A new study of fresh data on the crushing impact of the COVID-19 pandemic on craft distillers reveals that 41 percent of their sales evaporated—worth more than $700 million—and 31 percent of their employees have been furloughed. A significant portion of these losses was attributed to the shutdown of on-site sales from tasting rooms and other on-premise sales.
The study, conducted by the Distilled Spirits Council of the United States (DISCUS), was based on data from a June 2020 survey by the American Distilling Institute, a trade association for craft distillers.
“This study draws two important conclusions regarding the growth and future viability of the craft distilling industry,” said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States. “The analysis underscores the importance of craft distilleries as economic drivers in their communities that create jobs and support local farmers and tradesmen. It also makes clear the extreme challenges these small businesses are facing and the need for Congress to immediately act to help these cherished distilleries recover.”
The study was conducted to analyze the size of the craft distilling market and determine what impact COVID-19 restrictions have had on craft distillers in the United States in terms of sales and jobs. The survey includes feedback from nearly 300 distilleries across all 50 states and the District of Columbia.
Key Findings on Impact of COVID-19 Restrictions on Craft Distillers:
- Due to lost tasting room sales and lost wholesale sales, craft distillers are projected to lose $700 million in annualized sales, representing a loss of 41 percent of total craft business.
- The craft distilling industry has been forced to furlough 4,600 employees – almost 31 percent of all employees.
- Craft distillers rely heavily on sales through on-site tasting rooms, which have been hit hard by the pandemic.
- In 2019 an estimated $919 million of craft distiller revenues came from on-site sales; more than 40 percent of craft distillers derive more than 50 percent of their business from tasting rooms sales.
- Approximately 40 percent of craft distillers reported that their on-site sales were down 25 percent or more; more than 15 percent said that their tasting rooms were completely shut down.
- More than 40 percent of craft distillers report that their wholesale business is down 25 percent or more; 11 percent said they have lost all of their wholesale business.
Key Findings on Size of the Craft Distilling Market:
- Craft distilling is a $1.8 billion industry, generating approximately $3.2 billion in retail sales in 2019.
- There are more than 2,000 craft distilleries operating in the U.S. that collectively generate more than 15,000 direct jobs.
- Craft distillers are small businesses within the hospitality industry.
- 45 percent of craft distillers operate in just one state; only 12 percent of craft distillers operate in more than 10 states.
- 70 percent employ 10 or fewer employees; 55 percent employ 1-5 workers.
- Approximately 60 percent sell less than 2,500 cases per year.
“Craft distillers are a special community of men and women who entered this industry with a passion for spirits and a dream to build a craft distillery in their local town,” said Erik Owens, president of the American Distilling Institute, which represents more than 600 independently owned craft distillers. “For many, these dreams have been shattered in the blink of an eye. These small businesses are going to need the continued support from federal and state legislators to weather this unpredictable storm.”
DISCUS has been working closely with state guilds to urge Congress for additional economic relief. Key to the craft distilling industry’s survival is the passage of the Craft Beverage Modernization and Tax Reform Act (H.R. 1175/ S. 362), which will make the current federal excise tax rates permanent. If the legislation fails to pass by year’s end, craft distillers will face a 400 percent tax increase in January 2021, creating further financial turmoil for these small businesses.
