No doubt, 2020 will go down as one of the most difficult years for all U.S. businesses, including craft distilling.
A new study from the Distilled Spirits Council of the U.S. (DISCUS) reveals the horrible economic damage done to the industry by COVID 19. Reportedly, 41% of craft distilling sales have disappeared — representing a loss of around $700 million — while 31% of employees have been furloughed.
A significant portion of those losses was attributed to the shutdown of on-site sales from tasting rooms and other on-premise revenues. In 2019, an estimated $919 million of craft distiller revenues came from on-site sales, according to DISCUS. More than 40% of craft distillers derive more than 50% of their business from tasting rooms sales.
The DISCUS study was based on data from a June 2020 survey by the American Distilling Institute, a trade association for craft distillers. Respondents represented nearly 300 distilleries across all 50 states and the District of Columbia.
“This study draws two important conclusions regarding the growth and future viability of the craft distilling industry,” says 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.”
Other findings included:
- Approximately 40% of craft distillers reported that their on-site sales were down 25% or more; more than 15% said that their tasting rooms were completely shut down
- More than 40% of craft distillers report that their wholesale business is down 25% or more; 11% said they have lost all of their wholesale business
“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,” says 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.”
Craft distilling is a $1.8-billion industry in the U.S., according to DISCUS, 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.