For decades, whisky has been an industry built on patience. Time in oak, long-term planning, and disciplined release schedules have always defined success. But in today’s climate, time itself has become one of whisky’s greatest financial threats. Across markets such as Australia, New Zealand, and South Africa, rising costs, tax pressure, and tightened consumer spending are forcing distilleries to confront uncomfortable realities. For some, that has meant reducing production. For others, it has meant exiting the market entirely.
This is not a story about declining interest in whisky. Demand remains strong in many categories. Instead, the crisis facing producers is structural: cash flow pressure in a business that was never designed for instant returns.
A System Under Strain
Modern whisky production now collides with an economic reality it was never built for.
Rising input costs
The fundamentals of production have become more expensive almost overnight. Energy, transport, glass, packaging, agricultural inputs, and barrels have all seen sharp inflation. For a distillery laying spirit down today, production costs are significantly higher than they were when the previous generation of stock was filled. That means new whisky is entering warehouses at a higher cost base before margins are even considered.
Excise and taxation pressure
In markets like Australia and New Zealand, spirits are among the most heavily taxed consumer products by volume. Excise duty has been steadily increasing, squeezing already tight margins for many producers. For smaller distilleries, this tax is often payable upfront at bottling rather than deferred until the product is sold, meaning that cash outlay can coincide with production and packaging costs rather than revenue generation. When costs rise and sales soften, excise can quickly become a significant financial stress point rather than a background consideration.
The maturity mismatch problem
Unlike beer or RTDs, whisky absorbs capital and gives nothing back for years. Every barrel filled increases cash exposure. For fast-growing distilleries built during the whisky boom of the 2010s, maturation commitments accelerated faster than sales infrastructure. When inflation hit and consumer appetite slowed, some producers found themselves asset-rich and cash-poor almost overnight.
Post-boom market normalisation
Whisky benefited from years of rapid category growth. That era has cooled. Premiumisation remains, but consumers are increasingly selective, more price-sensitive, and less willing to buy indiscriminately.
Real-World Impact: Who Has Already Been Affected?
Australia: Pressure becomes visible
Australia has seen the clearest signs of strain among whisky and spirits producers.
Several distillers have entered voluntary administration or significantly reduced operations following rising debt, excise exposure, and falling margins. Public reporting has highlighted cases of:
- Distilleries entering administration following cash-flow stress.
- Whisky production pauses due to input costs and stock carrying burdens.
- Small producers closing tasting rooms or ceasing operations despite strong brand presence.
Ostra Distillers in Victoria entered voluntary administration in late 2023, halting production after a period of rapid expansion that left them vulnerable to rising costs and debts. Similarly, Top Shelf International, the owner of the NED Australian Whisky brand, also faced significant financial difficulties. In August 2025, the company was placed into voluntary administration, forced to sell its assets.
New Zealand: Quiet contraction
New Zealand’s whisky sector has not seen the same wave of public closures, but commercial pressure is evident. The domestic market is small and increasingly crowded, while excise, logistics, and cost inflation continue rising.
In practice, the impact is often less visible:
- Reduced distillation volumes.
- Delayed expansions.
- Quiet consolidation.
- Strategic shifts into lower-capital spirits for cash flow support.
Many producers are quietly scaling down risk, even if they are not closing doors. For instance, In Auckland, Grey Lynn Gin — a small craft‑spirits producer founded around 2020 — was forced into liquidation in 2023. According to the liquidators, rising alcohol excise, along with increased transport, storage and shipping costs, combined with softening demand, squeezed profit margins to the point where the business became unviable.
South Africa: Structural vulnerability
South African whisky operates in a more volatile commercial environment. Energy instability, rising excise, regulatory pressures, and export complexities have placed additional pressure on production economics.
Here, whisky remains viable — but only for distilleries that control cost tightly, manage stock intelligently, and build export strategy around cash stability. As elsewhere, it is not demand that is killing distilleries — it is fragile finances.
James Sedgwick Distillery, producer of the renowned Three Ships Whisky and Bain’s Cape Mountain Whisky, is under increasing strain from the country’s rising excise rates, set to increase by 6.75% in 2025.
Why Some Distilleries Survive While Others Fail
The difference between resilience and collapse often comes down to visibility.
Distilleries that struggle commonly suffer from:
- Poor understanding of inventory value by age and future revenue potential.
- Overproduction disconnected from sales pipelines.
- No forecasting by maturation band.
- Production driven by hope rather than data.
- Limited awareness of excise exposure and cash obligations.
Those that survive are disciplined:
- They distil in response to market reality, not optimism.
- They forecast inventory as future income.
- They control production velocity.
- They balance inventory growth with cash generation.
Preventing the Crisis Before It Happens
The solution is not simply “sell more whisky”. It is to operate with precision.
Inventory planning is financial planning
Every cask is an investment. Distilleries must know:
- What is in bond
- What age it is
- What it will be worth
- What it will cost to hold
- When it will convert into revenue
Without this clarity, production becomes guesswork.
Balance sheet visibility matters
Many producers discover too late that they hold large volumes of whisky with weak commercial positioning. Forward-looking distilleries:
- Segment inventory by quality and release potential.
- Separate strategic stock from stranded barrels.
- Forecast working capital years ahead, not months.
- Align production with real release plans.
Production discipline beats scale
Growing capacity is meaningless if it multiplies risk. Sustainable distilleries:
- Control volume
- Delay expansion until demand is proven
- Prioritise return on stock rather than litres produced
Scenario planning as survival
Modern distilleries must plan for:
- Cost increases
- Sales dips
- Financing volatility
- Regulatory changes
Those who model worst-case scenarios in advance avoid making desperate decisions later.
In conclusion, whisky remains a powerful global category. The issue isn’t a lack of passion, quality, or demand, but rather the structural pressures that many distilleries face in an increasingly challenging market. Those who survive the next decade will be the distilleries that approach production with financial discipline, aligning inventory management and production schedules with long-term profit, not just short-term growth. In this industry, tradition may craft the spirit, but it is strategic planning and financial insight that will keep distilleries thriving.
