It is safe to say that a 25% decrease in any industry would sound off troubling warning signs. To me it’s a code red and all hands need to be on deck to find a solution.

A recent report from the American Craft Spirits Association (ACSA), 2025 Craft Spirits Data Project, portrays an industry facing a troubling trend. [1] In little more than a year’s time, the number of active craft distillers has fallen by 25.6%, and in California, the largest market, the news is even worse with a 45% decrease in the number of active craft distillers.

The spirit’s industry is not alone in suffering a downturn in fortune, as beer and wine have faced headwinds. But these numbers are staggering and speaks to an ailing industry in need of solutions.

The spirits industry in particular is handicapped by access to markets. Unlike wine, where a winery can direct-to-consumer (DTC) ship to 48 states, a craft distiller does not maintain access to out-of-state markets. With their brands not being known across the country, a small brand is not going to create enough market penetration which would entice a wholesaler to take on their product.

The only realistic way for small craft distillers to sell out-of-state would be through DTC shipping.

Anyone who knows the industry, knows the obvious. A distributor in one end of the country will not take on a niche brand from the other end of the country, because economically it does not make sense for them. And with the number of wholesalers shrinking, the ability to get a small producer’s product to market is harder. This is just not me saying this, the U.S. Treasury study concluded the same thing.

But the necessary market access via DTC shipping to help the ailing industry is being fought by none other than the Wine and Spirits Wholesalers of America (WSWA).

In California, which is the largest U.S. market by far, out-of-state distillers will gain DTC access to the California market. However, this bill is short lived and sunsets on January 1, 2027.

In fighting enhanced market access, WSWA relies on their own biased study showing that 72% of all moms are worried about DTC shipping, and that there is the likelihood of increases of potential counterfeit or illicit sales.

It would seem odd that counterfeit product would come directly from a manufacturer shipping its own product. I am not sure what interest a distiller would have in shipping a consumer illicit or counterfeit product instead of its own product?

At the end of the day, WSWA’s only justification for fighting is they want a slice of the pie, but they are asking for a slice of the pie they don’t even eat from. The distillers that will benefit from this market are small ones, WSWA members for the most part don’t service these accounts as national accounts.

Will California DTC shipping access be a panacea for what ails the spirits industry, probably not in the immediate future, but California allowing interstate shipping will allow other states to follow suit and create a national market for small producers similar to what Granholm did for wineries. If I had a dollar for every winery that has told me that DTC shipping during COVID saved their business, I would be a rich man!

Since Granholm, driven by the growth of DTC shipping, the number of wineries in America has doubled. I can’t predict the same for small craft distillers, but I know one thing, clearly the present stoic three-tier system is not working for them, and needs reform. Better and greater market access is a start to helping turn around an ailing industry, or we can maintain the status quo and watch the industry shrink.

[1] https://www.thespiritsbusiness.com/2025/10/us-craft-distillery-numbers-drop-25/