Another Popular Drinks Company Files for Chapter 11 Bankruptcy

By: Georgia | Published: May 01, 2024

Montana Distillery, a well-known producer of a variety of spirits, has filed for Chapter 11 bankruptcy as of April 29, according to documents submitted to the U.S. Bankruptcy Court for the District of Montana. 

This move comes four years after the company relocated to try and slash costs in the face of ongoing financial struggles.

Financial Woes Come to Light

Montana Distillery’s recent bankruptcy filings reveal the depth of its financial troubles, with assets up to $50,000 and liabilities soaring between $500,000 and $1 million. 

Interior of Montana Distillery's tasting room featuring a bar with stools, wooden tables, a display of branded merchandise, and shelves filled with bottles, illuminated by warm, hanging lights

Source: the_montana_distillery/Instagram

These figures lay bare the significant financial hurdles the distillery is trying to overcome.


A Mountain of Debt

Documents from the bankruptcy proceedings show the distillery’s largest unsecured creditors, including a hefty $523,421 owed to the U.S. Small Business Administration and $161,342 to the Internal Revenue Service. 

Close-up view of three Montana Distillery vodka bottles, featuring Ginger, Coffee, and another unidentifiable flavor, adorned with vibrant labels and set against a dimly lit background

Source: the_montana_distillery/Instagram

This sizable debt underscores the financial challenges that have weighed heavily on the company.

Pandemic Adds to Financial Strain

The timing of the COVID-19 pandemic worsened the distillery’s financial issues, leading to decreased revenues

A close-up of a woman wearing a white protective N95 mask, gazing out a window with a reflective expression, symbolizing the impact of the COVID-19 pandemic

Source: Önder Örtel/Unsplash

The impact was severe, especially as the distillery had just opened its new tasting room in Stevensville on Christmas Eve 2020.

Unique Spirit Selection in Jeopardy

Montana Distillery is famous for its array of ten vodka flavors, including the unique Bacon Vodka and Cherry Vanilla Vodka.

A full range of Montana Distillery vodka bottles neatly lined up on a stone surface outdoors, showcasing various flavors like Cherry, Cucumber, and more, with trees and a clear sky in the background

Source: the_montana_distillery/Instagram

The company now faces uncertainty about the continuation of these beloved products due to the bankruptcy.

More Than Just Vodka at Stake

Besides its innovative vodkas, Montana Distillery also crafts Fallen Dove Gin and Careless Creek Red Sheep whiskey. 

A whiskey glass filled with golden liquid, resting on a rock by a campfire, with flames in the background and a natural forest setting, evoking a cozy outdoor drinking experience

Source: Thomas Park/Unsplash

These spirits, prominently featured in their tasting room, might also become scarce as the financial crisis unfolds.


Economic Pressures Mount

The distillery’s financial strain was exacerbated by rising operational costs and property taxes, compounded by reduced income during the pandemic. 

Close-up of wooden barrels used for aging spirits, stacked in rows in a dark distillery setting with subdued lighting highlighting the wood grain and metal bands

Source: Matt Hoffman/Unsplash

These issues were pivotal in the company’s struggle for economic survival post-relocation in August 2020.


Four Years of Financial Challenges

The distillery managed to operate in Stevensville for nearly four years before succumbing to the pressures that led to the bankruptcy filing. 

Two glass mugs of warm spiced cocktails garnished with apple slices, resting on coasters bearing the Montana Distillery logo, served on a bar counter

Source: the_montana_distillery/Instagram

This period highlights the ongoing economic difficulties Montana Distillery has faced since its move.


Events on Hold

The absence of upcoming events listed on the distillery’s website reflects the current halt in operations and financial distress. 

A colorful chalkboard sign outside Montana Distillery advertising drink specials with playful lettering, including "Martini Monday" and "Mule-Tastic Tuesday."

Source: the_montana_distillery/Instagram

This pause in events marks a significant reduction in community interaction and customer engagement, which were once vibrant parts of their business.


Online Expansion Stalled

The anticipated launch of an online store, hinted at with a “Coming Soon” message on their website, has been delayed

A selection of cocktails displayed on a bar counter, showcasing different types of drinks including martinis, a gin tonic, and colorful cocktails with garnishes, in a vibrant bar setting

Source: M.S. Meeuwesen/Unsplash

This setback is another blow to the distillery’s plans for growth and reaching a broader market digitally.


Widespread Challenges in Craft Brewing and Spirits

The Street reports that the craft brewing sector has faced significant challenges, with hundreds of breweries closing over the past few years—346 in 2020, 178 in 2021, and 319 in 2022, as reported by Statista. 

A man's hand holding a clear glass of amber beer, with a brewery setting in the background showing stainless steel equipment and soft focus

Source: Elevate/Unsplash

Even established names like San Francisco’s Anchor Brewing have not been spared, leading to its Chapter 11 filing and subsequent shutdown in July 2023.


The Ripple Effect Across the Industry

The struggles extend beyond beer, affecting the broader alcoholic beverage market. In 2023, spirits supplier sales barely increased, showing a mere 0.2% rise, with volume up by 1.2%, The Street notes.

A group of people toasting with various cocktails, including martinis and mixed drinks, in a lively setting with hands reaching in from all sides, showcasing a sense of celebration and camaraderie

Source: Helena Yankovska/Unsplash

This trend continued into 2024, impacting other businesses such as Colorado-based Lee Spirits Co., which filed for Chapter 11 bankruptcy on March 8 after ceasing all operations, including its tasting room at Brooklyn’s on Boulder Street.