Last week, the American Distilling Institute (ADI) published the results of a survey gauging the economic impact of the coronavirus pandemic on U.S. craft distilleries. With feedback from 269 distilleries located in 42 states and the District of Columbia, the survey showed huge revenue losses due to tasting room closures and distribution difficulties.
More than 50 percent of U.S. craft distillers experienced revenue declines in 2020, with 36 percent reporting their distillery’s revenue was down by more than a quarter. One of the major reasons cited for these declines was tasting room closures, with 61 percent of the surveyed distilleries saying their on-site sales were down last year.
“Craft distillers rely so heavily on tours, tasting rooms, and local bars and restaurants, and all of those sales opportunities were lost for many months,” said ADI president Erik Owens.
Amid the on-site declines, some distilleries found a lifeline in direct-to-consumer (DTC) shipping.
“In the states where direct-to-consumer shipping of spirits is allowed, craft distillers report that it has been a saving grace and a significant source of much-needed revenue,” Owens said. “To be successful moving forward, distillers must have the freedom and flexibility to ship their spirits, if that is how their consumers want to purchase and receive them.”
Distilleries that were able to take advantage of DTC shipping reported that it accounted for 39 percent of their total sales in 2020. Prior to the pandemic, 10 states allowed DTC spirits shipping, while six states passed temporary legislation allowing distilleries to do so last year.
Meanwhile, a majority of craft distillers reported difficulties with traditional distribution models — especially when selling out of state. More than 60 percent of distillers who sell products outside their home state said it was hard to find a wholesaler partner; 77 percent said that their out-of-state wholesaler does not pay their brands adequate attention.
All things told, the ADI report will surely only amplify calls from craft distillers for states to expand DTC shipping.