Measures taken to contain Covid-19 have cost craft distillers more than $700 million, or 41%, of their sales, Distilled Spirits Council of the U.S. President Chris Swonger announced this morning. That’s because of tasting room closures as well as lost wholesale sales. Craft distillers have furloughed 4,600 employees, or 31% of the craft distilling workforce.
More than 40% of craft distillers derive more than 50% of sales through their tasting rooms. The study, based on an American Distilling Institute survey in June, also found that more than 40% of craft ditillers derive more than 50% of their business from tasting room sales.
About 15% of craft distillers said their tasting rooms were completely shut down. But even among those that remained open measures to mitigate the virus had a significant impact: More than 40% said their on-site sales were down 25% or more.
About 11% of craft distillers surveyed said they had lost all their wholesale business, while 40% said their wholesale business is down 25% or more.
“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.”
Craft distilling is a $1.8 billion industry that generated about $3.2 billion in retailed sales. About 45% of craft distillers operate in just one state and only 12% operate in 10 or more states. Sixty percent sell less than 2,500 cases a year and about 70% employ 10 or fewer employees; 55% employ just one to five workers.
In releasing the study, DISCUS noted that if the Craft Beverage Modernization and Tax Reform Act is not passed by year’s end, craft distillers will face a 400% tax increase in January. That, DISCUS said, will further increase the financial pain.