Real Solutions

Event Summary: COVID-19 & Booze: How the Pandemic is Affecting the Alcohol Industry

May 1, 2020

issues: Alcohol Policy, Competition Policy

On Tuesday, April 28, the R Street Institute hosted a webinar exploring how the COVID-19 pandemic affects the alcohol industry and forces industry participants and policymakers to rethink how alcohol is regulated.

R Street Director of Commercial Freedom Jarrett Dieterle led the conversation about how things are changing in the booze world, what local alcohol producers are seeing on the ground and how the industry is going to navigate this new normal.

All of the experts on the panel agreed that from the beginning of the COVID-19 crisis, it was important that beer and liquor sales—as well as the supply chain that allows such products to be produced—were deemed essential. This was critical for understanding where this industry fits in American society, culture and commerce.

President of Distilled Spirits Council of the United States Chris Swonger said, “The marketplace has shifted so dramatically over the last 10 years. Many of the market changes we’re seeing now we’ll continue to grapple with.” When addressing how the liquor industry is adapting to the new demands brought about by the coronavirus, Swonger pointed to the entrepreneurial production of hand sanitizer by distillers to alleviate shortages: “As we ramp up the economy, the demand for hand sanitizer will increase. This is beneficial for the alcohol industry.”

President of the Beer Institute Jim McGreevy noted, “We’ve got millions of kegs that are going to spoil. We are talking to members of Congress to get some relief for them because of the vast amount of unmerchantable beer in the industry right now. It’s not the first thing you’d think about when you think about COVID-19, but it is a real issue.” Considering overall regulations and laws that are hurting the industry most severely, McGreevy emphasized that “we need permanent tax relief for beer, wine and spirits.”

Founder and General Manager of Catoctin Creek Distillery Scott Harris has found new opportunities to keep the lights on since the pandemic began. Regulatory restrictions that impeded the distillery’s ability to diversify have been lifted, allowing Catoctin Creek to start making hand sanitizer almost right away, because they had permits to obtain bulk alcohol. They repurposed their sales team to start bottling hand sanitizer. Harris said, “Hand sanitizer created enough revenue to keep the business going.”

When Virginia approved direct-to-consumer alcohol shipping via FedEx and UPS, Catoctin Creek received 80 orders on the first day. Harris said, “The revenue that we received from these direct shipments was like having 10 good Saturdays in one day.”

CEO and Co-Founder of Cape May Brewing Co. Ryan Krill addressed how things have shifted for his business, which relies on customers coming to the tasting room for a significant portion of its income. Governor Phil Murphy (D-N.J.) gave breweries the freedom to do home delivery. Krill revealed that “this was more of a morale boost than an effective method to replace the income losses from the tasting room being closed.” While Krill expressed serious interest in maintaining the privilege of home delivery for businesses like his after the pandemic is over, he said that “tax legislation is the number one priority for us.”

Event Description

As COVID-19 roils America and the world, much of the focus has been on how businesses can survive in an environment of extreme social distancing and self-quarantining. The crisis presents a host of tricky challenges to alcohol producers, including changes to delivery laws, the bottoming out of on-premise sales and rising demand among consumers. Hear from R Street’s very own Jarrett Dieterle, the presidents of both the Distilled Spirits Council and the Beer Institute, as well as several craft producers as they discuss how this pandemic affects the alcohol industry and forces industry participants and policymakers to rethink how alcohol is regulated.

To learn more:

R Street Institute