A pair of recent reports from the American Craft Spirits Association (ACSA) and its polling partners paint a picture of an industry that continues to struggle—but also one that may be finding its footing in a difficult environment, along the road toward a more favorable future.
ACSA’s annual Craft Spirits Data Project, produced in partnership with Park Street, detailed the continuing struggles of smaller, independent distilleries. On the heels of those findings, a consumer-focused report from Sovos ShipCompliant reinforced the association’s push for direct-to-consumer (DTC) shipping and other market-access improvements.
“There is a demand for getting craft-spirits products delivered and having better access to them,” says ACSA CEO Emily Pennington. “To me, these two reports are two sides of the same story. Craft is down, but it’s not for lack of demand. It is for lack of access right now.”
State of the Craft
Among the findings in the Data Project’s report:
- Sales volume for craft distillers decreased 8 percent, while sales value dropped 3.7 percent —the third consecutive year of declines.
- The craft segment represented 11.7 million cases (at nine liters per case) and $7.3 billion in sales.
- Employment in the craft-spirits industry continued to decline, down to 21,285 full-time employees in 2025, from 28,628 in 2024.
After the industry spent the past few years adapting to “the new normal” post-pandemic, Pennington says the mood among distillers is actually improving. Part of the Data Project’s polling that wasn’t released publicly included information about distiller sentiment: In the 2026 survey, 42 percent of distillers reported being optimistic, up from 40 percent in 2025; 31 percent were neutral, up from 25 percent in 2025; and 27 percent reported being pessimistic, down from 33 percent in 2025.
Times are still hard, but “I feel like in 2024 and 2025 people thought the world was basically on fire,” she says.
“Everyone was just in panic mode, and I think once we [turned] the corner into 2026, we see a lot more people who have adapted and were like, ‘Okay, this is the way things are right now. Here’s what our organization is doing to try to ride out this downturn.’ It feels like there’s a lot less panic. Despite the fact that distilleries are closing, I think there’s a little bit more stability to the way things are going forward.”
She suspects that many of the closures around the industry are the very smallest operators—people running legal distilleries that are almost a hobby, and the data appear to support that. There were 150 fewer active craft distilleries in 2025 than 2024, but the remaining distilleries sold an average of 800 more cases—that’s an increase of almost 18 percent, indicating that there are fewer of the smallest producers skewing the average downward.
“There are hundreds of craft distilleries that I would almost describe as ‘hole in the wall,’” Pennington says. “I’ve been in Pittsburgh 10 years. I pride myself on being friendly with all the distilleries in Pittsburgh, and there were two that I had no idea even existed because they don’t have storefronts, they don’t really do any marketing. It is one step above home distilling, basically. A lot of them still have day jobs. And so, I think people don’t really take into account how many of those there likely are, and those are also probably a vast majority of the people who stopped distilling.”
Direct Shipping
Meanwhile, the annual report from ACSA and Sovos ShipCompliant looks at the disconnect between demand for DTC shipping and its legality.
The report indicates that 68 percent of drinking-age Americans, and 81 percent of craft-spirits consumers, say they want to see the laws changed to expand access to direct shipping of spirits.
Among craft-spirits consumers, 82 percent say they want to legally purchase craft spirits via DTC shipping—a number that has stayed solidly at or above four-out-of-five in recent years (80 percent in 2022, 87 percent in 2023, 85 percent in 2024, and 84 percent in 2025).
However, only 10 states plus Washington, D.C., currently allow for spirits shipping, compared to 49 states plus D.C. for direct wine shipping. (California’s DTC shipping law expires on December 31.)
Pennington says that DTC shipping consistently rises to the top of ACSA member priorities but also that legislatively, it’s a long play. She notes that the federal case establishing the current framework for wine DTC, Granholm v. Heald, was decided in 2005—but it took a decade before a wide majority of states put that ruling into effect.
Opening More Roads to Market
More than just direct shipping, though, ACSA is looking at broader market-access issues.
“Market access at the state level is ACSA’s highest priority,” Pennington says. “But DTC isn’t the only thing in there. There are also a lot of restrictive regulations for tasting rooms that can and should be addressed. If you can’t even sell a bottle or a cocktail from your tasting room, that’s prohibitive to your business. If you can’t sell at a special event or a farmer’s market, that’s prohibitive to your business, and we want to work on regulation around that. The other one is self-distribution. We support self-distribution for craft distillers, and there are a handful of states that we know are looking at regulations for this in 2027 that we would support and provide resources.”
DTC and other market-access limitations have become even more important as the already-difficult wholesale tier becomes even more challenging with the collapse of the nation’s second-largest distributor. Pennington says the full story and impact of the collapse of Republic National Distributing Company (RNDC) still hasn’t finished unfurling, but having more equitable laws could, to a degree, help buoy sales for distillers who find themselves suddenly without a distributor.
“I don’t think anyone is advocating that the three-tier system should be abolished,” she says. “That’s preposterous. I don't think distributors have it easy either. I think that they’re also feeling a lot of effects post-COVID with their own staffing issues and their own inflation and price increases—they’re feeling it, too. But the current iteration is just not working.”
Pennington cites research that indicates that distilleries—along with supplier-tier parties in other industries—generally see a dip in sales with any transition from one distributor to another. In the case of RNDC, which represented thousands of spirits, wine, and beer suppliers, craft distillers who had been part of Republic’s portfolio now find themselves as part of a mass exodus, hoping and battling like RNDC’s other former partners to find space in some other distributor’s portfolio.
“Both RNDC and the general distributor consolidation and changes that are happening right now are massive,” she says. “It’s the worst game of musical chairs that ever existed. Everybody’s just trying to find a place to sit, and some people won’t find a chair.”
Creative Approaches
Yet some small distilleries are still finding ways to thrive. Some are joining forces to share resources. Others are offering contract distilling or acquiring other brands to fill out unused production capacity.
Tasting rooms and local markets remain a major point of focus for many distillers: Relatively large craft producers are focusing more on their home states, while small- and medium-sized distillers are focusing more on their onsite sales.
“A lot of them are retrenching and focusing on their tasting-room sales because that is the easiest thing that you can control and the margins are the highest,” Pennington says.
Ready-to-drink cocktails remain a rare segment enjoying strong sales; Pennington is familiar with a distiller in her market who launched an RTD alongside their regular line of 750 ml bottles, and “it was so popular that they adjusted their entire model around it,” she says. “It is saving people’s businesses. Regardless of what you think of the category, it is working for some people.”
She also sees an opening for ready-to-pour bottled cocktails and unique products—“amaros and weird-flavored liqueurs … things people can use at home to have a two- or three-ingredient cocktail. I think people want the easy way to make a good cocktail at home. So, I feel like this is a big opportunity for craft and a bright spot.”
More distillers are leaning into the data available through online sales and social media, as well as the ability to reach consumers directly. There’s no universal formula among the distillers who are seeing success now, Pennington says; rather, it’s case-by-case within each distillery’s own context, what its market looks like, and making good business decisions in response.
“I haven't necessarily connected the traits between those distilleries,” she says, “other than it’s people who really understand their consumer or their occasion, and they lean into it.”