Much has changed in the beverage landscape as a result of COVID-19. As craft distilleries grapple with shuttered tasting rooms and falling sales, owners report that reopening and sustaining business in this climate isn’t looking bright.
“We are in a tourist town, and April is one of our best retail sales months,” said Jaime Windon, Lyon Distilling, St. Michael's, Md., in a statement. “We have serious concerns that our local economy will not bounce back, and 2020 retail sales will be a huge loss.”
A survey of 118 distilleries across 35 states and the District of Columbia by the Washington, D.C.-based Distilled Spirits Council of the United States (DISCUS) and the American Distilling Institute (ADI), revealed that 43 percent of distillery employees have been let go or furloughed since COVID-19. Furthermore, two-thirds of respondents do not believe they can sustain businesses for more than six months in the current industry climate.
“This survey provides a snapshot of the very real and devastating impacts of COVID-19 on small distilleries across the country,” said Chris Swonger, president and chief executive officer (CEO) of DISCUS, in a statement. “After putting their blood, sweat and tears into building the distillery of their dreams, these craft distillers are barely hanging on and need immediate economic relief to keep their businesses running. For many towns, keeping the local distillery open is vital to tourism and the economic vitality of the surrounding community.”
The survey also revealed that distilleries reported a 64 percent decline in sales. While this has significantly impacted distilleries, other areas of the supply chain also are affected. For example, 63 percent of respondents reported canceling purchases of agricultural products or other inputs, such as stills, bottles and barrels.
“It's terrifying that such a robust industry could be so deeply threatened in a matter of weeks,” said Pia Carusone of Republic Restoratives, Washington, D.C., in a statement. “I worry that many of us won't survive, and the farmers and small suppliers that depend on us will be hurt as well.”
Assistance in a time of need
The American Craft Spirits Association (ACSA) has been working closely with the U.S. Food and Drug Administration (FDA) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) for guidance and oversight on these matters. Their own survey of more than 150 craft distillers revealed that 87 percent of craft distillery tasting rooms have closed as a result of COVID-19, while 60 percent of distilleries laid off or furloughed staff. Without government stimulus, 67 percent of distilleries would be forced to close, it reports.
“Our membership — much like our colleagues in hospitality — is grieving, and our community of craft distilleries are facing a potential industry-wide collapse,” said ACSA CEO Margie A.S. Lehrman in a statement.
While more than 700 distilleries have transitioned operations to producing hand sanitizer, industry stakeholders admit they need Congress’s help and support for months to come.
To incite action, stakeholders wrote to Senate and House leadership urging Congress to provide additional economic relief to the thousands of distilleries facing financial hardship because of COVID-19.
The letter requests federal excise tax relief, effective from Jan. 1 through Dec. 31, along with enacting of the Craft Beverage Modernization and Tax Reform Act, which would make the current federal excise tax rates permanent and prevent a tax increase at the end of the year.
Although doors remain closed, ACSA reports 70 percent of craft distilleries still are producing spirits or utilizing their facilities for the greater good.
“Even in the face of all of this, we continue to hear of selfless stories of our industry rallying to support their communities at home, many of whom are by pivoting to produce hand sanitizer during the global shortage,”ACSA’s Lehrman said. “Still, our organization is working around the clock to call for immediate federal and state support, and we will not rest until we are able to provide relief.”