In March 2020, local distillery owners transformed into heroes when they used their facilities to create alcohol-based hand sanitizers to help fight the Coronavirus pandemic.
But now, distilleries’ futures remain uncertain because an estimated 41%, or $700 million, of craft distillers’ sales have dried up, according to a study released by Distilled Spirits Council Of The United States (DISCUS). The survey includes nearly 300 distilleries across all 50 states and the District of Columbia.
Without intervention, this could mean 2021 will see distilleries closing, consolidation of distilleries, and fewer regional brands offered in bars and stores.
Why are distilleries struggling?
The distilleries’ problems started when states went into lockdown because of the pandemic, forcing distillery tasting rooms to close.
The tasting room closures resulted in a loss of $700 million in sales. 40% of distillers said more than 50 percent of their business came from tasting room sales.
As a result, 4,600 people, or 31% of distillery employees, have been furloughed.
“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,” said Chris Swonger, president and CEO of DISCUS.
Even as states open back up, the DISCUS study reports more than 40% of distillers say their wholesale business is down 25% or more, and 11% said they had lost all of their wholesale business. 40% percent also reported their on-site sales were down 25%.
“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.”
What can local distilleries do to survive a post-pandemic world?
Distillery owners may have some light at the end of the tunnel with COVID-19 vaccine rollouts happening across the country, but the truth is ordinary remains a far way off.
To survive the coming months, distillery owners should apply for pandemic relief through the Small Business Administration. The Administration offers a few options, such as the Paycheck Protection Program, SBA Bridge Loan, or SBA Debt Relief programs. These initiatives may help tide business owners over until sales naturally inflate.
Next, owners should pair up with other local businesses in the “shop local” push that has been popular during the pandemic. Many customers are trying to spend their money at small, local businesses, so make sure your name is out there, and customers know about your brand. For example, if you have a relationship with a local liquor store, ask them to put a sign up near the local beer section.
Distilleries can also offer virtual tastings as a way to increase sales, a fun way to engage customers regardless of where the customers currently are. Offering virtual tastings can also be a way to re-engage furloughed staff. You’ll need employees to pack up and ship the tasting bottles, and then someone to run the Zoom call with customers and provide exciting tidbits.
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