It’s been boom times with record growth in sales for distilled spirits in 2021, and record growth in distilled spirits over the last 12 years. That record growth is for the most part made up of sales by large, multinational distilleries that operate on multiple continents. On the other hand, It has been a tough couple of years for craft distilleries. There were 2256 distilleries in Jan 2021 and are now 2283 in Jan 2022. That is the lowest growth in the industry since 2009, when there were only 160 total distilleries in the country.
Much of the decrease in growth is due to the global pandemic shutting down on premises sales and consumption of spirits. ADI is thrilled to see businesses beginning to see on premises sales thrive again and the world economy continue to thaw. 2022 is well under way, and once again the future looks bright for the craft distilling industry. ADI aims to continue leading the way in helping to drive what’s next in our industry’s quest to level the playing fields and open access to new markets for our members and their customers.
Of course, even as the masks come off and our tasting rooms kick back into high gear, challenges remain for regaining the momentum that had been developing before the pandemic. Remaining at the top of the craft distilling industry’s wish list: establishing universal and national direct-to-consumer sales and shipping privileges for small distilleries in state and out of state.
As the industry continues to mature a few states have seen regulations around sales and shipping of craft distilled spirits loosen. Lawmakers at the federal level have acknowledged the economic importance of this issue for small distilleries. However, the 21st amendment created 50 regulation scenarios in the 50 states, so addressing this challenge will happen on the state level. So far, though, the pattern that’s emerged has been that states with more distilleries end up with better legislation.
The state representing the largest spirits market in the US — California — is currently on the front lines of this fight, and the outcome will set precedent for the rest of the country for at least a decade to come. California Senate Bill 620 (SB620) is the most promising piece of legislation so far, and would grant distillers privileges to sell directly to and ship to customers. As with any proposed legislation though, the debate continues.
The real opponents of regulatory reform for craft distilleries in California, however, have been powerful interest groups that see potential competition from distillers, regardless of any evidence to the contrary. Beer and wine distributors, as well as teamsters unions, in particular, have expressed opposition to allowing distilleries to sell directly to their customers.
DTC shipping is the number one regulation that needs to change in 2022, but additionally there are other regulatory hurdles that need to change, such as limits on bottle sales, limits on cocktail sales, the lack of self-distribution and the inability to sell at pop up events.
Your voice will make a difference. Reach out to your state guild and get involved. Contact your local legislators and invite them to your distillery. Talk to your customers and ask them to do the same. Have them join Ship My Spirits, a nationwide campaign led by a coalition of associations to educate consumers on the importance of supporting craft distilling.
At the 2021 ADI Conference in Louisville, KY, keynote speaker Bill Samuels Jr. put it most succinctly: For the spirits industry to thrive, on any scale, it’s going to require industry collaboration. California is one of many examples around the country confronting an outdated regulatory system. But in order for craft distilling to thrive on a national level, all distillers of every level in every state must get involved.
At the 2022 ADI Conference in Saint Louis, MO this September our keynote speaker Dr Anne Brock will share her passion for craft spirits and her journey from head distiller at a UK craft distillery to Master Distiller at Bombay Sapphire, one of the most prestigious companies in the spirits industry. We are coming back strong with more than 50 educational sessions over three days, and even larger expo floor, and several masterclasses and spirit-specific days.
Keep up the hard work — with your involvement 2022 could be a real turning point for craft distilling!
Cheers,
Erik Owens, President
eriko@distilling.com
