Craft distillers Nationwide, distilling input costs are higher due to inflation and looming tariffs on American whiskey, according to Chris Swonger, CEO of the Distilled Spirits Council (DISCUS).

“Consumers are always willing to spend a little more for that special bottle of spirits, but they are feeling the pinch in their wallets and are much more price conscious with their reduced discretionary dollars,” Swonger told FOX Business.

For the first time in more than a decade in business, Jeff Quint, founder of Cedar Ridge Distillery in Swisher, Iowa, said he won’t see double-digit sales growth. This year, he expects sales to his distributors to be stable.

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“This is new to us,” Quint said.

Meanwhile, Sonat Birnecker Hart, founder of Koval Distillery, told FOX Business she has faced “a road full of pitfalls and challenges since 2018.”

Koval Distillery in Chicago, Illinois. (Koval Distillery)

Birnecker Hart said her distillery, which still hasn’t reached pre-pandemic levels of growth and speed, has seen a “decline in business” over the past year – which she said , has been observed across the industry.

“We’re in the celebration business… But right now we’re seeing fewer things to celebrate.”

– Sonat Birnecker Hart, founder of the Koval distillery

But “as a craft brand, we see this in a very dramatic way. Keep in mind that we are still competing with very large legacy brands that have a lot more money for marketing,” she said. added. “The whole craft industry has had a lot of problems related to this.”

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She worries not only about falling demand, but also about potential tariffs on American whiskey exports to Europe and a possible increase in liquor taxes proposed by Chicago Mayor Brandon Johnson , in its 2025 budget.

“We’re not celebrating right now…we’re in the celebration industry. We’re celebrating local agriculture and local crafts,” Birnecker Hart said. “But right now we see less reason to celebrate.”

Sonat Birnecker Hart, founder of the Koval Distillery in Chicago, Illinois. (Koval Distillery)

Swonger described the pandemic as an “extraordinary time” for the industry, as consumers found themselves with more discretionary income for small luxury products due to stay-at-home orders and other restrictions. Many of them chose to “treat themselves by purchasing premium spirits products, building their home bar and exploring different spirits categories,” Swonger said.

Today, Swonger noted that the industry is beginning to normalize after “a period of phenomenal sales growth.”

“Consumers have reduced spending due to rising inflation and interest rates and retailers have slowed restocking by reducing inventory buildups that occurred when consumer demand increased,” a- he declared.

Sales of spirits suppliers grew twice as fast as before the pandemic in 2020 and 2021, according to DISCUS data.

Currently, volume sales of tequila are up more than 5%, while most other categories, including American whiskey, cordials and vodka, are down less than 2%. Categories such as brandy, cognac, rum and gin are down around 4%.

Sales from spirits suppliers grew twice as fast as before the pandemic in 2020 and 2021, according to the Distilled Spirits Council. (iStock/iStock)

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Besides falling sales, Swonger also warned that distillers could face additional challenges in the near future, including the potential return and doubling of European Union retaliatory tariffs on American whiskey by end of March 2025.

EU tariffs on American whiskey have been suspended in 2022, paving the way for a more than 60% increase in American whiskey exports to the European Union.

If these prices If they came back, they would reverse this “much-needed rebound in U.S. spirits exports,” Swonger said. He said a 50% tariff on American whiskey in the industry’s largest export market would be “a devastating blow” at a time when U.S. spirits sales have slowed.

A bright spot in the industry, however, has been the strong growth in spirits-based ready-to-drink products, which offer consumers lower-alcohol options, and the growing interest in low- and no-alcohol products.

According to DISCUS data, volume sales of cocktail and spirits ready-to-drink products continue to grow robustly, with spirits-based ready-to-drink products growing approximately 15%.

One of Ventura Spirits’ products, Angeleno Spritz, is a ready-to-drink twist on the classic Aperol Spritz. (Ventura Spirits)

Henry Tarmy, who co-founded California-based Ventura Spirits 10 years ago, is capitalizing on changing trends, which has helped the company avoid declining sales.

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“There are some categories that are bright spots, even in a tough climate for alcohol,” Tarmy told FOX Business.

The Ventura Spirits team, based in Ventura, California. (Moira Tarmy)

Among its extensive portfolio, Tarmy has noted an increase in demand for the company’s bottled amaro. He said there is also strong demand for Angeleno Spritz, a ready-to-drink twist on the classic Aperol Spritz.

Tarmy said the company’s strategy was to identify the positives and “make sure we adjust accordingly.”