Craft distillers in the US saw revenue drop by 55% in 2020 after tasting rooms were closed due to the pandemic, according to a new survey.
The survey by the American Distilling Institute (ADI) was conducted in January 2021 and included feedback from 269 distilleries across 42 states and the District of Columbia.
The ADI survey of its members found that 36% reported revenues were down by more than a quarter. The declining sales were due to the fall in on-site revenue after many distillers were forced to close their tasting rooms in 2020.
Furthermore, 61% said their revenues through online sales were down.
ADI president Erik Owens said: “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.
“Consumers wanted to support their local distillers, and one way they did that was to buy a bottle of spirits to have shipped to them – often along with hand sanitiser made by the distillery.”
DTC ‘saving grace’
Direct-to-consumer (DTC) shipping has been a ‘critical’ revenue stream for distillers during Covid-19, the ADI said.
Owens said 10 states allowed some form of direct shipping of spirits before the pandemic, while six additional states have since passed temporary measures to permit craft distilleries to ship their products to consumers.
Those who were able to use DTC shipping said the revenue stream generated an average of 39% of their total sales, with an ‘overwhelming’ amount of customers from their local state.
“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,” said Owens.
“The pandemic has completely changed the way consumers shop. 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.
“Distillers are urging their state lawmakers to pass laws allowing direct-to-consumer shipping of spirits permanently, to meet this new consumer expectation and to compete in this rapidly-changing marketplace.”
In addition, 78% of craft distillers reported that three quarters or more of their sales were to in-state customers.
Nearly 69% of craft distillers claimed their wholesaler does not provide brands with necessary time and attention. Meanwhile, 42% reported that it was difficult to find a wholesaler in their state.
The survey found that 62% of craft distillers who sell products outside of their home state said it was difficult to find a wholesaler, and 77% said their out-of-state wholesaler does not give brands the proper amount of attention.
Via The Spirits Business