Craft distillers in the US have been “crushed” by the Covid-19 pandemic and are expected to lose more than US$700 million worth of sales this year, a new study has highlighted.
The study, conducted by trade body the Distilled Spirits Council of the US (Discus), looked at data from a June 2020 survey by the American Distilling Institute (ADI), a trade association for craft distillers in the States.
Combining lost tasting room sales and lost wholesale income, craft distillers are expected to lose 41% of total sales this year due to the pandemic, equating to more than US$700m.
Furthermore, almost 31% of employees (4,600 workers) have been furloughed during the pandemic.
The monetary loss was attributed to the closure of on-site tasting rooms and the loss of other on-premise sales. More than 50% of respondents to the study reported a ‘significant’ impact on tasting room sales, with approximately 40% of craft distillers reporting a drop of 25% or more in on-site sales. More than 15% said their tasting rooms were completely shut.
Chris Swonger, president and CEO of Discus, said: “This study draws two important conclusions regarding the growth and future viability of the craft distilling industry.
“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.”
More economic relief vital for craft distillers
Discus has been working closely with state guilds and calling for Congress to provide more financial support to the craft distilling sector.
Craft distilling is a US$1.8 billion industry and in 2019, the sector produced around US$3.2bn in retail sales.
There are more than 2,000 craft distillers in the US, providing more than 15,000 direct jobs.
Government support to help distillers adapt to the pandemic can widely differ from state to state. Discus and distillers are calling for the US to make the Craft Beverage Modernization and Tax Reform Act permanent, which would make existing federal excise tax rates permanent.
Jon Kreidler, co-founder and chief officer at Tattersall Distilling, said: “Unfortunately, a lot of the rules and regulations are dictated on the state level. Many states have changed laws and regulations to help out distillers, whether that be allowing to-go cocktails at cocktail rooms, bars and restaurants, increased leniency in regards to bottle sales, or direct-to-consumer shipping.
“In Minnesota, we have fought for all of the above, but while the state loosened regulations tied to craft breweries and wineries, the distillers have been left out of the aid.
“On the federal level, extending and making permanent the Craft Beverage Modernization Act is hands down the most important thing that the government can do to help the industry. Without this, craft distillers will see their taxes increase by 400% and I’m not sure how many could actually survive such a hit right now.”
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Author: Melita Kiely