00:00They've been hitting us for a while. I would say the entire liquor industry has been dealing with
00:07the ups and downs of this for quite some time. And we've not gotten used to the uncertainty,
00:14but we've certainly had to deal with the uncertainty. I would say that the tariffs
00:19have definitely affected us. They've affected various raw materials that we may be using.
00:24And I would also say that there's the other side of it, which is also the emotional cultural elements.
00:32Once one of our brands is off the shelf abroad, there are so many other brands that are local to
00:40those communities. The craft movement is alive and well all over the world on some levels. And so
00:46they will jump into those spots. And then it is incredibly hard to get back on the shelf once
00:52you're off. So these are the kinds of battles we're dealing with. Whiskey is especially
00:58interesting in dealing with an uncertain environment. So not because you have to age the
01:02thing. It takes time and it takes a lot of planning. How difficult has this period been for you given
01:08the time element of it? Well, I would say it's been difficult for reasons also well beyond tariffs.
01:15Obviously, the entire industry has been experiencing a lot of decreases in consumption.
01:25You know, if we think about specifically the craft community, you know, we were increasing in number
01:31all across the nation until around, I would say, maybe two years ago and things started to sort of
01:39decline. I would say that there are way fewer craft distilleries this year than there were last year.
01:46We don't have the data yet for the full year, but I'm sure once it comes out, it's going to look
01:50worse than it did in August, where we have the last data from the American Craft Distillers Association.
01:57I mean, just in California alone, they lost over 100 craft distilleries. So this is happening
02:03everywhere. And I think that this is a combination of things. You had first COVID, which, you know,
02:10there was an increase in consumption of alcohol, but mostly value brands and not necessarily craft
02:18brands that might have a higher price point on the shelves. And then you had a post-COVID, you know,
02:24you had other issues. We were dealing with tariffs. We were dealing with uncertainty.
02:27And now you're dealing with a real decrease in consumption, particularly among Gen Z.
02:34Why do you think that is, Sonata? I mean, Jack Daniels recently said they were going to put
02:40their distilling on pause. Like, that's the kind of big box brand that you're talking about.
02:48We all started drinking a lot more of it during the lockdown. But why are people drinking less?
02:55Yes. And is it affecting craft brands as much as it is kind of the major labels?
03:02I think it's affecting craft brands a lot more. So if you've got a craft brand you like,
03:06you better go buy some today. Because if you think about it, as I said, craft brands have been
03:11closing across the country. These were small businesses that were in many different communities.
03:16And you have to think that these were businesses that were not just, you know, manufacturing a product,
03:22but they were manufacturing a product that's also agricultural. So it was helping local farmers in
03:27various communities. You know, for every dollar that you put into manufacturing, you know, it's two
03:33and a half dollars back into the local economy. So when you're talking about, you know, there are big
03:37brands and they're all over the place and they're taking this time to make some smart business decisions.
03:43Closing down, I heard that that facility is probably going to get, you know, refurbished.
03:49I did not hear about large layoffs from that particular facility that you mentioned.
03:55But what I am hearing and I'm seeing are, you know, complete closures of craft distilleries
04:03across the country. So, you know, part of it is also going to be the competition,
04:08you know, between craft brands that, you know, in a situation where you have so much whiskey on the
04:16market because you had a lot of production of whiskey. There are, I believe, over 16 million
04:22barrels in Kentucky of whiskey right now. And with consumption going down, you know, it's going to
04:29be very difficult for a lot of these independent craft brands, small brands to compete. And so that is
04:36going to, you know, be a big change for everybody. Can I just ask what may be a stupid question,
04:42but that's kind of like my role on the show. I also have quit drinking. It's been like three
04:48and a half years. But I love bourbon and I truly miss it. Is there any way to make an alcohol-free
04:56bourbon that tastes like really good bourbon? I love making Rio bourbon. So I would say that it's
05:06all a matter of taste. You do what you like. Obviously, at the end of the day, we're in an
05:10industry that's about joy and fun. And so if your fun is drinking something that isn't, you know,
05:17a real bourbon, that's fine. I would say, however, that, you know, it's an industry that is growing
05:23and it's one that's also affecting, you know, distillers, whether they're small or large across
05:30the country. It's not real bourbon, Matt. I know. I hear it. I get it. At the end of the day,
05:35you know, we have standards, you know, to call something a bourbon thanks to the TTB. And those
05:42standards require that it is made in a particular way and it does contain.
05:48So
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