Holyrood Distillery, a craft whisky maker in Edinburgh, had a busy summer hosting tasting tours during the festival season but faces a tough year. Co-founder Rob Carpenter said slowing demand forced a pause in production from its two copper pot stills, with 4,500 casks maturing in warehouses. The distillery is among many independent producers struggling in the industry’s worst downturn since the 1980s, driven by overproduction in the 2010s and reduced demand due to the cost of living crisis and shifting habits among younger drinkers.

Whisky maturing in casks has risen from under 400mn litres a decade ago to around 1.4bn litres this year—equivalent to 389mn cases or three years of current consumption—per Commercial Spirits Intelligence. This has led many distilleries to cut output by over a third. Smaller independents, unlike giants Diageo and Pernod Ricard (which control over half the Scotch market), are hit hardest, with Pernod’s share price down ~70% from its 2023 peak.

As many as a quarter of Scotland’s 160 distilleries could be for sale, per Duncan Mc Fadzean of Noble & Co. Foreign investors are eyeing distressed assets, with Carpenter noting “ridiculous low-ball offers.” The industry may see consolidation, though M&A remains rare due to valuation disagreements. Optimists point to growing overseas demand, especially in India, as a potential recovery driver.