We’ve shared with our teams that while we will continue to distill at our (Fred B. Noe) craft distillery in Clermont and at our larger Booker Noe distillery in Boston, we plan to pause distillation at our main distillery on the James B. Beam campus for 2026 while we take the opportunity to invest in site enhancements. Our visitor center at the James B. Beam campus remains open so visitors can have the full James B. Beam experience and join us for a meal at The Kitchen Table.”

Beam has bottling lines at Clermont that will continue to operate, supporting the Clermont maturation warehouse complex. In addition to Clermont, Suntory has bottling lines at the former Old Grand-Dad Distillery in Frankfort.

No announcement has been made about layoffs, but a law requires large employers like Beam to notify government officials if a layoff will affect more than 50 positions. No such notice has been given. 

Because the distilling part of the operation is largely automated, it’s likely the number of affected positions will be small. Affected employees might be shifted into other positions or transferred to another facility.

Not in the article, but pointed out to me by a former Beam insider, is that the distilling infrastructure at Clermont is about 50 years old. Booker Noe/Boston is more modern and has more than enough capacity to meet anticipated needs in the near term, which certainly means the entirety of 2026. It is likely Clermont will either receive a major overhaul or be retired. 

Although it is smaller than Booker Noe/Boston, Clermont is considered Beam’s main plant, in part because of the now very important tourism component, and because historically it is where Jim Beam, his brother, and their sons resumed distilling after Prohibition.

The Fred B. Noe Craft Distillery, which opened in 2021, is also on the Clermont campus. It has an annual capacity of about 1.2 million gallons. That’s comparable to Willet, Rabbit Hole, New Riff, Sagamore, and several others, a not insignificant volume. It is state-of-the-art. 

This behavior looks a lot like what happened in the late 70s, early 80s, with one key difference. That time, people started to skip seasons or shut down plants entirely after nearly a decade of not adjusting to a changing market. In this case, the reaction/response is only about a year late. In that sense, all this bad news is good because it says the industry is doing what it should to prevent a glut. So far, the responses we’ve seen from Suntory and others have been timely and proportional. 

We're getting our first glimpse of the "new normal," which is really the old normal, but at a much higher level.

For close to 20 years, all the major American whiskey distilleries have produced at or near capacity. It shouldn't be like that. Let's say an ideal level is 75 percent capacity. That way, you always have sufficient capacity to ramp up when you need a little more production. That's the efficient way to run a distillery.

A distillery is either on or off. All major producers use continuous stills, which are designed to run continuously, up to and including 24 hours a day. They must be shut down periodically only for cleaning and other maintenance. Consequently, the way you make more or less is in how many days you distill.

Historically, extended shutdowns that are used to adjust production occur between seasons. For distilleries, the year has two seasons, identified as spring and fall, but spring is the first six months of the year, and fall is the rest. That means production shutdowns usually, and deliberately, occur during the coldest part of winter and the hottest part of summer.

Ideally, you will distill for at least some number of months in each season. Shutting down for a whole season, let alone a whole year, is a big deal, but it’s mitigated in this case because Beam has two distilleries, with the same DSP number, less than ten miles apart, making the same products, so they’re still going to be make whiskey every season, just not at that distillery.

Suntory also owns the Maker’s Mark Distillery in Loretto, Kentucky, which is unaffected.

UPDATE 12/22/25: Suntory Global Spirits today said, “The company and union are working to ensure there is minimal impact on workers during this production shutdown. Employees in our distillery department are being reassigned within the company, and as of now, there are no layoffs.”

Year-on-Year Bourbon Production Is Down 28% and That's Good News

 

Typical warehouse shot but I took this one myself.
Pretty sure it's Barton 1792.

Janet Patton and the Kentucky Herald-Leader are indispensable if you want to stay current with the American whiskey industry. Today's headline: "Bourbon production is down 55 million proof gallons nationwide this year."

To wrap our heads around this news, let's start with an analogy. This is an oversimplification but bear with me. 

If Ford makes 500,000 F-150 trucks over a six-month period, that's because they expect to sell 500,000 F-150 trucks over the following six months. If they need more, they'll make more. If they have too many, they won't make so many next time.

