The State of Craft Spirits 2026: ACSA’s Market Analysis

Hi everyone, I’m Emily Pennington, CEO of the American Craft Spirits Association (ACSA). Our bread and butter is advocating for small distillers on both state and federal levels, conducting industry research, and creating educational resources for our members and the industry at large.

Today, I’m going to talk about the state of craft spirits. To give you a preview: first, I’ll examine the big picture of the craft spirits category as a whole. Then, I’ll zoom in on what the average craft distiller in the U.S. looks like. Finally, I’ll break down the top challenges small producers are facing and how they are adapting to them.

I wouldn’t be very good at my job if I didn’t take a moment to celebrate how far the craft spirits category has come. We’re going to discuss a lot of headwinds today, but look at the surge in craft distillers over the last 20 years. In 2006, we had 75 craft distillers; 20 years later, we have over 2,000. That represents a remarkable compound annual growth rate of roughly 20%.

Most fast-growing industries have much lower barriers to entry—think mobile apps, podcasts, or even craft beer. Craft spirits has had to grow despite massive structural barriers. The game-changer for craft distilling was the 2017 Craft Beverage Modernization and Tax Reform Act. It kickstarted the craft spirits category in much the same way the Homebrewing Legalization Act of 1978 exploded the craft beer boom. That policy change, combined with surging consumer demand and low interest rates, resulted in the growth boom we see today.

As a whole, the U.S. craft spirits category represents $7.6 billion in sales and 12.7 million nine-liter cases. That breaks down to about a 4.5% volume share of the entire spirits category and roughly a 7.5% value share.

Looking at the average craft distillery: while the exact definition of “craft” can be nebulous, ACSA defines craft as any producer making under 395,000 cases annually, not majority-owned by a larger strategic entity, and adhering to ACSA’s code of ethics.

While that 395,000-case cap is high, the average number of cases removed from bond by a craft distiller in the U.S. is just 4,500 cases. Over 90% of craft distillers fall into that small-producer category. As a group, craft distillers do roughly 49% of their business at their tasting room or within their home state, while 51% is sold across state lines. However, for micro-brands producing under 5,000 cases annually, 90% to 95% of their business stays strictly within their home state.

In an ACSA member survey on distribution, producers reported their current setup: 10% have no wholesale distribution at all, 30% have distribution agreements exclusively within their home state, and 60% hold distribution agreements outside their home state.

Looking at liquid categories by volume: craft distillers primarily produce specialty spirits (liqueurs, eaux-de-vie, aperitifs), followed by whiskey, gin, vodka, and ready-to-drink (RTD) products. Unsurprisingly, craft distillers produce very little agave-based spirits compared to the broader spirits market.

Now let’s examine the headwinds. The first reality of the craft spirits category is that small distillers do not compete on a level playing field when bringing product to market. Distributor consolidation has made it extremely difficult for small producers to secure and maintain distribution. A 5,000-case brand is competing for sales rep attention against deep-pocketed multinationals with dedicated sales forces and lucrative commission structures—the math simply doesn’t work in a small producer’s favor.

Because of this, market access remains the number one issue our members raise year after year, closely followed by direct-to-consumer (DTC) shipping. While the wine industry has enjoyed DTC shipping in most states for decades, spirits producers remain locked out of the vast majority of the country.

Additionally, macro economic conditions have hit hard. 2023 marked the first year in the history of the category that craft spirits declined, a trend that continued through 2024. As we prepare the latest Craft Spirits Data Project report, we expect volume to remain flat or down. Producers are also dealing with rising input costs across grain, glass, packaging, and labor—and small balance sheets cannot absorb these inflationary pressures the way international strategic players can.

Here is how craft distillers are meeting the moment:

• Contract Production: 33% of craft producers report taking on contract production to monetize idle still capacity and labor when their own brands cannot expand into new markets quickly enough. Conversely, some distilleries (like West Fork Whiskey in Indiana and The Family Jones in Colorado) have closed retail operations to focus entirely on contract manufacturing.

• Joined Forces & Strategic Partnerships: We are seeing craft-on-craft mergers and acquisitions (such as Middle West acquiring Old Elk), alongside collaborative collectives like the Siren Spirits Group—a newly launched portfolio of women-owned brands sharing distribution access, strategy, and marketing amplification without building massive in-house teams.

• Omnichannel Expansion: Producers like Frey Ranch and Lost Lantern Whiskey are using localized DTC online sales to identify real-time consumer demand, following those digital data points with targeted brick-and-mortar retail expansion.

Finally, addressing the DTC landscape: consumer and supplier demand for direct-to-consumer spirits shipping is massive. In our annual report with Sovos ShipCompliant, 87% of regular craft spirits drinkers reported wanting to purchase spirits online that they first tried while traveling, and 67% of Americans aged 21+ favor expanding DTC spirits shipping laws.

While consumer demand and technology are ready, the legal framework moves slowly. Currently, ten jurisdictions permit some form of permanent direct-to-consumer spirits shipping: Alaska, Arizona, Kentucky, Nebraska, New Hampshire, New York, North Dakota, Rhode Island, Vermont, and Washington, D.C.

California passed progressive DTC legislation allowing distillers to ship in and out of the state, but that law requires legislative reauthorization to remain in effect beyond 2026. Similar DTC bills were introduced in South Dakota and Iowa; while they did not cross the finish line this session, active legislative momentum remains behind expanding market access.

Thank you everyone, and feel free to reach out to ACSA for additional data and resources on craft spirits.