Kaveh Zamanian Says Bourbon's Reckoning Is Just What the Industry Needs
The bourbon industry has spent the better part of two decades operating as though the good times had no ceiling. Production soared, labels multiplied, rickhouses swelled, and every month seemed to bring another craft distillery cutting its ribbon somewhere in Kentucky. Now the bill has come due — and one of the men who helped define what modern American bourbon could be says the hangover, as painful as it is, might be the best thing that ever happened to the category.
Kaveh Zamanian, the founder of Louisville's Rabbit Hole Distillery, has watched the arc of the bourbon boom from a vantage point few people in the industry share. When he decided to enter the bourbon business in 2012, there were plenty of people in Kentucky who thought the clinical psychologist from California had lost his mind. At the time, bourbon was only beginning the remarkable run that would transform it from an often-overlooked American spirit into a global phenomenon. He got in early, built something that mattered, and survived long enough to watch the category he helped elevate now wrestle with its own excess. His read on where things stand — and where they're headed — carries weight precisely because he's lived through every phase of it.
The Psychologist Who Went Down the Rabbit Hole
Zamanian is not a conventional bourbon figure, and that has always been the point. Born in Iran and raised in Southern California, Zamanian spent 20 years practicing and teaching clinical psychology in Chicago — hardly the profile of a traditional Kentucky whiskey maker. His true calling was set into motion when he met and fell in love with his wife Heather, a native of Louisville. It was then that his passion for America's native spirit took hold, leading him to ultimately step away from a successful career as a clinical psychologist and psychoanalyst to start his own venture.
Zamanian describes his journey into the bourbon world as going down the rabbit hole, so naturally when he decided to start his own brand and build his own distillery, the name Rabbit Hole just stuck. As a whiskey maker, Zamanian dispensed with many of the conventions of today's mass-produced bourbon to produce Rabbit Hole's signature one-of-a-kind, award-winning spirits. He designed and developed Rabbit Hole Distillery in the heart of Louisville — now one of the largest bourbon distilleries in the world, a facility that has been named the architectural icon of the Kentucky Bourbon Trail.
The accolades followed. Rabbit Hole became one of the fastest-growing American whiskey brands in the country. In 2018, Zamanian was named an Endeavor Entrepreneur, and in 2019 he received the Entrepreneur of the Year Award from Ernst & Young. In 2022, he was inducted into the Kentucky Bourbon Hall of Fame, solidifying his place among industry pioneers and visionaries. Then, in 2019, came the move that gave Rabbit Hole its global runway: the distillery sold a majority stake to Pernod Ricard — a move that gave it the resources for international expansion. Crucially, Zamanian maintained his shares in Rabbit Hole and continued to operate the company. He wasn't cashing out. He was scaling up.
Production Ran Ahead of Reality
To understand why Zamanian views the current slowdown with a degree of philosophical calm, you have to understand what he watched happen to the production side of the industry over the last decade. His framework for the moment draws a clean line between consumption and production — two curves that traveled very different paths.
He argues that bourbon consumption has experienced relatively steady growth while production raced ahead. "When you see the consumer trends, it's pretty consistent," he says. "We've seen a steady, slow, slow, slow, steady growth. No major spike. But when it comes to production, we saw a hockey stick in the last basically 10 years." He calls what followed "irrational exuberance," and says bourbon has now reached a "face the music" and a "rinse cycle," during which some brands — and potentially some production facilities — won't survive.
The numbers back him up. The fundamental challenge defining the 2026 market is the unprecedented surplus of aging liquid in Kentucky. As of early 2025, Kentucky distilleries held a record 16.1 million barrels of aging bourbon, a figure that dwarfs the 5 million barrels held during the previous "whiskey glut" of 1985. This massive inventory is a direct consequence of the production ramp-up in 2021 and 2022, when Kentucky barreled 2.7 million barrels in a single year to meet projected demand that has since stabilized.
Zamanian compares it to other American boom-and-bust cycles, from technology to craft beer to real estate. The parallel to craft beer is particularly apt. The craft brewing industry saw a similar explosion of labels in the 2010s, followed by a brutal consolidation phase that wiped out hundreds of breweries that had built their businesses on novelty rather than quality. The survivors were, almost without exception, the ones who had done the hard work of developing a genuine product identity and a loyal customer base. Zamanian clearly believes the same dynamic will play out in bourbon.