It's like that in most businesses. If my store buys 200 Labuses, it's because I expect to sell 200 Labuses. Maybe I'll sell them in a month or two, or maybe in a day or two, but I expect a quick turnover. Time is money and that is never more true than when you are sitting on excess inventory.

Bourbon* is different.

Because most bourbon is sold at between four and eight years old, distillery production planners must predict demand 5 to 10 years from now. When you look at a year-to-date production figure of 142 million proof gallons, when it was nearly 200 million during the same period last year, you have to remember there are about 850 million proof gallons currently in aging warehouses, of varying ages, most of it less than eight years old.

That's just Kentucky. Tennessee doesn't report warehouse inventories the way Kentucky does, but you can add another 250 million for Tennessee, and a couple million more for every other state. (I'm converting barrels to gallons in a slapdash way, but the numbers are right enough to make the point.)

Because a 4-year-old isn't that much different from a 5-year-old, producers have a lot of flexibility in terms of what they choose to bottle and sell, up to a point. Production at the distilling end of the business is very different from production at the bottling and sales end of the business.

Although it's not as straightforward as the truck analogy, bourbon distillers expect to sell most of their current inventory over the next few years, replacing it as they go. Knowing how much to make during your current production season is, therefore, a complicated question. Each distillery knows how much they're making, and how much they have in inventory, but they don't necessarily know how much everybody else is making or how much they have in inventory. 

While some producers are transparent about how much they produce, most are not, so the data from Treasury is crucial. It is linked to excise tax payments, so it tends to be accurate.

The rest is analysis, crunching data you have and extrapolating the rest to reach conclusions. 

In August of 2024, when that previous milestone was reached, Bernstein, an analyst, issued a report. It said the 2022 inventory of 12.6 million barrels represented about 8.5 years of demand and was a 150 percent increase over the previous decade. They estimated that, depending on demand, the excess over the next five years could be as little as 500,000 barrels or as much as 1.3 million.

An old adage says that when you are up to your ass in alligators the first thing to do is stop draining the swamp.

So, the fact that bourbon distillers have cut production drastically is good news. It means they are taking steps to prevent a glut. This is unlike 50 years ago, when sales collapsed but producers kept filling the warehouses anyway. They expected an imminent turnaround and didn't want to underproduce, so they overproduced big time. 

Big picture and long-term, bourbon still has huge growth potential but it won't be realized until the trade war ends. In the meantime, you know what to do to bring down those inventory levels.

* Everything said here about bourbon applies equally to Tennessee whiskey, rye whiskey, wheat whiskey, etc. I could say "American whiskey," but it seems clearer to just say "bourbon" with the understanding that all the other types of American-made straight whiskey are included under that umbrella.

Today in Jack Daniel's Kremlinology*

 

Jack Daniel's brand family (2025)

The photograph above was used today by the Kentucky Herald-Leader to illustrate a story about quarterly results from Jack Daniel's parent company Brown-Forman. As a public company, Brown-Forman's quarterly results are public. In that they are alone among the Big Four American whiskey producers. Because they issue reports like this routinely four times a year, it's only news when the results are dramatic.

Today's Herald-Leader headline was: "Jack Daniel’s parent says profits down 14% for quarter. $59M in losses this year."

If you can't penetrate the Herald-Leader's paywall, here is the report itself. Like I said, it's public.

I'm not so much interested in the news as I am the picture. That's where Kremlinology* comes in.

If I talked to someone in Jack Daniel's PR (I didn't), they'd probably say don't read too much into it.

I'm about to read too much into it.

The photo, supplied to the media by Brown-Forman's PR department, is of the Jack Daniel's brand family. We know because that's the file name, minus the apostrophe.

It's a lineup but unlike a shelf set, the facing is staggered. Naturally, Old No. 7 is front and center. It has been the flagship since forever. I am old enough to remember when the brand family was Old No. 7 black label and Old No. 7 green label. The green-labeled stepchild was generally considered a slightly less mature whiskey but otherwise the same as black. During some of its history it was lower proof. In recent years, a whole mythology about it has evolved, which is why it's still made although distribution is limited.

Black label Old No. 7 is the flagship and there are seven products in the family. Coincidence? There are no coincidences at Jack Daniel's.

