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LOUISVILLE, Ky. (AP) – For five months, no rum has been flowing for visitors to Jaime Windon’s distillery in Maryland, causing a crucial portion of their revenue stream to flow. Windon’s tasting room remains shut down by the coronavirus, another victim of the pandemic’s devastating impact on the world economy.
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Like other craft distillers, Windon Distilling relied heavily on sales people who wanted to learn a little about making spirits, sampling the products, and taking a bottle or two home. But small, independent producers – who have cut a visible niche in the country’s spirits sector – have been hit hard by the COVID-19 outbreak, according to a new study.
The Distilled Spirits Council of the United States found that national, artisanal distillers will estimate 41% of their sales – worth more than $ 700 million – will evaporate due to the pandemic.
The distillers accounted for nearly one-third of their employees, the study estimates.
Windon, whose flagship is Lyon Rum, had no revenue at the end of March in the distillery she set up on the Eastern Shore of Maryland seven years ago. She carried out most of her staff, but has since brought back most of her full-time workers, although she only has 50% staff with the rehearsal room still closed. She was able to reopen the rehearsal room – which averaged about 500 visitors a week – but chose not to do so in part due to space constraints.
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“If people had told me earlier this year that I would have to close my rehearsal room for five months, I would have told you we were going to leave the company,” Jaime Windon said in an interview.
It continued to thrive through its wholesale business, after developing a strong core business in Maryland and a broader distribution network that reached eight other states.
“We can produce,” Windon said. “But we do not meet the hundreds of people a week in our distillery as we once were. That’s the hardest hit and it’s the biggest change for us. ”
Craft distillation has grown in the shadow of corporate giants producing well-known brands such as Jim Beam and Jack Daniel’s Tennessee Whiskey. In the world’s bourbon capital, Kentucky craft distillers have their own bourbon trail in a state that cultivates whiskey tourism.
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Nationwide, craft distillation grew into nearly $ 1.8 billion in 2019, directly employing around 15,000 people and indirectly supporting thousands of jobs in related businesses, according to the study. At retail, these sales are worth nearly $ 3.2 billion, it said. About 60% of artisanal distillers sell less than 2,500 cases per year and 70% employ 10 or fewer workers.
But because of their size, artisanal distillers are not as well capitalized as the large producers, making them more vulnerable to economic downturn.
The study by the Distilled Spirits Council was based on data from a June 2020 survey by the American Distilling Institute, a trade association for artisanal distillers. The survey included feedback from nearly 300 distilleries across the country.
It found that COVID-19 restrictions discouraged the sale of on-site tasting rooms at distilleries.
About 40% of craft distillers who participated in the survey reported that their sales on the site were 25% or more, the study found. More than 15% said their tasting rooms were closed,
Combining lost tasting room sales with lost large-scale business means craft distillers are projected to lose $ 700 million in annual sales – a loss of 41% of the total craft business, the study said. In 2019, an estimated $ 919 million in revenue for craft distiller came from on-site sales.
More than 40% of craft distillers reported that their wholesale business was down 25% or more, while 11% said they had lost all of their wholesale business, the study said. Most of the lost wholesale business was due to closures of sheds during the pandemic, it said.
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The distilling sector has sought additional economic relief from Congress, including pushing for a bill that would make current federal action tax rates permanent. Without the measure, the sector says that craft distillers will receive a large tax increase next year.
Windon, the CEO at Windon Distilling, said she is confident that craft distillers will weather the storm, but worries that it may take time to recover the losses. She wonders how quickly some people will return to tasting rooms, and whether artisan producers can maintain their market share.
‘How does it look on the other side? Will those hard-earned spaces on the shelves of liquor stores be lost? Because it’s harder to sell a craft, unique product, ”she said.
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