Thousands will gather in Nelson County this weekend for the Kentucky Bourbon Festival.

It comes as tariffs, declining sales and other factors pose challenges for spirits production.

Our Laura Rogers speaks with a journalist who extensively covers the state's $9 billion bourbon industry.

Janet Patton is the bourbon reporter for the Lexington Herald-Leader.

And Janet, in an article that you published just this week, you talk about declining bourbon sales.

So let's talk about some of the factors that are potentially to blame for that, including the trade dispute between the United States and Canada.

Where do we stand with that right now?

I think a lot of people haven't realized perhaps that while the tariffs that were imposed have been kind of on hold, Canada has been boycotting American whiskey for months now.

So most of the provinces have had no Maker's Mark.

No Jim Beam, no Woodford Reserve.

None of those things have been on the shelves.

So it's really taken a massive toll.

I think that sales of American whiskey to Canada are down between 55 and 65%, depending on what you're looking at.

Brown-Forman reported its exports to Canada are down 60%.

That's through June, at least $19 million in sales that have not happened.

That's how much they're down.

So far this year.

So I think that's taken a pretty big toll.

Are we seeing this in other international markets as well?

So far, we aren't.

We've been waiting to see what's going to happen with the European Union.

They are in talks right now to try to find some middle ground.

But if they're not able to, then some retaliatory tariffs could kick in there as well, which would be really bad.

You know, Kentucky bourbon relies upon export markets right now, especially to prop up the sales that aren't happening here at home.

And in your article, you also quote a CEO and president of Brown-Forman.

And we know, of course, what a powerhouse company that is.

A lot of those major bourbon brands fall under Brown-Forman.

But he talks about there being thousands of American whiskey brands across the country.

And so which ones are really most at risk of these financial struggles?

Is it the smaller, more entrepreneurial distiller, or is it the big guys, those big recognizable brands that everybody knows?

Yeah, he was really candid about that, that there's a lot of small brands, he said, that are just going to go out of business.

And I think the way to think about it is that the impact is hitting all of bourbon, but it's not felt equally.

So if you're a big company like a Brown-Forman, like a Heaven Hill, like a Buffalo Trace, you can weather that storm a lot better than if you're a new company, a start up company or a small company.

And those are the ones that I think are probably feeling the impact the hardest right now.

But everyone is feeling it.

It's not just the small brands.

So are we seeing layoffs as a result of all this?

Yeah, we are.

So far, I haven't heard of any major layoffs at the distilleries themselves, although there have been hints of it coming.

The exception being Brown-Forman itself, which in January closed its cooperage in Louisville and laid off a couple hundred people there and then worldwide laid off a lot of people.

And then just recently, independent State, which operates Kentucky cooperage in Lebanon, said they are going down to just one shift.

And so they're going to be laying off more than 100 people permanently as well.

Now, let's talk about another factor here that you point out, and that is that across the board, Americans are drinking less alcohol.

You cite a recent Gallup poll that showed 54% of Americans report drinking any alcohol.

And how does that compare to two years?

That's the lowest level in 90 years, Gallup says, which is sort of shocking.

You know, to think that we're just we're just not drinking as much at all.

I think that part of the reason is economic.

You know, things are expensive.

Things are more expensive now than they have been in a long time.

So if you're at the grocery store and you're looking at having to pay more for everything, something's going to have to go in.

For a lot of people, these are expendable items.

These are things that they can, you know, cross off their list.

But there are a lot of reasons going on there that the reasons that people gave health consciousness is a big factor.

And the industry itself has cited both growing cannabis adoption, cannabis use and GOP ones as potential factors as well.

So I think it'll be interesting to see how this plays out.

If the economy rebounds and people are not feeling so economically stressed, are they going to go back to drinking?

I kind of feel like they will.

I think that the the concern over health is there and it's real.

But I don't think that people are completely turned off of alcohol.

And I think there are a lot of sort of things that you can interpret in the data that show that RTD is ready to drink cocktails, that, you know, canned cocktails are growing category.

And so I think if people really didn't want to drink at all, then there's no sector would be growing.

And I do think it's important to know, you know, this, of course, is a signature industry in Kentucky.

We know what bourbon does for tourism in the Bluegrass State and the Kentucky Bourbon Trail and all of that.

And that is still drawing a lot of guests to our state every year.

As a matter of fact, we're expecting a lot of people this weekend for the Kentucky Bourbon Festival.

That's right.

That's right.

It's sold out and should be packed.

If you're in downtown Bardstown, you will not be able to miss it and it will spill over to distilleries all across the state.

A lot of distilleries will have special events on their campuses.

A special bottles will be released both at the festival and at the distillers.

So, you know, if you're there, it's still going to feel like a really big, really big party and it's still going to be a lot of fun.

I think people are still coming to Kentucky just like they're still drinking bourbon.

They're still coming here to enjoy it and to see where it's made and to have a lot of fun.

Janet Patton with the Lexington Herald-Leader, we appreciate your time so much.

Thank you.

Thanks for having me.