In the current family grouping, the flavored expressions are to the left, everything else is to the right. You can read that as flavored whiskey products make up 43 percent of the line. Immediately flanking the flagship, a little further back, are Tennessee Honey on the left and Jack Daniel's Rye on the right. 

Honey seems to have pride-of-place as granddaddy of the flavored expressions. The parallel high status of JD Rye, however, is a surprise. Rye was just about extinct when the bourbon boom began. Tennessee distilleries didn't make rye whiskey. Corn was their thing. Even though Jack uses rye as its flavor grain, it's barely there, much lower than virtually all rye-recipe bourbons.

Jack Daniel's started to distill rye whiskey in 2012. They even released some rye white dog to take advantage of the short-lived white whiskey craze. The mature version arrived in 2017. It's interesting that the company regards it more highly than Gentleman Jack or Single Barrel Select. Their bottles are set back even further. 

The corresponding bottles on the flavored side are Tennessee Fire and Tennessee Apple.

The bottles on each end, Tennessee Apple and Single Barrel Select, are set back a little behind their nearest neighbors. The difference is almost imperceptible, though not to a person with too much time on his hands. So, it's stair stepped like an arrow pointed at your heart.

Sometimes the term "brand family" will include every product in circulation that bears that brand name. That would be impossible for Jack Daniel's. The Jack Daniel's logo appears on literally hundreds of products. Setting aside things like mustard, barbeque sauce, and hooded sweatshirts, it's notable what's not considered a core offering. Jack Daniel's American Single Malt was introduced in 2023. It's not here. The quarterly report touts the recent introduction of Jack Daniel’s Tennessee Blackberry as a boost for the brand, but it is not yet part of the family photograph.

Ready-to-Drink spirits products (RTDs) are the hottest trend in an otherwise dismal beverage alcohol marketplace, and Jack has a bunch of them, most notably a tie-in with Coca-Cola. Southern Comfort may have trademarked "The Grand Old Drink of the South," but the real grand old drink of the South is Jack and Coke. 

But at family gatherings, it sits at the kid's table. Legal drinking age kids, of course. It doesn't rate a place in the family portrait.

The prominence of the flavors and JD Rye may have strategic implications. A bottle of Old No. 7 is about $23. The flavors are similarly popular priced. So is the rye. Gentleman Jack and Single Barrel Select are more expensive, especially Select which can range from $45 up to $800 a bottle. By comparison, Gentleman Jack is only a slight upcharge, at $30.

Jack Daniel's has gotten deep into the limited edition and other collectible bottles game. Those products are very profitable but low volume. It's conventional wisdom that you use market dips to build share, which you do with volume products, not high-priced novelties. Gentleman Jack and everything to the left of it are less profitable but with unlimited volume potential. The flavors are especially good because they contain so little aged whiskey, so their volume potential is not constrained by the aging cycle. They can be cranked out as needed. 

Consumers struggling with inflation tend to trade down, buying less expensive products or their usual products in smaller sizes. Optimistically, Jack Daniel's is the first whiskey brand to release a newly legal three-liter bottle. Of course it's Old No. 7.

As a very mature product, Old No. 7 probably has peaked in the U.S. market. It's still mammoth and the brand family will continue to battle Jim Beam's brand family for category leadership, but if the Daniel's brand has any potential for growth in the USA, it's in the products that flank Old No. 7 in the photograph. Otherwise, Old No. 7's future is international, progress currently stymied by Trump's trade war, much to the delight of archrival Johnnie Walker, although Diageo has its own problems.

In conclusion, here's the brand family from 2017.

* Kremlinology: During the Cold War, lack of reliable information about the Soviet Union forced Western analysts to "read between the lines" and use the tiniest titbits, such as the removal of portraits, rearranging of chairs, positions at the reviewing stand for parades in Red Square, the arrangement of articles on the pages of the party newspaper Pravda, and other indirect signs to try to understand what was happening in internal Soviet politics. A classic instance was Myron Rush, at the time an analyst for the RAND Corporation, making a key deduction from the choice of capital or small initial letters in the Soviet press in phrases such as "First Secretary." (from Wikipedia)