The Market in 2026: A Tale of Two Shelves
Walking into a liquor store in 2026 can feel disorienting if you've been paying attention to the bourbon market for the past few years. The bifurcation of demand is unlike anything the industry has seen before. In January, a 41-year-old collector named Brian Mosoff raised his paddle in a Sotheby's auction room in New York and paid $162,500 for a single bottle of bourbon — an Old Rip Van Winkle 20-Year Single Barrel, the most expensive bottle of American whiskey ever sold. That same winter, a few hundred miles west in Kentucky, used bourbon barrels that fetched more than $200 apiece a year earlier were going for around $50 — and some were being sold off as garden planters. That is the bourbon market in 2026, in two images.
In 2026, the secondary market is characterized by a "flight to quality," where cornerstone bottles like Pappy Van Winkle, William Larue Weller, and George T. Stagg maintain strong demand while mid-tier limited releases see significant volatility. The days of flipping any allocated bottle for a 400% markup are essentially over. The market is sorting itself — separating the truly desirable from the merely scarce, and separating both of those from the genuinely excellent.
The headline-grabbing numbers from the category's decline tell a sobering story. The overall spirits industry in the U.S. experienced a revenue slip of 1.1% in 2024, totaling $37.2 billion, although volumes rose slightly. Specifically for American whiskeys — which include bourbon, Tennessee whiskey, and rye — domestic sales fell by 1.8% in 2024, reaching $5.2 billion in revenue. IWSR data indicates that bourbon sales slowed to just 2% between 2021 and 2024. Sales volumes of U.S. whiskey dropped 1.2% in 2023, the first decline since 2002, and that drop steepened to 4% in the first nine months of 2024.
Jim Beam's Pause and What It Signals
Nothing captured the breadth of the bourbon industry's reckoning quite like the announcement that came at the end of 2025 from the most iconic name in the business. Jim Beam, one of America's most iconic bourbon makers, announced an unprecedented move: it would pause whiskey production for an entire year at its main Clermont, Kentucky, distillery starting January 1, 2026. The company, owned by Beam Suntory, said the temporary shutdown would allow it to "invest in site enhancements" and rebalance its inventories. The maker emphasized that it was a pause, not a permanent closure. Jim Beam planned to keep its visitor center open and continue limited distilling at its smaller craft facilities, while its other Kentucky distillery in Boston, KY, and bottling operations remained active.
The news sent shockwaves across the bourbon world because Beam is the largest bourbon producer in the country, releasing more than 26 million gallons of whiskey annually. About eight million gallons are distilled at the main Clermont location. For a distillery with roots dating back to 1795, stopping the stills for a year is not a decision made lightly. It is, in the clearest possible terms, an acknowledgment that the industry made too much whiskey and now has nowhere to put it.
The development capped a painful 2025 filled with lawsuits, defaults, and layoffs in an industry that just two years ago set a record for bourbon production in Kentucky, where 95% of U.S. bourbon is produced. The whiplash between those two realities — record production followed by production halts — is almost hard to process. But it is precisely the dynamic that Zamanian had identified with his "hockey stick" production analysis.
Why the Slowdown Has Multiple Drivers
The causes of the bourbon slowdown are not simple, and anyone who reduces the situation to a single factor is missing the full picture. Several distinct forces are converging simultaneously, and they interact with each other in ways that make a quick recovery unlikely.
A Younger Generation That Drinks Less
This shift is influenced by factors such as the post-pandemic decline in bar sales, inflationary pressures leading consumers to seek less expensive options, and a general trend of younger generations drinking less alcohol. Younger generations, particularly Gen-Z, are drinking less than previous generations, contributing to the overall decline in alcohol sales. Younger consumers are drinking less alcohol overall, while inflation and higher living costs are pressuring discretionary spending. Analysts also point to the growing popularity of cannabis products and wellness-focused lifestyles as factors reducing alcohol consumption. According to Gallup, American adults are consuming alcohol at historic lows.
The Supply Problem That Can't Be Quickly Fixed
One of the structural challenges unique to bourbon — as opposed to most other consumer products — is that you cannot simply turn off the tap and recover in a quarter or two. Because bourbon must age for years before being sold, producers cannot quickly adjust supply once demand weakens. That has left many distilleries storing massive numbers of barrels with fewer buyers entering the market. Industry reports indicate Kentucky rickhouses are approaching capacity in some areas, forcing companies to delay or reduce production schedules. The barrels already sitting in those rickhouses represent billions of dollars in capital that cannot be redeployed until the liquid inside is ready — and saleable.
