The annual report from the Craft Spirits Data Project is out, and a steep drop in distilleries is making headlines—but so is a key change in methodology.
The 2025 CSDP—released annually by the American Craft Spirits Association in partnership with Park Street—indicates 2,282 active craft distilleries in August 2025, compared to 3,069 in August 2024.
That’s a reduction of more than 25 percent. However, a large portion of that drop is due to a shift in how they approach the data, says Jordan Cotton, the ACSA board president and cofounder of the Cotton & Reed distillery in Washington, D.C.
“It is a tough time in the craft-distilling market, and we are seeing more craft distilleries close, but we’re probably not seeing 25 percent of them close,” Cotton says. “As we refine the methodology, our count is decreasing at the same time.”
ACSA’s initial list of all distilled spirits plants (DSPs) comes directly from the TTB, and they work to whittle down the data by removing those that shouldn’t be counted. Those include distilleries with multiple locations, those that aren’t operational, larger ones or others that don’t fit ACSA’s “craft” definition, research or industrial operations, dedicated bottling operations, and distilleries in planning.
This year, Cotton says, since ACSA hired Park Street alum Emily Pennington as COO, she went through a painstaking culling of the roughly 3,000 DSPs that would have made the cut in 2024—continuing to winnow out inactive DSPs; operators such as breweries or wineries that may have acquired a DSP license but haven’t released any products; defunct distilleries that haven’t shut down their account with the TTB; distilleries that no longer qualify under the “craft” definition; and other false positives.
“She went through line by line,” Cotton says. “That was a pretty big, big undertaking for her because it can be a little tricky to dig up some of these.” As a result, the number of DSPs in this year’s report represents a disconnect from past data—resulting in some sensationalist, sky-is-falling headlines—but it also resets to a clearer picture of the industry as the project moves forward in coming years.
“I think we all have experienced, anecdotally, [that] a lot of distilleries are closing,” Cotton says. “It's very hard to get an authoritative list of which ones and how many exactly, so we want to have a better baseline for that data going forward.”
Clarity on Challenges
The CSDP report does reveal a struggling industry through its other data.
Case sales across the craft industry are down 6.1 percent by volume and 3.3 percent by value, compared to the previous 12-month period (August 2022 to August 2023). That represents a decline of about 800,000 nine-liter cases and $200 million in sales. (A small bright spot in the data is that the greater decline in volume indicates that higher-value products are not falling off as much as lower-value ones.)
Craft spirits are caught in the same tide as the broader U.S. spirits market, with declines almost in lockstep. Craft remained at a 7.5 percent share of overall U.S. spirits value from 2023 to 2024, nudging down from 4.6 percent to 4.5 percent in volume share in that window. However, Cotton says that in the craft segment—where many producers are still battling to establish a foothold in the market or achieve profitability—the situation for distillers is especially tenuous. A market that results in layoffs or production pauses at a large commercial distillery can be magnified for a smaller one.
“We’re small businesses that are eking it out in in the best of times over the last few years,” he says, “and then when the overall market is going down, we don’t have the resources and the scale to weather that. If we’re down by X percent and Grupo Campari’s down by X percent as well, it’s a little harder for me to keep doing everything I need to do than it is for them. I feel like the big guys are going to be fine. They wish their graphs were going up, but we need ours to go up.”
Toward Better Market Access
When it comes to improving the landscape for craft distillers, Cotton says, there’s “a little bit of a hammer-nail problem.” Especially in such a difficult business context, he’s a firm believer in legislation that supports a better environment for craft-scale businesses, as well as in the value of collective action within the industry.
Direct-to-consumer (DTC) shipping has been a big legislative priority for ACSA in recent years, and the group also has created a craft-spirits caucus in the House of Representatives, aiming to organize and tap into support from legislators who have a strong craft presence in their districts. They’re also preparing a legislative proposal that would have the TTB regulate distilleries differently by size, lessening the administrative weight on those least able to afford it.
“If we can get a different regulatory scheme that recognizes that Cotton & Reed and Jack Daniels are different operations, we could have a lower cost of meeting the regulatory burden,” he says.
Another barrier for many small distillers is the state-to-state variability in what producers are allowed to offer on-site, Cotton says. In some states, sales at the distillery aren’t allowed or are highly restricted; in others, distilleries have much broader latitude in serving tastings, pours, and cocktails and in selling bottles.
“We have so many distilleries making great products that a lot more people would buy if they were not arbitrarily prevented from doing so,” Cotton says. “The biggest thing that we all need for turning around volume is growing market access. We have all these distillers around the country who have amazing products that are having way too hard of a time for no good reason.”
While sales across channels—at the distillery, locally, into other states, and exports—have all seen declines, the slowest declines have been in-state sales, including on-site at the distillery. As a result, local sales are a slightly bigger piece of the pie—about 1 percent more—in the 2025 data compared to 2024. However, the sales skew considerably depending on the size of the distillery. Operators classified as large rely on out-of-state sales for 68.6 percent of their volume sales, while medium-sized craft distillers move 39.3 percent of their volume to other states. The smallest producers sell only 5.5 percent of their volume out of state, while an outsized proportion—49.6 percent of sales—happens on-site.
However, there are some dramatic differences in how states regulate these sales. A channel that might provide the most sales for one distillery could be nonexistent for a distillery on the other side of a state line. Given the unequal privileges that distillers enjoy from one state to the next, Cotton says he wants to emphasize that the nearly 50 percent of on-site sales is an average that includes some extremely restrictive areas.
“If everybody across the country was able to do what we can do here in D.C.—unlimited bottle sales to consumers out of the tasting room, cocktails for on-site consumption, [direct shipping]—the volume numbers jump right up over overnight,” he says. “In states where you can move a lot of volume [on-site], that’s going to be 60, 70, 80 percent of a lot of small distillers’ volume.
“So, we need to double down on efforts to expand what members are able to do,” he says. “We have made a lot of progress in loosening up tasting-room restrictions over the last decade, but there are a lot of states that have so much further to go. It can just be a huge instant boost to volume if, all of a sudden, now you're allowed to serve cocktails or sell more bottles per person.”