State Issues & Market Modernizations

Spirits Tastings—Critical Marketing Tool for the Distilled Spirits Sector

There are over 5,000 brands of distilled spirits on the market in the United States, with hundreds of new brands entering the market each year. Tastings -small samples of distilled spirits- are an extremely effective way to encourage adult consumers to “try before you buy,” compare, and ultimately choose, new products. Learning more about the numerous types and brands of distilled spirits products is an important way to market new products before consumers are interested in paying for a full-sized premium product.

Most States Currently Allow Some Form of Distilled Spirits Product Tastings

  • 46 states allow some form of distilled spirits tastings.
  • 42 states allow tastings in bars and restaurants and 41 states allow tastings in retail stores that sell spirits for off-premise consumption. Also, 37 states allow consumer spirits tastings at both on- and off-premise establishments.

Product Tastings are a Traditional, Responsible Marketing Tool

  • Tastings are a customary and longstanding means to feature a brand or product.
  • States that permit tastings usually limit the size and number of sample tastings and, of course, prohibit illegal underage consumption.
  • States have not reported abuse, social consequences or enforcement problems related to laws that permit limited beverage sampling.
States allowing consumer tastings of distilled spirits

Fighting Hospitality Taxes

The Distilled Spirits Council works closely with other suppliers, wholesalers and retailers to oppose all state and local alcohol and hospitality tax increases. Responsible consumers of distilled spirits already pay more than their fair share. The current taxation scheme in almost every state includes a federal excise tax, a state excise tax and significant state and local licensing fees imposed on retailers (bars, restaurants and liquor stores). Some municipalities will add additional local excise taxes on alcohol products as well. When these taxes and fees are piled one upon the other this results in nearly 50 percent of the retail price of a typical bottle of distilled spirits going toward a tax or fee of some kind in most states.

There is a wide disparity in alcohol tax rates at the state level, with spirits being taxed nearly two times higher than table wine and nearly three times higher than beer. States should be in the business of picking economic winners and losers. These discriminatory tax rates put spirits at a competitive disadvantage vis-à-vis beer and wine. In the end, this hurts spirits consumers.

Taxes on beverage alcohol are taxes on the hospitality industry and, unfortunately, retailers have little choice but to pass the higher tax rates along to consumers in the form of higher prices. Proposals to increase state and local taxes have a number of negative impacts to the consumers, citizens, taxpayers and voters:

  • Prices will go up. Retailers – both on-premise and off-premise – will have no choice but to raise prices to pay for the increased taxes.
  • Sales will go down. People react to higher prices, and state and local tax increases most often lead to lost sales. If a state has significantly higher taxes than its neighboring states, they are at a competitive advantage in the beverage alcohol market and consumers may choose to make their purchases across state lines.
  • Jobs will be lost. A significant loss in retail sales means a decline in economic activity, and hospitality jobs are put at risk.
  • Excise taxes are inefficient taxes. The best tax policy is one that applies to the widest possible base at the lowest possible rate. Excise taxes are narrowly focused on one product and penalize a significantly lower base.
  • Raising alcohol taxes simply penalizes more than 100 million responsible beverage alcohol consumers, while doing nothing to deter abusers.