Trade Headwinds and Tariff Uncertainty
The domestic slowdown would be manageable on its own, but it has been compounded by geopolitical turbulence that has put export markets at risk. The threat of retaliatory tariffs from the EU against U.S. goods, including Kentucky bourbon, and the actual cessation of American alcoholic beverage imports by some Canadian provinces, pose significant challenges to export markets. The shuttering of Jim Beam's main distillery comes amid President Donald Trump's trade war with Canada, which contributed to a significant decline in U.S. liquor sales after the country ushered in a boycott of American booze.
While a temporary suspension of a 25% EU tariff was extended through early 2026, the geopolitical climate became extremely volatile. A trade war was triggered in early 2026 after President Donald Trump threatened a 10% tariff on eight European nations unless they facilitated a deal for the U.S. to acquire Greenland. For an industry that had been counting on European demand to absorb some of its surplus production, that kind of uncertainty is corrosive to business planning.
The Counterintuitive Upside: Why Zamanian Is Optimistic
Given that backdrop — declining domestic volumes, overstuffed warehouses, trade war disruptions, and an industry landmark pausing production — the natural instinct is to be gloomy about bourbon's near-term future. Zamanian doesn't share that instinct, at least not entirely. His optimism is not the glib variety; it is grounded in what he sees as a market correction that was both inevitable and ultimately healthy.
A shakeout could recreate some of the conditions that allowed entrepreneurs like Zamanian to challenge the bourbon establishment in the first place. Think about what that means in practice. When the industry is bloated with mediocre product, when every retailer has wall-to-wall bottles of indistinguishable bourbon from brands that didn't exist five years ago, it becomes very hard for genuinely innovative distillers to stand out. Zamanian built Rabbit Hole by challenging bourbon conventions. Now he believes the industry's slowdown could open the door to its next wave of innovation.
The craft beer parallel is instructive again here. After the mid-2010s shakeout in craft brewing, the breweries that survived tended to be the ones with the most distinctive identity — the ones that had a reason to exist beyond chasing the trend. Their survival cleared shelf space and consumer attention for the next generation of genuinely creative brewers. Zamanian's argument is essentially that the same dynamic will reward the bourbon producers who have prioritized quality and originality over volume.
What Rabbit Hole Has Always Done Differently
To understand why Zamanian is positioned to weather this market correction better than many, you have to understand what Rabbit Hole has always been about at the production level. With its use of one-of-a-kind mash bills, custom-toasted and charred barrels, and uncompromising devotion to detail, Rabbit Hole stands apart as a symbol of modern American whiskey. Established in 2012, Rabbit Hole unifies heritage techniques with innovative mash bills to create unique expressions of super-premium American whiskey.
The brand's Straight Bourbon and Rye whiskeys are crafted with a mix of carefully selected grains, distilled in copper Vendome column stills and aged in native oak barrels by Louisville's hot summers and cold winters. That attention to process detail — custom barrel specifications, proprietary grain combinations, a distillery designed from the ground up with quality as the primary constraint — gives Rabbit Hole a defensible position in the premium segment that cheaper, bulk-sourced brands simply cannot replicate.
The brand's most recent release illustrates exactly this philosophy. As Kentucky's most celebrated racing season kicked off in spring 2026, Rabbit Hole launched Raceking, a six-year aged, limited-edition Kentucky Straight Bourbon Whiskey. The release built on the original Raceking introduced in 2020, now aged longer to deliver even greater depth, balance, and complexity, further highlighting Rabbit Hole's commitment to craftsmanship, quality, and innovation in mash bill design. Raceking is a 95 proof bourbon crafted from a distinctive five-grain mash bill featuring chocolate-malted wheat and chocolate-malted barley, aged for six years in handmade, toasted, and charred American oak casks.
Zamanian himself framed that release in terms that say something about his entire ethos. "Raceking reflects how I like to approach bourbon, with respect for tradition but a willingness to explore its edges," he said. "With this release, we wanted to honor Kentucky's legendary horse racing tradition. The name Raceking reflects that heritage and embodies the careful, deliberate process required to craft a bourbon worthy of a thoroughbred pedigree."
The Pernod Ricard Partnership as a Structural Advantage
One reason Rabbit Hole is better insulated from the current market turbulence than many craft distilleries is the strategic partnership Zamanian forged with Pernod Ricard in 2019. Pernod Ricard's division was focused on partnering with "fast-growing, high-potential" brands like Rabbit Hole as the craft spirits industry continued to flourish in the U.S. and globally. What looked at the time like a big fish swallowing a smaller one was actually something more nuanced: a craft distillery gaining distribution infrastructure and capital without surrendering creative control.
