Good News, Bad News: Distilled Spirits Council Releases 2020 Economic Report

While the coronavirus pandemic that took over the world in early 2020 brought with it human suffering and death, it also brought plenty of economic suffering, and the hospitality industry was one that was hit hard.

Combined with international trade tariffs that offered a completely separate challenge to the spirits industry, and hospitality as a whole took a serious hit, with many restaurants, bars and other small businesses closing, some temporarily and some permanently as consumers were essentially glued to their couches for months on end.

The Distilled Spirits Council of the United States, in its annual economic report, reported, however, that the U.S. spirits industry experience solid growth in 2020. Giving credit to many state leaders for swift action to legalize sales avenues such as delivery and cocktails to go, DISCUS reports that supplier sales in the United States were up 7.7 percent in 2020 to a total of $31.2 billion, while volumes rose 5.3 percent to 251 million 9-liter cases. Overall, total beverage alcohol sales by volume grew 3 percent.

Theoretically, the report suggests, those stuck-at-home consumers chose premium spirits as “affordable luxuries.”

DISCUS also reported that spirits gained market share over beer and wine for the 11th straight year, with sales rising 1.3 points to 39.1 percent of the total beverage alcohol market, with each point of market share worth $800 million in supplier sales revenue.

The goal now is to keep as many of these sales drivers permanent once the virus is defeated.

“Tariffs and the pandemic left a wake of destruction in the hospitality industry in 2020,” DISCUS President and CEO Chris Swonger said in a news release. “Permanently enacting marketplace modernizations introduced in response to COVID-19, from online delivery to cocktails-to-go, will aid in the recovery of restaurants, bars and craft distilleries.”

Unfortunately, DISCUS Chief Economist David Ozgo said in the report that the pandemic had a lopsided impact on hospitality businesses resulting in strong off-premise sales at liquor stores vs. weak on-premise sales amid nationwide restaurant and bar closures and restrictions.

He said off-premise sales were up 18 percent; on-premise sales were down 44 percent; and sales at global travel retail (duty free) outlets dropped to nearly zero. Additionally, at the start of the pandemic in April, U.S. restaurants and bars lost 5.8 million jobs – almost one out of every two jobs, according to the U.S. Bureau of Labor Statistics. Through December 2020, 2.3 million jobs have not been recovered.

Meanwhile, a new survey of COVID-19 impacts on craft distilleries by DISCUS and the American Distilling Institute, found that 36 percent of craft distilleries reported a total revenue decline of 25 percent or more in 2020.

DISCUS already has issued a plea for the Biden administration to immediately lift tariffs which have led to trade disputes and harmed American spirits exports, which is has been a gutting issue for U.S. distilleries.

“Hospitality businesses on both sides of the Atlantic have been decimated by the global pandemic, and these tariffs are a significant and unnecessary drag on their recovery,” LoCascio. “We are hopeful the Biden administration will clearly recognize the widespread damage being caused by the escalation of these trade disputes. We urge the U.S., EU and UK to make it a priority to immediately suspend these tariffs.”

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