Navigating Uncertainty: Supply Chain Challenges in the Wine & Spirits Industry
Many forces are at work that are impacting supply chains for agricultural products. From climate change and wildfires and shifting consumer preferences for low- and no-alcohol options, to uncertainties presented by tariffs, producers and sellers of wine and spirits are facing new pressures and adapting to change. Add in global trade uncertainties and the picture becomes even more complicated.
Our expert panel dives into how these dynamics impact supply chain decisions across the industry—from small craft producers to large distributors—and what it means for restaurants, bars, and consumers
Tyler Mark
Tyler Mark opened the webinar with a comprehensive look at the evolving whiskey industry, focusing particularly on the economic dynamics in Kentucky—the heart of U.S. bourbon production. He traced the boom in craft distilleries back to policy changes like the 2017 Craft Beverage Modernization and Tax Reform Act, which reduced excise taxes and spurred small-scale growth, and the 2021 suspension of European tariffs, which boosted exports. However, Mark emphasized that growth has since slowed significantly. Some distilleries have gone bankrupt, export markets have tightened, and long-term concerns are emerging as production and market access begin to contract.
Mark also addressed the agricultural side of the supply chain, illustrating how the bourbon industry's grain demands—particularly for corn, rye, and barley—create unique challenges. Kentucky relies heavily on out-of-state and international sources for barley and rye, making it vulnerable to supply disruptions and global trade policies. He pointed out the long production timelines inherent in bourbon aging, meaning today’s shifts in demand may take years to fully materialize in the market. Mark concluded by highlighting emerging research on applying the concept of "terroir" to bourbon, aiming to differentiate Kentucky products and maintain demand for high-quality spirits.
Bradley Rickard
Bradley Rickard turned attention to the wine industry, emphasizing how layered regulations, tariffs, and climate change are shaping its current landscape. He revisited the implications of the U.S.’s three-tier alcohol distribution system, where tariffs are levied on importers, but the cost burdens ripple through distributors, retailers, and ultimately consumers. Rickard noted the complexity this creates in pricing decisions and competitiveness. He also discussed how recent tariffs apply not only to imported beverages but to critical inputs like glass, aluminum, and machinery—raising costs for domestic producers and compounding supply chain challenges.
In addition to regulatory and trade pressures, Rickard examined shifting market access in retail environments. More states are now allowing wine and spirits sales in grocery stores, which disrupts traditional distribution but could increase consumer access. Climate change, however, presents a deeper structural issue. Because wine consumers are highly particular about grape varietals and regions of origin, producers face limited flexibility in adapting to extreme weather events. Rickard also addressed how societal shifts—including declining alcohol consumption among younger consumers and the rise of GLP-1 weight-loss medications—are further dampening demand, posing long-term implications for the wine industry’s viability and growth.
Ricky Volpe
Ricky Volpe explored the implications of wine and spirits supply chain disruptions from the perspective of the food service industry. He began by highlighting that while alcohol sales spiked during the COVID-19 pandemic and remain elevated, the growth rate has since slowed. Volpe attributed this shift to broader changes in consumer behavior and sentiment, including increasing price sensitivity and a growing body of research suggesting that no level of alcohol consumption is beneficial to health. He noted that this evolving understanding is likely influencing purchasing habits and creating new challenges for businesses that depend on alcohol sales.
Volpe focused on the economic role of alcohol in restaurant profitability, estimating that alcohol sales can account for 20% of revenue—and as much as half of total profits—due to high margins. He warned that tariffs on imported beverages could have a downstream effect on restaurant operations, potentially reducing revenue by $17 to $43 billion industry-wide. In response, restaurants may cut hours, reduce staff, or scale back product offerings and promotions. Drawing on lessons from previous tariff rounds, Volpe emphasized that even small policy shifts in global trade can trigger broad ripple effects across the restaurant economy, affecting wages, consumer experiences, and overall sector stability
This program is supported in part by the Agricultural and Applied Economics Association and the US Department of Agriculture’s Economic Research Service, and the National Agricultural Statistics Service.
Those who register but cannot attend our webinar can always view a recording of it later at the council’s YouTube channel.