The Whiskey Glut Upending America’s Bourbon Heartland

0:00AI is changing the world. We're securing it. CrowdStrike. We stop breaches.

0:09The U.S. puts arms sales to Taiwan on hold. Plus, weight loss drugs show a surprising ability to slow down cancer. And we look at how the slowdown in alcohol sales is impacting the U.S.'s native spirit, bourbon. A lot of folks are trying to kind of recalibrate with taking their stills offline for a period of time and putting less liquid in barrels as the others come to maturity because they need to be able to figure out where they will sell that in the future. It's Friday, May 22nd. I'm Daniel Bach for The Wall Street Journal, filling in for Luke Vardis. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

0:52House Republican leaders have yanked a plan to vote to restrict President Trump's ability to conduct military strikes against Iran. That's after it became clear that the resolution, forced to the floor by Democrats, would likely pass. People can't afford their groceries. Is that why you're pulling in? You guys don't have the guts. The House will be in order. Passage would have been seen as a rebuke of Trump and the war he started without seeking authorization from Congress. Opinion polls show most Americans are opposed to the war, which has led to rising energy costs and disrupted global supply chains.

1:29Trump and his allies have defended the war as necessary to deny Iran a nuclear weapon. The U.S. is putting a planned arms sale for Taiwan on hold. Acting Secretary of the Navy Hong Kao told Congress that the munitions and the arms that were being sold to Taipei are going to be needed in Iran instead. Jonathan Cheng is the journal's China bureau chief, and he says while this may be down to a lack of munitions, the timing is key, with the news coming just days after President Trump was in Beijing. Certainly in Taiwan, this is going to be received with alarm because there was already this concern here that President Trump was breaking with U.S.

2:08precedent. and consulting China before making any possible arms sales to Taiwan. Certainly, if you're sitting in Beijing, this is good news because whatever the reason, whether it's because President Trump does see this as a negotiating chip with Beijing, or whether or not it's because the Iran war has forced the U.S. to have to redeploy its arms towards the Middle East rather than towards Taiwan, that's a good thing for Beijing. Hong Kao told the Senate Appropriations Committee that arms sales to Taiwan would continue once the Trump administration deemed it appropriate. Meanwhile, the president has said the U.S.

2:45will be sending 5 ,000 extra troops to Poland. It comes just days after the Pentagon abruptly canceled a deployment to the country that was underway. Earlier this month, Trump said he would pull 4 ,000 troops out of Germany after Chancellor Friedrich Mertz was critical of the U.S. war on Iran. I don't think anyone is shocked to know that the United States and the president in particular is very disappointed at NATO right now. That's U.S. Secretary of State Marco Rubio, who lashed out at some allies ahead of a meeting with NATO foreign ministers in Sweden this morning. Why is NATO good for America?

3:18Because it gives us bases in the region that allow us to project power during a contingency in the Middle East or somewhere else. So when that is the key rationale for why you're in NATO, and then you have countries like Spain denying us the use of these bases, well, then why are you in NATO? Their NATO Secretary General Mark Rutte has fielded questions on the recent shifts in policy from the U.S., including the new troop announcement. Our military commanders are working through all the details, but of course I welcome it. But let's be clear, the trajectory we are on, which is a stronger Europe and a stronger NATO, making sure we will, over time, step by step, be less reliant on one ally only, as we have been for so long, which is the United States, so that also they have the possibility and the option to pivot more towards other priorities, which are also in our interest, will continue.

4:10And Canada's oil-rich province of Alberta will hold a referendum in October on whether to leave Canada. But the province's premier, Danielle Smith, said it won't actually be a vote on whether to become an independent country. A ballot question will ask whether Alberta should stay in Canada or take legal steps under the Constitution to hold a binding referendum on separating.

4:35SpaceX has delayed the launch of its newest Starship rocket after several problems cropped up shortly before last night's planned countdown. SpaceX CEO Elon Musk later said in a social media post that a hydraulic pin on part of the launch tower didn't function correctly. He also added that the company could try the flight today if the problem is fixed. It turns out weight loss drugs may have a surprising side effect installing cancer. Four different studies have found GLP-1 drugs like Ozempic and Monjaro can reduce tumor progression, lower the overall chance of death, and lessen the risk of developing breast and lung cancer.

5:10In addition to reducing blood sugar and spurring weight loss, the drugs are already approved for reducing the risk of heart attacks and strokes, and in testing for helping with sleep apnea and dampening addictive behaviors. The cancer studies were observational, and further research is needed to confirm the findings. And we've got a special bonus episode coming later today. In the latest What's News and Earnings, we look at NVIDIA's blistering growth in the latest quarter and the growing competition it faces. That'll be in your What's News feed today at midday.

5:44Welcome, welcome one and all to The Late Show. I'm your host, Stephen Colbert. After 11 years and more than 1 ,800 episodes, last night Stephen Colbert hosted the final edition of The Late Show. If you're just tuning into The Late Show, you missed a lot. For fans, it was a bittersweet final broadcast of The Late Show, which was canceled after a 33-year run. Journal media reporter Isabella Simonetti says it marks the end of an era for late-night television. The cancellation of Colbert's show is just one symptom of the challenged economics in television. Still, late-night has emerged at the center of many of the Trump administration's conflicts with the media.

