#United States #New York #Bankruptcy #Restaurant Strategies #U.S. Spirits

Understanding the Surge of Distillery Bankruptcies

In 2025, the U.S. spirits landscape underwent a significant transformation, driven by a series of distillery bankruptcies that have raised red flags across the hospitality sector. As multiple distilleries file for Chapter 11 protection, it is essential for bars and restaurants to reevaluate their liquor programs to maintain customer satisfaction and operational efficiency.

The Financial Landscape

Recent data from OysterLink, a hospitality insights platform, illustrates that the consequences of spirits bankruptcies are more than just missing products on shelves. In 2024, overall sales from U.S. spirits suppliers fell from $37.7 billion to $37.2 billion, a decline attributed to changing consumer preferences and economic challenges, including inflation-related price adjustments. As alcohol consumption decreases with only 54% of adults reporting usage, operators must act strategically to secure their inventory and profitability.

The Decline in Distillery Viability

A significant number of distilleries have filed for bankruptcy. Notable cases include:

• - A.M. Scott Distillery (Ohio) – December 2025
• - Dented Brick Distillery (Utah) – July 2025
• - Devils River Distillery LLC (Texas) – May 2025
• - JJ Pfister Distilling Co. (California) – May 2025
• - House Spirits Distillery LLC (Oregon) – April 2025
• - Boston Harbor Distillery (Massachusetts) – March 2025

These closures signal more than short-term setbacks; they reflect a potential structural shift in the market.

Factors Contributing to Struggles in the Industry

The changes are compounded by several prevailing challenges:
1. Reduced Consumption: Americans are drinking less alcohol, reflecting a cultural shift towards moderation and health consciousness.
2. Shrinking Exports: U.S. spirits exports fell 9%, hitting particularly hard on specific categories such as American whiskey and vodka.
3. Inventory Overload: American whiskey inventories have ballooned over the last decade, leading to oversupply issues.
4. Trade Issues: International relations have introduced tariffs that significantly dampen export viability, particularly affecting Canadian markets.

Implications for Restaurants and Bars

The fallout from distillery bankruptcies extends into every corner of restaurant management. As beloved brands go under, cocktail menus need recalibrating, distributor contracts can shift unexpectedly, and patrons often face the disappointment of unavailable items. Milos Eric, co-founder and general manager of OysterLink, emphasizes that operators cannot afford a static approach to liquor sourcing. A single bankruptcy can impact numerous drinks, especially those relying on popular pours.

Steps to Navigate the New Normal

For bars and restaurants looking to mitigate risks associated with these bankruptcies, several proactive measures are recommended:
1. Menu Dependency Audit: Identify cocktails and spirits that rely heavily on specific brands—these should be prioritized for potential sourcing alternatives. Preparation is crucial; operators might want to test alternative brands ahead of time to ensure continual service.
2. Diversify Supplier Relationships: Relying solely on multiple distributors can be misleading if they simultaneously represent vulnerable suppliers. Bars should vet alternative producers behind their best-selling items to ensure continuity.
3. Renegotiate Contracts: Operators need to include flexibility clauses in supplier contracts. Such terms can prevent financial lock-ins and allow for adjustments in the event of a brand’s financial instability.
4. Broaden Marketplace Insight: Keep track of category risk rather than just pricing. Consumer trends favor low-ABV spirits and versatile cocktails. By diversifying offerings with growing categories, establishments can maintain customer interest and profitability even amid market disruptions.

Conclusion: Preparing for Future Shifts

The spirit industry’s difficulties reflect broader consumer shifts towards moderation and conscious spending. For restaurants, this moment serves as a call to action to ensure alcohol supply programs are as robust as food supply chains. As Eric notes,