The Scotch whisky business, long considered one of the most stable and storied industries in the United Kingdom, is now staring down a crisis that could reshape its future. New data paints a grim picture — nearly one in five distilleries across Scotland is in serious financial trouble, and the forces behind the downturn show no signs of letting up anytime soon.
A business distress report released in December 2025 by restructuring firm BTG revealed that 69 distilleries in Scotland were dealing with what the firm classified as "significant or critical" financial issues. That number represented a staggering 40.8% jump in just the final three months of 2025 alone, a rate of increase that dwarfed the broader UK business average of 12.2% during the same period. When measured year over year, roughly 17% more Scotch distilleries found themselves in distress compared to the prior year, again far outpacing the national average increase of just 6.7%.
Scotland is not the only part of the UK feeling the squeeze. An additional 217 distilleries spread across England, Wales, and Northern Ireland reported that they too were wrestling with financial difficulties. But it is Scotland, the historic heartland of whisky production and the source of most of the country's output, where the pain is being felt most acutely.
Thomas McKay, managing partner of BTG in Scotland, laid out the situation in plain terms. "Distilleries in Scotland, where the majority of the UK's whisky production is based, are facing a perfect storm of lowering demand, rising production costs and increased tariffs in key markets, factors that have already cost numerous brands their businesses over recent months," he said.
McKay pointed to the pandemic era as the beginning of the problem's roots. Demand for Scotch and other spirits hit a peak in 2020 during Covid lockdowns, when consumers stuck at home were buying bottles at an unusual clip. But that surge did not last. Demand has since fallen away considerably, and the industry has been left holding the bag — literally. The oversupply that built up during those boom years has driven prices downward, squeezing margins for producers who were already dealing with climbing costs on everything from barley to energy to shipping.
The export picture adds another painful layer. The United States has long been one of the most important markets for Scotch whisky, a place where single malts and blended varieties have carved out devoted followings over decades. But tariffs on imports have made the cost of doing business across the Atlantic significantly more expensive, eating into profits and making it harder for Scottish producers to compete on price.
And the American market is not the only concern on the international front. McKay noted that exports to China dropped by more than 30% last year, a massive hit for an industry that had been counting on growing Asian demand to fuel its next chapter of growth. The Chinese market, once seen as a golden opportunity for premium Scotch brands, has cooled dramatically.
There is also a lingering question about whether the numbers coming out of the US market in 2025 were even as strong as they appeared on the surface. McKay raised the possibility that American buyers may have been loading up on inventory ahead of anticipated tariff increases, essentially front-loading their orders to beat higher prices down the road. If that turns out to be the case, the real demand picture could be far worse than the export figures suggest.
"It is still not clear whether US orders in 2025 were artificially high in order to build up stocks there before the new tariffs impact prices," McKay said. "If so, that could see exports of Scotch to the US fall away precipitously, and it's important for businesses to have a plan if that does happen."
The human cost of the downturn cannot be overlooked either. Scottish distilleries directly employ more than 10,000 people, accounting for well over half of the whisky industry's total workforce across the entire United Kingdom. Many of these jobs are in rural communities where the local distillery is not just an employer but a cornerstone of the town's identity and economy. When a distillery goes under, it does not just mean lost revenue on a balance sheet — it means families losing livelihoods in places where alternative work can be hard to come by.
McKay stressed that many of the distilleries now in trouble are not poorly run operations that made bad bets. They are established businesses, some with histories stretching back generations, that have been caught in a web of market forces beyond their control.
"Previously thriving businesses that have existed for generations are facing distress, often through no fault of their own, and there is a case for additional support to the sector to preserve the heritage of the Scottish whisky industry in unprecedented times," he said.
The path forward, according to McKay, requires speed. Many distilleries have already burned through their cash reserves trying to weather the storm, and the window for restructuring is narrowing. BTG has worked with a number of distilleries and related businesses in recent months to help them reorganize and find a way through, but McKay warned that broader action from policymakers and industry groups may be needed to prevent a wave of closures.
"The dynamics of these market forces are such that they are impacting otherwise healthy businesses that have used their cash reserves to stay afloat, and now need to restructure to survive this period of drastic downturn," he said. "We've helped a number of distilleries and businesses to do this in recent months, but swift action is needed to help the industry in these very challenging times, especially if the threatened higher tariffs come into effect in the summer."
The specter of even steeper tariffs arriving in the summer months hangs over the industry like a dark cloud. If the United States follows through on threats to raise duties further, the already battered export pipeline could suffer another serious blow. Producers who are barely hanging on right now could find the math simply no longer works.
For an industry that has survived world wars, prohibition movements, and countless economic downturns over the course of centuries, the current crisis carries a particular sting. Scotch whisky is not just a product — it is a cultural institution, a source of national pride, and for many communities across Scotland, the very reason a town exists at all. The question now is whether enough can be done, and done quickly enough, to keep that tradition alive through what may be its most difficult chapter in modern memory.
The months ahead will be telling. If tariffs escalate, if Chinese demand continues its slide, and if the suspected inventory bubble in the US turns out to be real, the industry could face a reckoning unlike anything it has seen in living memory. For the distillers still standing, the message from those closest to the numbers is clear — plan now, act fast, and do not assume the storm will pass on its own.
