Over the past two years, the market for spirits-based ready-to-drink (RTD) products has grown tremendously. Spirits-based RTDs – known to some as “canned cocktails” – are products made with distilled spirits that can be single-serve and portable.

This market for spirits-based RTD products that are 10% ABV and below is growing at a rate of more than 250% annually as many adult consumers have become interested in recreating the cocktail experience at home.

Distilled spirits producers of all sizes are joining this growing market. In a 2021 DISCUS survey, 45% of craft distiller respondents reported they are actively producing spirits-based RTDs and an additional 20% plan to do so.

However, approximately 62% of craft distillers not producing spirits-based RTDs or soon-to-be producing spirits-based RTD surveyed by DISCUS identified the federal excise tax (FET) rate as a barrier to entry.

Consider at 5% ABV, the base FET rate on spirits-based RTDs is more than twice the malt- and sugar-based RTD FET rate:

5% ABV READY-TO-DRINK PRODUCTS AND THEIR BASE FEDERAL EXCISE TAX RATES

Congress can help distillers looking to enter the RTD market by addressing the FET discrepancy on these products.

The U.S. distilled spirits industry is highly regulated. The Alcohol and Tobacco Tax and Trade Bureau (TTB) within the Department of Treasury approves distillers’ permits and product labels and establishes other industry standards.

The COVID-19 crisis has significantly impacted distilled spirits producers. Over 800 distilleries across the country stepped up to produce hand sanitizer during the pandemic.

As fewer Americans dined or enjoyed a cocktail out, traveled, or gathered for events, craft distillers experienced a 41% decline in revenue and have furloughed or laid off 31% of their employees in 2020. Restaurants, bars, and others within the hospitality industry have experienced heavy losses during the pandemic and continue to face an uncertain future.

Additional economic relief is necessary to ensure that distilleries, restaurants, and bars weather this challenging time. DISCUS urges Congress to replenish the Restaurant Revitalization Fund and support the recovery of the hospitality industry.

Direct-to-consumer shipping serves as an important complement to the traditional three-tier system of beverage alcohol distribution. The USPS Shipping Equity Act (H.R. 3287/S. 1663) would enable the USPS to ship beverage alcohol products where direct-to-consumer shipping is permissible by law. This legislation would generate an estimated $180 million in revenue annually for the USPS while supporting small businesses and consumer choice alike. Importantly, this legislation provides for regulations that will allow the USPS to safely delivery beverage alcohol products to adult consumers with appropriate ID checks and verifications in place.

For additional information:

• FACT SHEET: About the Distilled Spirits Industry (2022)
• U.S. Postal Service Shipping Equity Act Letter of Support to Congress (May 2021)
• COVID-19 Relief Advocacy Resources
  • FACT SHEET: COVID-19 Economic Relief For Distillers (updated: May 3, 2021)
  • FACT SHEET: Restaurants Revitalization Fund Fact Sheet (updated: April 28, 2021)
  • Coalition Letter to Congress on Industry Relief (March 2021)
  • DISCUS Letter to the House Small Business Committee on Paycheck Protection Program (PPP) (March 2021) 
  • DISCUS Letter to House Small Business Committee on Paycheck Protection Program (PPP) (March 2021) 
  • Comment to the Small Business Administration on Paycheck Protection Program (PPP) Loan Forgiveness (March 2021)
  • Coalition Letter to Congressional Leadership Urging Inclusion of Restaurant Relief in Budget Reconciliation (February 2021)  
  • Beverage Alcohol Coalition Letter to SBA on Extending Relief for NAICS Code 72 Businesses to Distilleries with Tasting Rooms (February 2021) 

The Distilled Spirits Council Political Action Committee (DISPAC) has promoted the election of pro-business candidates across the United States since 1993. DISPAC exists to help fund the races of candidates and incumbents on both sides of the aisle who support distilled spirits producers and importers. Your voluntary contributions are critical to our role in the political process and have helped us establish our strong political backbone for decades.  The threat of taxation and additional regulatory burdens are always looming so please consider joining our efforts today!  To learn more about DISPAC, contact Kelly Poulsen at [email protected].

Spirits United is a community of advocates united with a common goal to ensure adult consumers can enjoy distilled spirits where they want, how they want, and when they want. Spirits United brings together professionals in the distilled spirits industry, partners, customers and consumers.