Dear Client: 

There are about 2,000 small distillers currently operating in the US. But that number could start dropping soon thanks to COVID-19 containment measures.

Two-thirds of craft distillers will be forced to close within three months without federal assistance due to the impact of the COVID-19 pandemic, according to a survey of more than 150 craft distillers from the American Craft Spirits Association. 32% of which say they’ll only last another month.

“Our membership – much like our colleagues in hospitality – is grieving, and our community of craft distilleries are facing a potential industry-wide collapse,” says ACSA ceo Margie Lehrman. “And even in the face of all of this, we continue to hear of selfless stories of our industry rallying to support their communities at home, many of whom are by pivoting to produce hand sanitizer during the global shortage.”

Indeed, according to the survey, more than 75% of craft distillers plan to produce hand sanitizer and sanitizing solutions. 

Nearly 90% of craft distillers have closed their tasting rooms due to COVID-19, 38% of which closed their tasting rooms proactively while about 47% closed due to government mandates. Though nearly 70% are still producing spirits, per the survey. 

As these craft distillers struggle, they’ve had to lay off staff. Almost 60% of distilleries have already laid off or furloughed their staff. The remaining respondents said they’d likely follow suit in the coming weeks. 

“As a small, independent distillery owner in Minnesota, the devastating impact of COVID-19 on my business is very, very real, and without federal support, our survival is in jeopardy,” says Chris Montana, ACSA president and owner and head distiller of DuNord Craft Distilling. “We have already closed our cocktail room to the public and laid off more than half of our staff. With no end in sight we will almost certainly be forced to further reduce our workforce and potentially halt our production. These actions have been painful, but the long term looks far more ominous.” 

Margie says ACSA “is working around the clock to call for immediate federal and state support, and we will not rest until we are able to provide relief.”

WSWA, DISCUS PUSH FOR BEV ALC INCLUSION IN FEDERAL RELIEF PACKAGE

Speaking of seeking federal assistance, late last week Wine & Spirits Wholesalers of America chief Michelle Korsmo sent a letter to the House of Representatives and Senate Leadership to call for bev alc industry inclusion in any proposed COVID-19 hospitality relief measures.  

“As states and localities implement social distancing and self-quarantine policies and sweeping closures of restaurants and bars, and major sporting and entertainment events cancel, the entire alcohol supply chain is struggling to rapidly respond,” per the letter. “It is critical that as Congress seeks solutions to mitigate this economic and public health disaster, any relief made available to the hospitality industry include all types of restaurants, bars, liquor stores, specialty wine stores and the distributors, importers, wineries, distilleries and brewers who serve them.”

Meanwhile, the Distilled Spirits Council kicked off a grassroots push through the Spirits United platform yesterday, calling on spirits industry workers to contact members of Congress to provide distillers with federal relief. More than 2,800 letters were sent in the first four hours.

“This is an all-out effort to implore Congress not to forget struggling distillers across the country who contribute to our nation’s vibrant hospitality, restaurant and tourism industries,” says DISCUS chief Chris Swonger.

Negotiations are still underway at the federal level on the coronavirus stimulus package. 

MORE STATES ORDER SHELTER IN PLACE & LOOSEN BEV ALC RESTRICTIONS 

Last week, California and New York issued state-wide stay-at-home orders and shut down all non-essential businesses to ‘flatten the curve’ of the COVID-19 spread [see WSD 03-20-2020]. Since then, more states have taken similar measures. 

Illinois, Connecticut, and Oregon all announced stay at home orders on Friday, and New Jersey took similar action on Saturday. Pennsylvania has not announced a stay at home order per se, but has called for the closing of non-essential businesses. Philadelphia announced stricter measures on Sunday, prohibiting all but essential businesses and activities, and disallowing gatherings of any number until further notice.

Yesterday, Louisiana Gov. John Bel Edwards told lawmakers he would issue a statewide stay at home order, which will take effect later today. Ohio also announced an order for all residents to stay at home, and the closure of non-essential businesses, effective midnight tonight, per Cincinnati Business Courier.

Kentucky Gov. Andy Beshear also called for the closure of non-essential businesses starting tonight. 

Delaware, Indiana, Massachusetts, Michigan, Washington and West Virginia have also issued similar orders. 

The good news is that most states are also loosening up restrictions on beverage alcohol sales. For instance, Tennessee, Virginia, Nebraska, Colorado and others have lifted regulations to allow restaurants to include alcohol in takeout and delivery orders. 

In other good news, Pennsylvania Gov. Tom Wolf is reconsidering the order to shut down the state-run liquor stores, per the Washington Examiner. You may recall, last week the governor ordered the closure of state-run liquor stores as well as ceased online sales. 

“We are looking at that very seriously,” the governor said about reconsidering the previous order. “I’m trying to understand the thinking in other states. On the one hand, this can be considered a nonessential function. On the other hand…this sometimes gets to be a health issue for those with a substance use disorder.”

ON-PREMISE WAS DOWN 24% IN WEEKS BEFORE MANDATORY CLOSURES

By now, the on-premise is pretty much closed for business here in the US. But new data from Nielsen CGA shows the trends in the channel were looking pretty grim in the weeks before the mandatory closures started trickling in on March 15.

Indeed, the two weeks from February 22 to March 7 show total checks across the US were down 24% versus a year ago, and total dollar sales were down $28,000. 

They also highlighted the trends for the two-week period in four large markets. 

• In Florida sales were down $39,000 for the two-week period vs. a year ago.
• In California sales were down $40,000.
• In New York sales were down $41,000.
• And in Illinois sales dropped $53,000.

Unfortunately those numbers are only going to get worse for the foreseeable future. 

WSD BRIEFS:

RNDC EXPANDS PARTNERSHIP WITH PERNOD. Republic National Distributing Co. and Pernod Ricard inked a new agreement in Indiana, effective April 18. With the addition of Indiana, RNDC now handles Pernod’s wine and spirits portfolio in nine markets and wine and champagne in 12 markets.

NABCA CANCELS ANNUAL CONFERENCE. The National Alcohol Beverage Control Association’s 83rd Annual Conference, scheduled for May 18-21, has joined the growing ranks of cancelled events due to the coronavirus. NABCA will automatically cancel and fully refund all paid registrations, per a release. The group is now looking toward the conference in 2021. 

MORE CHARITABLE DONATIONS. DISCUS member companies are collectively donating more than $8.37 million to the US Bartenders Guild Foundation and other charities to support relief efforts, per a release. Brown-Forman recently announced a donation of $1 million to COVID-19 response funds. Diageo also pledged to donate up to two million liters of alcohol to hand sanitizer manufacturing partners worldwide. 

Until tomorrow,
Sarah

“Everyone here has the sense that right now is one of those moments when we are influencing the future.” – Steve Jobs       

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