6:24So some skeptics might argue that Colbert's show was canceled for political reasons, despite CBS's statement that the decision was purely financial. CBS's parent company, Paramount, finalized a historic agreement to buy rival media company Warner Brothers Discovery earlier this year. That move, which requires regulatory approval, has raised eyebrows both about political motives at play and financial headwinds in the media industry. And Colbert himself has wielded political influence by poking fun at the Trump administration. Yesterday, just yesterday, yesterday, Trump took a break from profiting off the presidency to speak at the annual congressional picnic.

7:09And he gave this update on the war in Iran. But more broadly, late night is at the center of the Trump administration's tensions with the media. And hosts like Colbert and Jimmy Kimmel have repeatedly drawn the president's ire. More specifically, and recently, Disney's ABC, which is home to late-night host Jimmy Kimmel's show, is in a high-stakes fight with the Federal Communications Commission. And more broadly, it represents the continuing tensions that will outlive The Late Show with Stephen Colbert between late-night networks and the media industry broadly and Trump. To close out the show, Colbert was joined in the Ed Sullivan Theatre by Paul McCartney, the site of the Beatles' first performance on American television.

7:59Joined by the show's band and former band leader John Batiste, they performed the Beatles' song Hello Goodbye.

8:10Coming up, Kentucky's bourbon distilleries are stacked with barrels of unsold whiskey. amidst a slowdown hitting the U.S. booze industry. That story after the break.

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8:43Kentucky is the heartland of America's bourbon industry. Home to 125 licensed distilleries, the most since Prohibition was repealed in the 1930s. With a cocktail craze that kicked off around 2010 and people stocking up their bars during the pandemic, things were booming. But a mix of inflation, trade wars, and more people choosing not to drink alcohol has dramatically changed things for the U.S. drinks industry. Journal reporter Laura Cooper covers the sector. Laura, obviously there's Tennessee whiskey, rye, single malts, lots of whiskey made across the United States. But for your story, you focused on Kentucky, where 95 percent of the world's bourbon is made.

9:23Give us a sense of how the state's been hit by a slowdown in booze sales. Yeah, so bourbon is America's native spirit. I decided to focus on it because it was in quite a boom, especially after COVID. We saw a lot of money pour into Kentucky. You can see it in the infrastructure. You can see it in the contract distillers that kind of popped up. And because so many folks were interested in stocking their bar carts, a lot of liquid was put into barrels in Kentucky that would eventually become whiskey. And obviously that's a many years process. So that whiskey is coming to maturity into a very different market than it went into the barrel.

10:00And how much is this impacting the major players? These are storied companies. Tell us a little bit about how existential this is for them. Yeah, so a lot of the players generally have turned off their stills, whether it was last year, whether it's now. I chose to focus on Jim Beam, which is the best selling brand in the world of bourbon. And they have put their 65 foot still in Claremont on a pause. They've moved a lot of production to a different place. But this is, you know, on the main site of Jim Beam. Because of that, a lot of folks are trying to kind of recalibrate with taking their stills offline for a period of time and putting less liquid in barrels as the others come to maturity because they need to be able to figure out where they will sell that in the future.

10:49The journal has reported on a number of potential mergers in the sector led by your reporting. Is that pressure on the industry driving this talk around mergers and acquisitions, picking up a good deal or being able just to stay alive? I would say that generally, and I cover beer, wine, and spirits across the board, it's a tough time. And if you were having a tough time, you might want to consider merging with somebody else. Earlier this year, we actually saw that French spirit giant Pernod Ricard and Brown Foreman, which owns Jack Daniels and is based in Louisville in Kentucky, were discussing a potential deal that fell apart a little while later.

11:33But my understanding of it was they were interested in it because of the synergies geographically. But also since then, we've seen folks like Sazerac, also based in Kentucky, interested in Brown-Forman. Or for instance, they recently did an investment in 818 Tequila. So I think there are opportunities that folks are seeing in this market. And just lastly, Laura, I wanted to ask you about how these bourbon makers are seeing their future. They're obviously not sitting on their hands waiting for sales to pick back up. They're being proactive. And that includes a shift into new products as well, right?

12:09You focused on Jim Beam for your story. Yes. And I will say that the bourbon industry is a very proud industry. They're considering different things. The harder things are turning off your stills for a certain amount of time. We're also seeing a lot of folks move into small bottles of alcohol, which is picking up steam because of affordability. Jim Beam has infused its alcohol with pineapple, which is resonating with younger legal age drinkers. And then on top of that, there's Citrus Sin, which is a citrus non-alcoholic drink that bears the Jim Beam name. And that is a very interesting thing to see Jim Beam, traditionally a very well-known bourbon, breaking into the non-alcoholic space.

12:48But I think that speaks also to what we're seeing from consumers. Laura Cooper covers the beverage industry for The Journal. Laura, thanks for this. No problem. Thanks so much. And that's it for What's News for this Friday morning. Today's show was produced by me, Daniel Bach, with help from Hattie Moyer. Our supervising producer is Sondra Kilhoff. We'll be back tonight with a new show. After that, both shows will take a break on Monday for Memorial Day. Until Tuesday, have a nice weekend and thanks for listening.

13:43Thank you. dot com slash USA wealth. That's Wellington dot com slash USA wealth.