Over the years, various different spirit companies had expressed interest to Zamanian about potential partnerships, and although it was always humbling to have been approached, a partnership wasn't something he'd considered. That was until he met with Alexandre Ricard, the CEO of Pernod Ricard. For Zamanian and Ricard, the spirits industry is about so much more than just products — it's about inspiring and bringing people together. Both companies share the same spirit and are fully aligned in their values and cultures.
With the partnership, the goal was to expand distribution of Rabbit Hole and connect with spirits lovers throughout the world, while the dreams for the future of Rabbit Hole, its leadership, and its products remained the same. "The way we make whiskey, the creativity, passion and innovation we bring to the spirits business will continue to be the heart of our story, just as it is now." That promise has held. Zamanian says he remains "very actively involved on the liquid and storytelling side of things."
Industry Perspectives: Cyclical Correction or Structural Shift?
Not everyone agrees on the nature of what the bourbon industry is experiencing, and that debate matters enormously for how producers, investors, and enthusiasts should think about the next five years. The optimists, like American Whiskey Association CEO Michael Bilello, call the slowdown "primarily cyclical rather than structural — the category is coming off an exceptional multi-year run and is now recalibrating from a very elevated base."
The pessimists point to data that suggests something deeper than a temporary hangover. It is difficult to imagine that people worldwide will again increase their appetite for hard liquor or show interest in the same old bourbon in brand new bottles. Even if the world's economy booms, if people are going to be drinking less, the current glut of whiskey will not disappear any time soon, and the thought of producing more in a saturated market hardly seems to make sense.
As so often happens in American business, greed fueled the market, creating a bubble of brand-new bourbon labels — including some made in Texas, Oregon, and New York. Many of those brands entered the market with sourced product and a fancy label, banking on bourbon's hot streak to do their marketing for them. They had no genuine production story, no aging program, and no reason to exist once consumers started making more deliberate purchasing decisions. Those are the brands Zamanian's "rinse cycle" will wash out.
There is also potential opportunity on the international horizon to offset domestic pressures. Markets such as India, China, South Korea, and Taiwan are rapidly expanding their bourbon consumption, often skipping the "value" tier and moving directly into premium and super-premium categories. This regional growth acts as a critical hedge against the domestic slowdown and the trade-related headwinds currently facing the European market. For a brand like Rabbit Hole, which has Pernod Ricard's global distribution network behind it, that international growth runway is a genuine advantage.
What Enthusiasts Should Take From This Moment
For the bourbon drinker who has been navigating the past few years — the frustration of impossible allocations, the sticker shock of secondary market prices, the crowded store shelves full of brands that felt interchangeable — the current correction is not entirely bad news. The market is sorting itself, and that sorting process tends to reward people who drink with their taste buds rather than their investment spreadsheets.
If you've felt a kind of whiplash lately — empty allocated shelves one minute, deep discounts the next — you're not imagining it. The end of the speculator-driven frenzy means that genuinely good bourbon at fair prices is becoming more accessible, not less. The bottles that belonged on shelves but were siphoned off into secondary market channels are starting to show up where they were always supposed to be: in stores, at retail price, available to people who actually want to drink them.
The brands that survive this correction will have earned their place on the shelf. They will have real distilling programs, real aging inventories, and real flavor profiles that give consumers a reason to come back. Zamanian has spent over a decade building exactly that kind of distillery — one where one-of-a-kind mash bills, custom-toasted and charred barrels, and uncompromising devotion to detail define every bottle that leaves the facility. When the noise clears, those are the bottles that will matter.
The Next Wave Is Coming
Zamanian's most compelling argument isn't really about the present at all. It's about what comes after. Every major American industry consolidation — from craft beer to the dot-com bust to the housing correction — eventually cleared the ground for a new generation of builders who did things differently. The survivors of the shakeout found themselves operating in a cleaner competitive environment, with more shelf space, more consumer attention, and more room to experiment than they'd had when the category was flooded with also-rans.
A shakeout could recreate some of the conditions that allowed entrepreneurs like Zamanian to challenge the bourbon establishment in the first place. That's the real promise embedded in his optimism. The next Rabbit Hole — the next distillery founded by someone with a genuinely unconventional background and an obsessive commitment to the liquid — will have an easier time making its case to consumers and retailers than it would have in the peak-boom years when everything was selling regardless of quality.
The bourbon industry built something extraordinary over the past two decades. It transformed a regional American spirit into a global category, created a tourism economy in Kentucky that draws millions of visitors annually, and sparked a genuine cultural renaissance around American whiskey. The correction underway right now doesn't erase any of that. It refines it. Zamanian, a man who once practiced clinical psychology and now makes some of the most distinctive bourbon in the country, knows better than most that going through the difficult part is often the only way to get to something better on the other side.
