Jake Emen’s recent article “U.S. Craft Distilleries Are in Crisis” ignores the realities of today’s challenging spirits marketplace in favor of an overly simplistic and factually inaccurate argument that the distribution tier is to blame for recent craft spirits decline. Below Wine & Spirits Wholesalers of America (WSWA) sheds light on the broader economic conditions of today’s market and correct the most glaring inaccuracies:
Market Conditions vs. Industry Challenges
The challenges faced by large and small wine and spirits brands are fundamentally tied to broader economic conditions. Consumer purchasing power has been significantly impacted by inflation, rising costs of living, and economic uncertainty. When consumers are financially strained, discretionary spending—such as craft spirits—naturally declines. It is overly simplistic to attribute the current craft spirits market decline solely to distribution issues without acknowledging the pivotal role of broader economic factors.
Direct-to-Consumer Sales: Not a Silver Bullet
The article posits that direct-to-consumer (DTC) sales could be a panacea for the craft spirits industry’s woes. However, data shows that DTC sales in the wine and spirits sector have been declining year over year. This trend suggests that consumer interest and purchasing power are not strong enough to support significant growth through DTC channels alone. The assumption that opening this channel would single-handedly resolve the industry’s struggles is unfounded.
To learn more about the economic pitfalls and the health and safety risks associated with DTC alcohol shipping visit https://www.wswa.org/DTC-know-the-whole-story.
A Global Market Slump
It’s important to recognize the downturn in the wine and spirits marketplace is a global phenomenon, not just confined to the U.S., as WSWA’s SipSource Forecasting Report predicted accurately in the beginning of the year. Even well-established spirits categories with extensive resources are experiencing declines and cannot simply “spend their way” out of this slump. This indicates that the issues are systemic and not merely a result of distribution constraints or regulatory frameworks within the U.S.
The Role of Wholesalers and Market Support
The article’s critique of the wholesale tier overlooks its substantial contributions to bringing craft brands to market. Wholesalers have expanded their portfolios to include a diverse range of craft products, providing crucial support and market access to many small producers.
To download WSWA’s Access Craft Distribution Playbook visit https://www.wswa.org/access-distribution-playbook.
The article claims consolidation is why there are only three “national” wholesalers (in fact there are no “national” wholesalers, though three companies approach this designation). But the author fails to recognize that two decades ago there were no wholesalers that served even close to a national market. New market entrants sought distribution through individual state-by-state partnerships. That remains an option today, with a range of small, mid-sized and large distributors in most markets. But today, brands also have the chance to find multi-state players, increasing options in the market.
Blaming wholesalers for the industry’s challenges is shortsighted. The focus should instead be on how the entire supply chain, including wholesalers, can adapt to changing market conditions and support each other in navigating economic pressures.
Industry Unity Over Finger-Pointing
During times of economic stress, it’s natural to seek causes and solutions for declining sales, but finger-pointing and divisive rhetoric only serve to fragment the industry further. Instead, all three tiers of the industry need to band together to find collaborative solutions that address the economic realities affecting consumers. By working collectively producers, distributors, and retailers can better weather the storm and prepare to thrive when consumer spending rebounds. Deregulation serves only to feed future problems with much higher costs and consequences.