space and distribution opportunities as those new DSPs continue to expand. Adding in the next five states to the mix highlights that 15 states represent over 50 percent of the number of active craft distillers. The stills are ablaze in the West and South, with over 60 percent of total craft DSPs operating there. As reported in Forbes earlier this year, Sageworks (a data resource entity for privately-held companies) indicated beverage manufacturing is among the fastest growing industries, expanding by 17.1 percent over the past year. With signs of direct reinvestment from the reduction in the FET, craft spirits will continue to play a role in alcohol beverage growth. Respondents to this data study confirmed that close to 95 percent of FET savings are being used to purchase new equipment and/or hire new staff. Looking at the craft spirits industry as a whole, almost half of the overall business takes place in the home state, while slightly under 8 percent is generated by the export market. With tariffs and the threat of continued trade wars looming, U.S. craft spirits exports remain highly uncertain with a difficult forecast for next year. Of special note is the number of full-time employees within craft spirits distilleries. The number is on the rise from an average of 7.6 employees per distillery in 2015 to more than 10.1 in 2017, representing a 38.2 percent increase. Currently, there are over 18,000 employed, not considering the ripple effect on other segments of the industry, such as transportation, hospitality, and manufacturing of the supplies needed to support the craft spirits industry.
With the uncertain status of continued FET reduction beyond 2019, most DSPs will find it difficult, if not impossible, to project a solid business plan. Is it possible that the excise tax could revert from $2.70 to $13.50 on the first 100,000 proof gallons removed from bond? Sadly, yes. As a reminder, that tax relief is due to sunset on December 31, 2019 unless Congress acts favorably to extend. Would the economic health of this industry suffer? Most certainly it would. For that very reason, it is imperative that every distiller make his or her voice heard if the craft spirits industry wishes to continue to grow and remain economically viable and strong. There is strength when efforts are joined. Moreover, securing permanent tax relief is only one step in the journey ahead for our burgeoning sector. ACSA supports this annual economic data study, evaluates trend impact analysis, employs horizon scanning, and conducts DSP surveys to ensure it fulfills its mission: “To elevate and advocate for the community of craft spirits producers.” The only possible benefit from an economic decline in the craft spirits industry would be a reduction in TTB’s processing time for DSP permits, formula or label approvals. For now, let’s celebrate the overall economic success of American craft spirits and work forward from this unprecedented growth in 2017.
Margie A.S. Lehrman is Executive Director of American Craft Spirits Association. Visit www.americancraftspirits.org for more information on ACSA and to join.
LEARN FROM THE EXPERTS
Whether you’re looking to grow your own knowledge or to level-up key employees, Moonshine University has a class for you: From intro-level distilling to the advanced intricacies of aging, our courses are fast paced, in-depth, and hands on. Take a week class or a one day seminar and join the ranks of our alumni, who own & operate over 150 distilleries around the world.
The magazine for craft distillers and their fans.