Even though Prohibition was repealed in 1933, distillers still have to adhere to vestigial laws pertaining to the manufacture and sale of their products. United States federal law requires distillers to meet numerous licensing requirements, and so do laws in many states, including Florida. Major distillers can easily deal with these laws, but they make it impractical for small distillers to produce spirits for personal beverage use.
This, despite exploding demand for locally distilled booze produced in comparatively small batches.
In recognition of outdated state laws that, couple with federal requirements, even further hinder smaller distillers, Republican State Sen. Greg Steube filed SB 166, along with state Rep. Cyndi Stevenson’s House companion (HB 141), which would allow distilleries to sell more of their own product on site without third-party distribution fees as well as reduced licensing fees.
“The trend towards fresh, 'handmade' products made with real and less processed ingredients has affected all segments as consumers increasingly want assurances that the food and drink they are consuming is safe, healthy, and made with integrity,” wrote Michael Kinstlick, CEO of Coppersea Distilling, in his 2015 update to the paper “The U.S. Craft Distilling Market.” But even as demand grows for locally made liquor, state law has yet to catch up.
Currently, Florida craft distilleries are allowed paid tastings on-site and limited direct sales to customers, currently two bottles per brand, per customer. Yet they are not allowed satellite tasting rooms, the sale of cocktails or self-distribution.
“What’s the most important ingredient when distilling whiskey?” Scott Neil, co-owner of American Freedom Distillery in St. Petersburg said. When met with a blank stare, he said, “money.”
“The cash flow in early start ups for Florida Craft Distillery comes directly from sales of product from our retail,” stated Neil.
The bill supports an increase in production by redefining craft distilleries as “a licensed distillery that produces 250,000 or fewer gallons per calendar year of distilled spirits on its premises,” up from the originally defined 75,000 gallons.
Craft distilleries would save $3,000 in state licensing fees, paying $1,000 instead of $4,000, which all liquor producers and distributors currently pay.
The bill would also remove restrictions on how much distilleries can sell directly to customers, which was recently amended in 2013, allowing two bottles per brand, per customer to be sold face to face at the distillery. This simple change helped keep approximately 30 new businesses afloat and profitable according to Philip McDaniel, CEO and co-founder of St. Augustine Distillery Co., and founding president of the Florida Craft Distillers Guild.
These changes allow small distillery owners grow and compete with major producers, given a smaller portion of their revenue would go to governmental gatekeepers.
“[Craft distillers] can’t promote, we can’t compete against brands that have sales teams, promotional incentives, kickbacks, market share,” Neil said. “Distributors have multiple brands that are profitable and are incentivized by their sales. As a craft distiller we basically have to do all of the promotion and selling but can’t finish the sale – the distributor has to.”
Jason Unger, a lobbyist with GrayRobinson, a firm that's pushing the bill, wrote in an email to Florida Distillers Guild members that the bill, if passed, “will place Florida's craft distilleries on more similar footing as smaller wineries and breweries to allow us better access to our customers.” He wrote that he hopes the bills make it to the governor's desk without any major changes, but knows there may be tough competition from retailers and distributors.
The Craft Distilling market is expanding quickly due to consumer demand for unique, local crafts, passion and quality products. A recent Kentucky tourism study conducted by University of Louisville found that more than one million visitors toured the historic Kentucky Bourbon Trail in 2015, on average, spending $1,000 on their trip, with more than 85 percent of these visitors coming from outside of Kentucky.
“A healthy craft market in Florida and the Tampa Bay [area] means national and international visitors are exposed to Florida products and not Kentucky based products and internationally owned major spirits brands,” Neil said.
This article appears in Jan 26 – Feb 2, 2017.