Together the Distilled Spirits Council of the US (DSCUS), the American Craft Spirits Association, the Kentucky Distillers’ Association and the New York State Distillers Guild all penned a letter to the US Senate, urging them to ‘move quickly’ to help distilleries.
In the letter, the association presidents said, “Across the United States, our member distilleries are doing their part to help prevent the spread of COVID-19 and ensure the health and safety of their workers and the public.”
“However, because of the necessary measures being undertaken, including the closures of restaurants, bars, and tasting rooms, many distillers will soon need to lay off employees and delay or reduce production. Many may even be forced to close their doors permanently.”
“As Congress moves swiftly to provide economic relief to affected businesses, we urge you to remember the important role of distilleries in your home states and across the country and their inextricable link to the hospitality, restaurant, tourism, and retail industries.”
A separate letter to the Senate brought together the American Craft Spirits Association, the Beer Institute, the Brewers Association, the American Cider Association, Wine America, the Wine Institute, the American Mead Makers Association and DSCUS. They also asked for relief for the wider alcohol industry.
"Collectively, the beverage alcohol sector proudly supports over 5.4 million jobs across the country and generated over $562bn in economic activity in 2018," they said.
"Absent relief, a large number of distilleries, breweries, wineries, and cideries may be forced to permanently close their doors as a result of COVID-19."
The government responds:
The US Senate has been meeting to discuss financial relief for many industries, and began a vote on March 22 in regards to a general trillion dollar-plus rescue bill. It's expected to be finalized early this week.
The bill could include $350bn for small businesses, individual checks for Americans, increased aid to states and hospitals, waivers for paid sick leave and a $250bn expansion in unemployment benefits.
Loan assistance and tax relief
Many larger alcohol companies are coming forward with donations to charity and offers to produce hand sanitizers to fill demand. But it’s the smaller companies that will be most affected in the economic recession caused by the novel coronavirus.
The entire supply chain of the alcohol industry is being impacted, including farmers, glass bottle makers, truck drivers and warehouse workers. To navigate through the crisis, the spirits associations are asking for four specific components to be a part of any relief package.
1. Provide federal excise tax relief
2. Ensure robust no- and low-interest loan assistance
3. Seek the suspension of tariffs on distilled spirits
4. Create an Industry Stabilization Fund
The beer, wine and cider associations are asking for a bit more out of the federal economic relief, like a stabilization fund of $5bn to provide cash advances to ensure businesses can pay their employees and to borrow against.
1. Expand unemployment insurance
2. Suspend payroll taxes
3. Provide federal excise tax relief
4. Provide robust no- and low-interest loan assistance
5. Create an Industry Stabilization Fund
6. Maintain an open commercial border
7. Seek the suspension of tariffs on beverage alcohol and their suppliers
State by state regulations
More letters have also been sent directly to certain state governors, pointing out the early action of other states. Alabama, Delaware, Maryland, New Jersey, New York and Texas are allowing bars and restaurants to sell distilled spirits for carry-out and delivery.
New York has also classified liquor and wine stores as an essential business, allowing them to remain open despite the state’s ‘shelter in place’ mandate. This is drawing criticism from workers, and sparking debate on what qualifies as essential during a pandemic.
In Maryland, the state’s comptroller is extending the alcohol excise tax filing deadline until June 1 for certain business returns, with due dates during March, April and May 2020. This will assist the state’s craft distilleries that are struggling.
In Texas, laws have been waived that prohibit trucks in the alcohol industry from delivering supplies to grocery stores. The governor is also working with small businesses like Texas distillers to qualify for the Small Business Administration’s Economic Injury Disaster Loans.
And California has declared that the state’s Department of Alcoholic Beverage Control is temporarily suspending enforcement of certain legal prohibitions.
Manufacturers and wholesalers (MW) may accept returns of alcoholic beverages from retailers; there will be an extension of credit between MW and retailers; and alcohol can now be sold to-go from authorized retailers in conjunction with meals.