In many states, consumer access to spirits ready-to-drink (RTD) cocktails is severely restricted by outdated laws that prohibit the sale of these products at grocery and convenience stores, unlike beer- and wine-based RTD beverages. At the same time, spirits RTDs are taxed at a much higher rate than beer- and wine-based RTDs. Modernizing alcohol laws to allow equal access and fair tax treatment for spirits RTDs will boost small businesses, raise state tax revenue and support consumer choice.
Beer- and wine-based RTDs can be sold in grocery and convenience stores in 40+ states. Meanwhile, spirits RTDs with the same or lower amounts of alcohol can only be sold in grocery stores in 31 states and in convenience stores in 29 states. In 45 states, spirits RTD cocktails are taxed at a higher rate than beer- and wine-based RTD beverages, even though many spirits RTDs contain the same or lower amounts of alcohol.
While 47 states allow the direct shipment of wine straight from winemakers to consumers, only 11 states currently allow distillers to ship their products directly to consumers. In the last 15 years, growing consumer interest in diverse spirits products has led to the increase in the number of distilleries in the U.S. from just 70 to more than 2,000. There are now more than 15,000 distilled spirits products in the marketplace. A modern spirits marketplace will allow residents of any state to buy the products they want, in the way they want, while allowing smart regulation to ensure responsible delivery. Direct-to-consumer shipping has, will and should continue to serve as an additional market access channel to the traditional three-tier system of alcohol beverage distribution.
During COVID-19, more than 35 states began allowing restaurants and/or bars to sell cocktails to-go as an economic relief measure for struggling businesses via executive orders or other temporary measures. Since then, 18 states and the District of Columbia passed legislation to make cocktails to-go permanent, and 14 other states passed legislation to allow cocktails to-go on a temporary basis. Some states are still considering cocktails to-go legislation.
The overwhelming majority of states give adult consumers the option to purchase their favorite distilled spirits any day of the week they choose, but seven states still prohibit the retail sale of distilled spirits bottles on Sundays. Removing the ban on seven-day sales will promote a free market, increases consumer convenience, and allow local businesses to make their own decisions about when to open or close their stores.
The Distilled Spirits Council works closely with other suppliers, wholesalers and retailers to oppose all state and local alcohol and hospitality tax increases. Responsible consumers of distilled spirits already pay more than their fair share. The current taxation scheme in almost every state includes a federal excise tax, a state excise tax and significant state and local licensing fees imposed on retailers (bars, restaurants and liquor stores). Some municipalities will add additional local excise taxes on alcohol products as well. When these taxes and fees are piled one upon the other this results in nearly 50 percent of the retail price of a typical bottle of distilled spirits going toward a tax or fee of some kind in most states.
There is also a wide disparity in alcohol tax rates at the state level, with spirits being taxed nearly two times higher than table wine and nearly three times higher than beer. States should be in the business of picking economic winners and losers. These discriminatory tax rates put spirits at a competitive disadvantage vis-à-vis beer and wine. In the end, this hurts spirits consumers.
There are more than 5,000 brands of distilled spirits on the market in the United States, with hundreds of new brands entering the market each year. Tastings -small samples of distilled spirits- are an extremely effective way to encourage adult consumers to “try before you buy,” compare, and ultimately choose new products. Learning more about the numerous types and brands of distilled spirits products is an important way to market new products before consumers are interested in paying for a full-sized premium product.
Forty-eight states allow some form of distilled spirits tastings, 42 allow tastings in bars and restaurants, and 45 states allow tastings in retail stores that sell spirits for off-premise consumption. Also, 39 states allow consumer spirits tastings at both on- and off-premise establishments.