Craft alcohol makers will be allowed to ship directly to consumers under new NYS law
Barrels of bourbon and rye at the Long Island Spirits distillery in Baiting Hollow. Credit: Long Island Spirits distillery
Small craft-alcohol manufacturers are cheering a new law that soon will allow them to ship spirits, cider and mead directly to consumers in and outside New York State, potentially boosting their profits by skipping the "middlemen" distributors.
But some liquor store owners are opposed to the law, saying they are concerned that it will open the door to large liquor companies that will find loopholes to take advantage of the legislation.
Craft manufacturers had been allowed to ship spirits and cider directly to consumers temporarily, from March 16, 2020, to June 24, 2021, during the COVID-19 pandemic, the New York State Liquor Authority said. Gov. Kathy Hochul signed legislation Sunday making the shipping option permanent.
The law takes effect 90 days from the date of signing, which will be Nov. 16, the liquor authority said.
"This legislation levels the playing field, allowing these small producers to reach new markets and foster economic growth across the state," Hochul said in a statement Monday.
A business would need to hold a license type defined as farm distiller, micro distiller, a farm cidery or farm meadery to be defined as a craft manufacturer, the liquor authority said.
Under the new law, craft manufacturers will be able to ship directly to customers in other states that have reciprocal agreements with New York State, and craft manufacturers in those states will be able to ship directly to consumers in New York State.
The law allows consumers to buy up to 36 cases of spirits, cider and mead directly from a manufacturer annually.
New York has more craft cideries than any other state in the country and the second-largest number of distilleries, the governor’s office said.
Wine manufacturers in New York State have been able to ship directly to consumers for nearly two decades, while craft cider and spirits producers have encountered challenges in gaining access to traditional wholesale distribution channels, the governor's office said.
The number of craft alcohol manufacturers has surged in New York State over the last decade as consumer demand for artisan products has grown.
There are 346 licensed craft manufacturers of spirits, cider and/or mead now, compared to 42 in 2014, according to the state liquor authority.
Craft distillery Long Island Spirits produces vodka, bourbon, whiskey and other alcoholic beverages in Baiting Hollow, said Richard Stabile, the company’s founder and master distiller.
"Business has been off for the last 12 months with the way the economy has been," so being able to ship products directly to consumers "would be a significant help," he said.
About 75% of Long Island Spirits’ sales are made through wholesalers that sell the company’s alcohol to liquor stores, bars and restaurants, while the remaining sales come from customers’ visits to the tasting room in Baiting Hollow, said Stabile.
Direct-to-consumer shipping would allow Long Island Spirits to create a subscription-based whiskey club with semiannual limited releases of certain products, similar to what wineries in New York state do, he said.
The Better Man Distilling Co. in Patchogue is a craft distillery that sells about 60% of its vodka, gin, whiskey and bourbon through wholesalers, while the remaining sales come from customers’ visits to the company’s tasting room and stands at farmers markets, said Abigail Gruppuso, who co-owns the family business.
Not only would selling directly to consumers boost sales in cities where the company’s products are not sold in stores, but it also would be more profitable than selling through third parties, she said. But the company has to research the logistics of direct-to-consumer selling, including efficient packaging, Gruppuso said.
Distilleries that produce more than 75,000 gallons of distilled spirits a year, as well as cideries/meaderies that annually produce more than 250,000 gallons of cider, mead and/or braggot, which is a fermented beverage with characteristics of mead and beer, are prohibited from shipping directly to consumers under the new law.
But there are concerns that larger producers will find a way around that.
The Metropolitan Package Store Association, a trade group that represents about 3,800 liquor stores statewide, lobbied against the passage of the law.
Out-of-state, multinational distilleries spent large amounts of money to lobby in favor of the law, which is an indication that they plan to try to ship alcohol directly to consumers, possibly through craft distilleries that they own, or they could try to sue the state alleging discrimination against large companies, said Michael Correra, executive director of the association and the owner of Michael Towne Wines & Spirits in Brooklyn.
"I think this is going to open up a Pandora’s box for this industry. It’s going to be impossible to police," he said.
The Distilled Spirits Council of the United States is a Washington, D.C.-based trade group whose board of directors includes representatives from large liquor companies, such as Bacardi and Moët Hennessy USA.
The spirits council, whose members also include craft distillers, lobbied in favor of the original version of the state bill, which included direct-to-consumer shipping of spirits by manufacturers of all sizes, Andy Deloney, senior vice president and head of state policy at the spirits council, said in an email. But the bill was later amended to exclude large manufacturers.
The package store association's concerns that large alcohol manufacturers might take advantage of the new law "are misguided and hyperbolic," Deloney said.
The law is a step in the right direction, but the council hopes that the option for direct-to-consumer shipping will be extended to all producers in the near future, he said.
"We understand that rising tides lift all boats, and allowing large producers to ship products only grows interest in the spirits industry among adult consumers who then seek out new and unique products in the category – including from New York craft distillers," he said.
Small craft-alcohol manufacturers are cheering a new law that soon will allow them to ship spirits, cider and mead directly to consumers in and outside New York State, potentially boosting their profits by skipping the "middlemen" distributors.
