Like many US industries, America’s craft distillers were hit hard by the coronavirus pandemic. A complete picture of the economic fallout has taken time to emerge, but a recent study suggests that Covid-19 cost US distilleries more than half of their business last year.
A survey conducted by the American Distilling Institute (ADI) found that craft distillers in the US saw revenue fall by a whopping 55 percent in 2020, reports The Spirits Business. Much of this decrease can be attributed to the loss of in-person sales, but online business didn’t fare much better.
Conducted this January, ADI’s survey includes feedback from 269 distilleries across 48 states. It found that the huge dip in revenue can largely be attributed to one factor: the closure of tasting rooms across the country. Distillers were forced to shut these locations down due to Covid-19 lockdowns, which made in-person sales all but disappear.
“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,” ADI president Erik Owens said.
Unlike the luxury retail industry, which saw robust online sales help offset pandemic-related losses, craft distillers did not benefit from an increase in e-commerce amid Covid lockdowns. Of the distillers that responded to the survey, 61 percent reported a drop in online sales last year. Much of this is can be linked to the difficulty of finding the right distributor. Nearly 69 percent of distillers felt their wholesaler wasn’t giving their brand the time and attention it deserved. This increased to 77 percent when dealing with an out-of-state wholesaler.
But the news wasn’t all bad. Director-to-consumer (DTC) shipping has provided a lifeline for some distillers during Covid-19. Only six states passed temporary measures allowing distilleries to ship their spirits directly to customers, but in those states DTC accounted for 39 percent of total sales. Understandably, this has led to calls to make DTC sales permanent and more widespread.
Unfortunately, craft distillers aren’t the only alcohol makers feeling the financial sting of the pandemic. Champagne producers have also seen sales plummet. Bubbly revenue fell by a whopping $2 billion during the first months of the pandemic, leaving the industry with an excess of 100 million bottles by year’s end.
Hopefully, the rest of 2021 will bring better news to both markets—and reason to pop a few of those bottles.