Overview: A recent report from The Wall Street Journal highlights a significant surplus in the spirits industry, noting that distillers are holding vast quantities of aged inventory. Carol Ryan describes the situation as a corporate equivalent of over-ordering for a party where many guests do not attend.
The Full Story
Distillers’ warehouses are currently crammed with barrels of aging spirits laid down in better times, creating a market facing a global glut affecting cognac, Irish whiskey and Scotch whisky alongside bourbon. The situation is described as the corporate equivalent of ordering too much alcohol for a house party where half the guests turn out to be dry.
With billions of dollars at stake and a no-returns policy on this inventory, the excess stock remains in storage. Investors tempted by alcohol companies’ low stock-market valuations should look at their saturated balance sheets first before committing capital.
What This Means
The market saturation suggests that distillers are deciding how much to produce based on current demand rather than past expectations. The global glut affects cognac, Irish whiskey and Scotch whisky alongside bourbon, indicating a shift in production decisions for aged spirits globally.
Consumer Takeaway
For the drinker, this surplus indicates a steady supply of aged spirits available from global warehouses, including U.S. locations. The availability of these barrels suggests that consumers can access cognac, bourbon and Scotch whisky despite the market-wide slowdown in demand.
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