But some liquor store owners are opposed to the law, saying they are concerned that it will open the door to large liquor companies that will find loopholes to take advantage of the legislation.
Craft manufacturers had been allowed to ship spirits and cider directly to consumers temporarily, from March 16, 2020, to June 24, 2021, during the COVID-19 pandemic, the New York State Liquor Authority said. Gov. Kathy Hochul signed legislation Sunday making the shipping option permanent.
The law takes effect 90 days from the date of signing, which will be Nov. 16, the liquor authority said.
WHAT TO KNOW
- A new law will allow craft alcohol manufacturers in and outside New York State to ship spirits, cider and mead directly to consumers in the state.
- Out-of-state craft manufacturers that have reciprocal agreements with New York State also will be able to ship directly to consumers.
- Some liquor store owners are opposed to the law, saying they are concerned that it will open the door to large liquor companies that will try to find loopholes to take advantage of the legislation.
"This legislation levels the playing field, allowing these small producers to reach new markets and foster economic growth across the state," Hochul said in a statement Monday.
A business would need to hold a license type defined as farm distiller, micro distiller, a farm cidery or farm meadery to be defined as a craft manufacturer, the liquor authority said.
Under the new law, craft manufacturers will be able to ship directly to customers in other states that have reciprocal agreements with New York State, and craft manufacturers in those states will be able to ship directly to consumers in New York State.
The law allows consumers to buy up to 36 cases of spirits, cider and mead directly from a manufacturer annually.
New York has more craft cideries than any other state in the country and the second-largest number of distilleries, the governor’s office said.
Wine manufacturers in New York State have been able to ship directly to consumers for nearly two decades, while craft cider and spirits producers have encountered challenges in gaining access to traditional wholesale distribution channels, the governor's office said.
The number of craft alcohol manufacturers has surged in New York State over the last decade as consumer demand for artisan products has grown.
There are 346 licensed craft manufacturers of spirits, cider and/or mead now, compared to 42 in 2014, according to the state liquor authority.
'A significant help'
Craft distillery Long Island Spirits produces vodka, bourbon, whiskey and other alcoholic beverages in Baiting Hollow, said Richard Stabile, the company’s founder and master distiller.
"Business has been off for the last 12 months with the way the economy has been," so being able to ship products directly to consumers "would be a significant help," he said.
About 75% of Long Island Spirits’ sales are made through wholesalers that sell the company’s alcohol to liquor stores, bars and restaurants, while the remaining sales come from customers’ visits to the tasting room in Baiting Hollow, said Stabile.
Direct-to-consumer shipping would allow Long Island Spirits to create a subscription-based whiskey club with semiannual limited releases of certain products, similar to what wineries in New York state do, he said.
The Better Man Distilling Co. in Patchogue is a craft distillery that sells about 60% of its vodka, gin, whiskey and bourbon through wholesalers, while the remaining sales come from customers’ visits to the company’s tasting room and stands at farmers markets, said Abigail Gruppuso, who co-owns the family business.
Not only would selling directly to consumers boost sales in cities where the company’s products are not sold in stores, but it also would be more profitable than selling through third parties, she said. But the company has to research the logistics of direct-to-consumer selling, including efficient packaging, Gruppuso said.
Distilleries that produce more than 75,000 gallons of distilled spirits a year, as well as cideries/meaderies that annually produce more than 250,000 gallons of cider, mead and/or braggot, which is a fermented beverage with characteristics of mead and beer, are prohibited from shipping directly to consumers under the new law.
But there are concerns that larger producers will find a way around that.
The Metropolitan Package Store Association, a trade group that represents about 3,800 liquor stores statewide, lobbied against the passage of the law.
Out-of-state, multinational distilleries spent large amounts of money to lobby in favor of the law, which is an indication that they plan to try to ship alcohol directly to consumers, possibly through craft distilleries that they own, or they could try to sue the state alleging discrimination against large companies, said Michael Correra, executive director of the association and the owner of Michael Towne Wines & Spirits in Brooklyn.
"I think this is going to open up a Pandora’s box for this industry. It’s going to be impossible to police," he said.
The Distilled Spirits Council of the United States is a Washington, D.C.-based trade group whose board of directors includes representatives from large liquor companies, such as Bacardi and Moët Hennessy USA.
The spirits council, whose members also include craft distillers, lobbied in favor of the original version of the state bill, which included direct-to-consumer shipping of spirits by manufacturers of all sizes, Andy Deloney, senior vice president and head of state policy at the spirits council, said in an email. But the bill was later amended to exclude large manufacturers.
The package store association's concerns that large alcohol manufacturers might take advantage of the new law "are misguided and hyperbolic," Deloney said.
The law is a step in the right direction, but the council hopes that the option for direct-to-consumer shipping will be extended to all producers in the near future, he said.
"We understand that rising tides lift all boats, and allowing large producers to ship products only grows interest in the spirits industry among adult consumers who then seek out new and unique products in the category – including from New York craft distillers," he said.
Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.
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