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
- 48 states allow some form of distilled spirits tastings.
- 42 states allow tastings in bars and restaurants and 45 states allow tastings in retail stores that sell spirits for off-premise consumption. Also, 39 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
Cocktails To-Go – Boosting the Struggling Hospitality Industry
The hospitality industry – which represents tens of millions of jobs across the U.S. – has been one of the hardest hit during COVID-19. According to the National Restaurant Association, social distancing restrictions have caused a 78% reduction in restaurant sales resulting in an 86% reduction in jobs.
- In response, states across the country are allowing restaurants and bars to sell cocktails and/or spirits to-go. Innovative solutions like these are helpful in mitigating some of the economic effects of COVID-19.
- As governors consider re-opening their states, expanding measures like cocktails to-go will provide critical revenue to restaurants and bars necessary to rebuild their businesses.
- Currently, more than 33 states and the District of Columbia allow some form of to-go, pick up, or delivery of cocktails or distilled spirits from restaurants or bars. We believe this should continue.
- Arizona, Arkansas, Delaware, Florida, Georgia, Iowa, Kansas, Kentucky, Missouri, Montana, Nebraska, Ohio, Oklahoma, Oregon, Rhode Island, Texas, West Virginia, Wisconsin and D.C. have made cocktails to-go permanent since the onset of the pandemic.
- Several states including California, New Jersey, New York, Pennsylvania and others are also considering either extending or making these policies permanent.
MAINTAINING RESPONSIBILITY MEASURES WITH COCKTAILS TO-GO
- The distilled spirits industry is committed to responsibility and encourages moderation for adults who choose to drink alcohol. We strongly support effective laws and enforcement to stop impaired driving.
- Cocktails to-go are intended for home consumption. No one should ever consume alcohol while driving. Laws governing alcohol consumption must always be observed. We recommend that cocktails to-go be in sealed or secured containers to prevent consumption without removal of the lid.
- Restaurants and bars are continuing responsible practices including ensuring patrons have valid identification verifying that they are 21 years or older and prohibiting sales to intoxicated patrons, in accordance with existing laws.
- eTIPS Off Premise and Delivery provides delivery personnel with strategies and guidelines to protect against sales to underage and/or intoxicated customers. TIPS – (gettips.com) a nationally recognized expert in alcohol server training – has created A Guide for Alcohol Delivery and Carry Out (https://getti.ps/3c5V5aF).
States allowing cocktails to-go in response to COVID-19
Direct-To-Consumer Shipping of Spirits and Related Practices
Modern-day consumers want enhanced convenience when it comes to purchasing their favorite products, whether produced in-state, out-of-state or outside of the U.S. The world of commerce has changed and will continue to change dramatically – particularly in the wake of the COVID-19 pandemic. Markets must adapt to meet consumer demand. Wine direct-to-consumer shipping and the three-tier system have coexisted for more than a decade in many states. Direct-to-consumer shipping has, will and should continue to serve as an additional market access channel to the traditional three-tier system of alcohol beverage distribution. The number of distilleries and new distilled spirits products have skyrocketed in recent years. Since 2003, the number of distilleries in the United States has increased from 70 to more than 2,300. Increasingly, consumers want to have access to the new and exciting spirits products that often may not be available in their state.
STATES ALLOWING DIRECT-TO-CONSUMER SHIPPING OF SPIRITS AND RELATED PRACTICES
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.