TXWA/TDSA Joint Letter: Request for Expanded Sales Options

Thank you for your recent tweets recognizing the work Texas distillers have done to help their communities during the COVID-19 pandemic by producing and donating hand sanitizer. Texas distillers have donated over 120,000 gallons of hand sanitizer to first-responders and front-line health care workers in their communities thus far. This production has added over $4 million in costs to their businesses at a time when they are also experiencing an 80 percent overall loss of revenue from the closures of their tasting rooms and limited sales at bars, restaurants and package stores.

On behalf of the Texas Distilled Spirits Association, the Texas Whiskey Association and the 160 distillers in this state, we write today asking for relief for the unprecedented losses our industry has experienced because of COVID-19.

As mentioned in our previous correspondence, many Texas distilleries rely heavily on sales made through their tasting rooms. Texas law prohibits a distiller from selling an individual more than two bottles every 30 days. Typically, hundreds of visitors visit tasting rooms every month and purchase bottles. Texas distillers have experienced a 62 percent loss of revenue since shelter-in-place and social distancing orders have limited tasting room sales to curbside pickup only by neighbors and local community members. The bottle limitation and the 30 day restriction make it impossible for distillers to generate significant sales from their distilleries.

We ask that you suspend Texas Alcoholic Beverage Code § 14.05(c) so distillers can sell more of their products to those who still visit their distilleries. Distillers estimate that lifting the two bottle and 30 day restriction will increase curbside sales by 35 percent and allow them to re-hire staff to conduct these additional sales.

Additionally, we ask that you suspend Texas Alcoholic Beverage Code § 14.05 (d), (e) and (f), which would allow Texas distillers to ship and deliver their products to consumers by removing the requirement that a consumer must physically be present and show an ID at the distillery to obtain the spirit. Compared to today, distillers will see an estimated 21 percent increase in sales if they are allowed to deliver products to consumers within the county where their distillery is located. They could

see a 48 percent increase in sales if they are allowed to ship directly to consumers. Opening these sales channels to distillers—as has been recently done in four other states—will give Texas distilleries an opportunity to maintain their businesses.

COVID-19 has had a major economic impact on Texas distilleries. Even if the bottle cap and restrictions on direct sales to consumers are waived, Texas distilleries still anticipate at least a 30 percent direct loss of sales. In an industry as new as ours, even these losses could force some distilleries to close. However, easing these restrictions will give Texas distillers a fighting chance to remain in business.

Thank you for your consideration of this request.

Signed