As 2020 nears its end the fate of many craft spirits distilleries as well as restaurants, bars, and other on-premise establishments are at risk of closing. These businesses and the entire hospitality industry has been devastated by Covid-19 work force reductions and a loss of business as people stay at home.
In a letter sent to Missouri’s congressional delegation, trade associations representing 36 distillers throughout the state urged Congress to provide additional economic relief to distilleries facing enormous financial hardship due to the impact of COVID-19. The letter was signed by Chris Swonger President and CEO of the Distilled Spirits Council of the United States – DISCUS and Don Gosen President Missouri Craft Distillers Guild President and Co-Founder Copper Mule Distillery.
The leaders of both associations noted that Missouri’s distilled spirits industry had been thriving prior to COVID-19, supporting more than 29,000 Missouri jobs and $2.9 billion in economic activity in 2018.
Some Distillers Facing Decision to Close Doors Permanently
“Today, because fewer Americans dine and drink outside of their homes, travel, or attend large events, distilleries across the state have lost sales at an enormous rate,” the industry leaders stated.
“Due to the impact of the pandemic, many distilleries in Missouri have been forced to furlough or lay off employees and some are facing the hard decision of whether to close their doors permanently.”
The leaders urged Congress to act swiftly to enact further measures that provide liquidity and certainty to distillers who have seen sudden and steep declines in sales with the closure of distillery tasting rooms, restaurants and bars.
According to a survey of craft distillers by DISCUS and the American Distilling Institute – ADI, two-thirds of respondents do not believe they will be able to sustain their businesses for more than six months.
43% of Distillery Employees Already Let Go or Furloughed
The survey, which included feedback from 118 distilleries across 35 states and the District of Columbia, found that approximately 43 percent of distillery employees have been let go or furloughed since the start of the COVID-19 crisis. The average distillery respondent had almost 14 employees before the COVID-19 crisis and has let go nearly six employees.
In the letter, the association leaders specifically urged Congress to support the recovery of distilleries as well as restaurants, bars and other on-premise establishments by:
- Pass the Craft Beverage Modernization and Tax Reform Act (S. 362/H.R. 1175) – This Act which includes a critical tax cut for craft distillers. Craft distillers across the United States will face a 400% increase in their federal excise taxes in January 2021 if Congress does not act by year’s end.
- Support the RESTAURANTS Act – The Act provides grants to eligible establishments for payroll, benefits, mortgage, rent, utilities, and other expenses and is a critical step forward for the recovery of the hospitality industry.
- End Tarriffs on Distilled Spirits – The EU tariffs, which have been in place since June 2018, have had a devastating impact on our American Whiskey exports, including from Missouri distillers, resulting in a 41 percent decline from $757 million (July 2017 to June 2018) to $449 million (August 2019 to July 2020). The EU may impose new tariffs on other U.S. spirits in the coming weeks if these trade disputes are not resolved soon.
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“We are extremely proud that more than 13 small, medium and large distilleries across Missouri did their part to prevent the spread of COVID-19 by transitioning to produce hand sanitizer, but they will continue to need the help and support of Congress for months to come,” the leaders added.
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