Anyone who is involved with the liquor world knows how the lack of access to DTC markets is hurting distillers across the country. Outside of the statistics, all it takes is talking with a distiller or two to get the gist of this.

Jake Emen’s piece in Food and Wine sheds light on the grave state of the industry. The article focuses on the difficult path small out-of-state distillers face in trying to enter different markets. According to the article only 6.9% of small producer’s sales derive from out-of-state markets. For large producers this number represents 69.1% of their sales.

It is clear from the evidence small producers do not maintain adequate access to out-of-state markets. Without being able to access these markets, there is very little room for growth.

The American Craft Spirits Association (ASCA) wrote a piece in response to Jake Emen’s Food and Wine Article, “U.S. Craft Distilleries Are in Crisis”.

In their response, ASCA provides some chilling facts and figures. Since January 2023, 49 craft distillers closed their doors and the closures accelerated in 2024.

ASCA provided evidence that their membership faces almost insurmountable problems with the wholesaler tier of the industry. According to ASCA, 72% of their members seek distribution in more than one state. 51% have been turned down, 22% have given up looking. And 79% indicate that there is no viable alternative to their current distributor.

With no alternative, small producers are stuck with a wholesaler that could radically underperform and maintain unbelievable leverage over the small distiller. Negotiating leverage not only allows distributors to take high margins in the 25-30% range, it can lead to a small producer making substantial payouts to get out of a bad distribution contract.

ASCA has requested greater access to out-of-state markets through DTC shipping and a greater ability to sell directly to retailers.

Seems logical that the small producers would want greater access to markets as this will lead to greater sales.

And then here comes WSWA responding to ASCA by maintaining it is not them the wholesalers who are at fault, it is the economy stupid. And that wine DTC sales have fallen and the liquor industry is taking a hit. And this trend demonstrate that this drop off shows that there will be no significant growth in DTC sales for spirits.

WSWA makes the same tired DTC flawed studies argument to show how DTC will lead to a tsunami of underage drinking. I have refuted much of this evidence in prior posts so I won’t belabor the point. Also, they don’t acknowledge that brick-and mortar retailers fail in compliance checks around 10% of the time. Are they looking to close them down, or is it okay since it goes through the three-tier system?

Finally, their piece allows WSWA, although fighting the privileges to permit small producers access to different markets and the potential for great growth, to brag about how they have made substantial contributions to small brands coming to the market and it is them that has helped small producers gain access to the marketplace.

WSWA’s piece attempts to create red herrings and espouse opinions disguised as facts.

Yes, the economy is not great, but it is especially not great if you can’t maximize your sales and can’t get access to different alternative markets. It is especially not great when 51% of small producers are turned down when they want to expand in the only channel available for them to sell into a state. It is especially not great when there is only one option for entering a marketplace.

Instead of looking at the economy, the industry should look at how we handle the “especially not great” problem.

WSWA alludes to falling wine sales as a reason DTC won’t have a major impact. What they won’t tell you is the number of wineries has doubled since Granholm, and that if winery DTC shipping was shut down, then a good amount of these small wineries would either close down completely or significantly reduce their production according to SOVOS.

WSWA will also not share that allowing spirits shipping and direct-to-retail sales, would permit a distiller to gain access to markets they would never enjoy access to.

WSWA brags about their hand in making the diverse array of products, is that really the case? Or did brands grow in the wine industry because of the Granholm decision, or did spirits producers grow because small spirits producers could vertically integrate? Neither of which WSWA supported.

What we are actually witnessing is large wholesaler interest becoming the grim reaper of small brands. ASCA’s stats don’t seem to lie about closings and from the people in the know about the reasons for closings, market access blocked by wholesaler interest is the top reason.

The “especially not great” problems still exist, as an industry we need to start dealing with this, because at the end of the day, we are bigger than just one tier!