I suppose one could really argue that rye whiskey has been fading in popularity ever since the Whiskey Rebellion. That happened, as you may recall, in 1894, just a few short years after the federal government enacted a tax on small whiskey producers (mostly Scots-Irish settlers in the Appalachians) to help pay off the military debts the states incurred during the Revolutionary War. Obviously, the tax was extremely unpopular since turning grain into whiskey was the only way for some small farmers to preserve, ship and sell what they grew, which back in those days was usually wheat, barley or rye.
The hostility toward the tax grew fierce all along the Western frontier. Tax collectors were harassed (one was even tarred and feathered) and mail carriers were robbed. When actual shooting started in Pennsylvania in 1894 the Federal government went into action, calling up state militias and assembling an anti-insurrectionary force. As it turned out the force was never used (all the whiskey rebels ran away), yet the Whiskey Rebellion is historic since it marked the first time the federal government ever used (really only threatened) force to keep the peace. It was also one of the very few times in American history that a sitting President (George Washington) led troops in the field.
The upshot of all this was that small whiskey makers left Appalachia for greener pastures West, where there was no Federal taxation nor any Federal army. As it happened, most of those pastures were in Kentucky, where it also happened that the climate was almost perfectly suited to growing corn. Rye, once a staple grain in American whiskey, faded to the background as Kentucky corn whiskey (Bourbon) became king.