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TXWA and TDSA Seek Regulatory Parity Amidst COVID-19 Financial Losses

The association will serve as the standard bearers for the definition of “Texas Whiskey”

Today, TDSA and TXWA submitted our 3rd letter to Governor Abbott’s Office requesting emergency statutory relief on a series of regulations that are severely limiting the ways in which Texas distilleries are allowed to sell their products to consumers. Texas distillers are facing 80% or higher losses in sales since COVID-19 social distancing and shelter-in-place orders have been implemented. Both organizations have requested that certain limitations on distillers be temporarily lifted so that their product can more easily reach their consumers at this time. Lifting these restrictions would put Texas distillers in parity with options enjoyed by other segments of the Texas alcohol industry. We look forward to hearing something soon from the Governor’s Office.

The full text of the letter is below.


Dear Governor Abbott,

Thank you for your leadership in protecting Texans from COVID-19. We understand the public health necessity in closing restaurants, bars and tasting rooms, however these closures have left Texas distillers with serious financial concerns.

Social distancing and stay-at-home orders have forced distillers to close their tasting rooms and limited the amount of Texas spirits that can be sold in our state. Since the social distancing and closure requirements were put in place, distillers throughout Texas are estimating 80 percent losses in total sales. Tasting room sales alone are down 90 percent, with an average loss of over $76,000 per month. At a time when many distilleries have transitioned to producing much needed alcohol-based sanitizers, we fear that these persistent financial losses will force many Texas distillers out of business.

On behalf of the 160 distillers throughout the state, we urge you to provide relief for these important businesses. The following measures will help Texas distillers during this economic hardship:

  1. Temporary waiver of the 30 day limit. We request flexibility in the number of bottles that can be sold at a distillery. Texas distilleries are limited to selling two bottles to the same individual every 30 days. Distilleries have loyal customers who want to help ensure their favorite distilleries remain open by purchasing more than two bottles every month. We ask that you waive the 30 day requirement to allow an individual to purchase more bottles during this public health pandemic.
  2. Lift the 375ml limit. We are grateful for your order allowing restaurants to deliver cocktail kits to Texas consumers, which will help some of our restaurant partners remain open. This allowance does little to help Texas distilleries because the limitation on bottle size for distilled spirits precludes most distillers. Only eight of our members currently have 375ml or less bottles in distribution. This means the vast majority of Texas distilleries are not benefiting from restaurant deliveries. We ask that you lift the 375ml or less restriction and allow restaurants to deliver 750ml bottles. Allowing for the delivery of standard 750ml bottles will help restaurants alleviate their bottle inventory and will also give Texas distilleries the opportunity to compete with larger distilleries that distribute smaller bottles.
  3.  Allow for the delivery of mixed beverages sealed by restaurants or manufacturers. Currently, bars and restaurants in Texas have 750ml bottles of Texas spirits on their shelves that they cannot pour drinks from, and thus cannot be reordered from Texas distilleries. Without cocktail sales from bars and restaurants, distillers have their own inventory sitting in warehouses that cannot be sold. In fact, our members have approximately $2 million worth of 750ml bottles that cannot be distributed because bars and restaurants cannot pour cocktails. Allowing restaurants and tasting rooms to sell cocktails to-go for delivery will help distillers move product inventory that currently is providing no income.
  4. Allow distillers to deliver distilled spirits within their county. As you know, package stores may deliver distilled spirits within the city or county in which they are located. During this time of quarantine, we are grateful that our retail partners—through their own employees or through third-party delivery apps—are permitted to deliver alcohol. Because Texas distillers can also sell distilled spirits from their distilleries, we ask that distilleries also be granted the authority to deliver their product within the county in which their distillery is located. This allows distillers to shift employees’ duties from manning tasting rooms to delivering bottles, saving jobs.
  5. Allow third-party delivery services to deliver products from the distillery. Texas consumers, now more than ever, are utilizing third parties apps like Drizly, Minibar and Instacart to have distilled spirits delivered to their homes. Temporarily allowing these third parties to pick up distilled spirits at a distillery and deliver them to Texas consumers at home will provide revenue to distilleries, which cannot currently make any revenue because of the closure of tasting rooms.
  6. Allow distillers to ship products out of state. In keeping with parity to our retail partners, we also ask that Texas distillers be allowed the same shipping opportunities that package stores are currently allowed. With states throughout the country mandating closures of liquor stores, we ask that Texas distilleries, like package stores, be allowed to ship their products out of state by delivering spirits to a holder of a carrier’s permit, and letting that third party transport the spirits outside of the state. Exposing people outside the state to Texas spirits will help amplify brand identification, potentially increasing sales of these products for package stores once the public health disaster has ended.

Texas distilleries, like most small businesses, are struggling to keep their employees on payroll and their distilleries in production. Because alcohol is highly regulated, we urge you to grant temporary relief of delivery, shipping and bottle limitations for Texas distillers. Thank you again for your leadership during this public health disaster. If you have any questions, please do not hesitate to ask.

Sincerely,

Mike Cameron
President — TDSA

Jared Himstedt
President — TXWA

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