Whisky Advocate: Craft Distillers Battle Challenges Raised By Covid-19

Craft distilleries, like most small businesses, have struggled to weather the devastating effects of Covid-19, though some are finding ways to tackle the onslaught of challenges and survive, if not grow. Overall, however, the craft distilling sector is suffering. Sales have fallen by around 41%—or approximately $700 million—and nearly a third of employees have been furloughed, according to a recent study from the Distilled Spirits Council (DISCUS) and American Distilling Institute (ADI). The study attributes a significant portion of the losses to the shutdown of on-site tasting rooms, which drive over half of the business for more than 40% of respondents.

Among those affected is New Mexico’s Santa Fe Spirits, which has a tasting room at the distillery as well as a second site downtown; together they accounted for 40% of the company’s sales pre-Covid. Owner Colin Keegan says Santa Fe Spirits could increase its sales by up to 50% if New Mexico permitted direct shipping from the distillery, which some states allow. Among them is Virginia, where Catoctin Creek Distillery has seen a positive sales impact from in-state direct shipping, though co-founder and chief distiller Becky Harris notes that “markets further away are definitely affected.”

For others, the picture is brighter, largely thanks to business models that rely less on tasting rooms and more on traditional retail. “Things didn’t shake out quite as bad as the doom-and-gloom scenarios we predicted in March,” says Peyton Mason, CFO at Denver-based Laws Whiskey House. “With people learning to make cocktails, and purchasing whiskey to take home, our off-premise business has done much better than we would’ve anticipated.”

Like so many others, New York’s Finger Lakes Distilling had to shut down its tasting room when the pandemic hit in March. Even as the state has gradually reopened, “business is still lacking from bars and restaurants, particularly downstate, where things aren’t nearly back to normal,” says president and owner Brian McKenzie.

Since the tasting room reopened in June, “we’ve actually been pretty busy,” McKenzie notes, adding that the distillery’s location works to its advantage. “A lot of people are coming to the Finger Lakes because it’s been a relatively safe place right from the beginning—there haven’t been many cases of Covid here, you can hold tastings outside, and the weather has cooperated, so we’ve been pretty fortunate.” Whisky Advocate has the full story.—Zak Kostro

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