‘Painful Evaporation of Opportunities’: Government Shutdown Takes a Toll on Craft Distillers

Barrels at the Liberty & Plenty Distillery in Durham, North Carolina. Liberty & Plenty is one of over 2,000 members in the American Craft Spirits Association. (Photo: Liberty & Plenty)

The American Craft Spirits Association has released its annual report detailing the state of the country’s spirits industry. In light of headwinds facing alcohol producers of all sizes, it may come as no surprise that the statistics weren’t particularly optimistic. Craft spirits volumes reportedly slumped by 6.1% in 2024, while exports dipped by 20.7% in the same time frame. Employment numbers have also taken a hit, dropping for the first time post-pandemic to a total of 28,628 full-time domestic employees.

Declines, cutbacks and closures have unfortunately been par for the course within the industry over the past few years. This time around, however, the ACSA notes that something different is in the air.

Due to the ongoing government shutdown, now the longest in American history, craft distillers have been unable to access crucial resources from the Alcohol and Tobacco Tax and Trade Bureau, the federal agency responsible for regulating most functions of the industry. In a roundtable with journalists, ACSA CEO Margie Lehrman explained that the closure has effectively ground innovation to a halt.

“Neither labels nor formulas are being approved by the TTB. As close as 88% of TTB’s workforce was furloughed during the shutdown,” Lehrman said. “Painful evaporation of opportunities. Lost time, lost possibilities. And members are already struggling.”

In addition to suspending its Certificate of Label Approvals, the agency has put permit processing, formula approvals, laboratory services and most administrative functions on ice until Congress resumes funding. Put simply, distillers can’t do anything “new” for the time being. Products can’t be launched unless they were approved before October 1, and those submitted after the closure will be subject to a hefty backlog once the TTB resumes operations.

Missed opportunities have likely already reached into the tens of thousands. According to DISCUS, the TTB received nearly 198,000 label applications and 27,000 formula submissions throughout 2023. Those numbers tend to skew higher around the end of the year, when brands are pumping out new releases to coincide with the holidays.

“This is not about politics,” Lehrman remarked. “This is about the livelihoods of American craft spirits producers. This is about watching the hard work of hundreds of our American distillers turn to dust because a signature has not been put on a label approval or a formula approval.”

“I heard from one distiller just this morning. He had filed his Distilled Spirits Plant permit back in August — TTB returned it well after a month with corrections, and he got it in immediately after that. This particular distiller is now unable to open his doors in Minnesota because the government is shut down.” 

According to an ACSA survey, the average estimated revenue loss among distillers sat at $40,000 as of October, with four out of ten distillers predicting losses over $100,000. 67% are reportedly waiting on label approvals and 27% on formula authorizations.

The impact of those losses will vary widely from situation to situation. The ACSA defines a craft distillery as producing less than 750,00 proof gallons per year and being no more than 50% owned by a company that exceeds those limitations. The organization counts 2,282 craft distilleries across the U.S. as of August 2025, responsible for a 4.5% share of total volume and 7.5% of total value in the domestic spirits market.

Craft distilleries range from mom-and-pop upstarts to mainstream brands days away from a corporate acquisition; whiskey producers exporting worldwide and gin makers available only in their hometown. ACSA Chief Operating Officer Emily Pennington says the options have narrowed considerably, not only because of the government shutdown, but due to looming trade tensions, distribution hiccups and declining consumption.

“They can’t easily export anymore, they can’t expand their footprint to new states because retailers and distributors are cutting back… so what do they do? They retrench and focus on their home state,” Pennington added. “I have a good example from our recent Craft Spirits magazine. There was a piece on tasting room trends, and there was a distillery in there that had a lot of success with themed events. In the months where they have themed events, their sales are two to three times higher than the months in which they have none.

“The distiller said, and I quote, ‘This is not why I got into distilling. It was not my dream to have a themed bar. But I have two kids, I have employees, and I have a business that I want to keep alive. So I have to focus on the things that bring in revenue and people to the space.”