US government shutdown: product delays and lost sales possible
The American spirits industry could face delayed product launches and lost sales after the US government reached a political gridlock, forcing it to shut down.
The US federal government shutdown came about after Republican and Democratic officials failed to reach a funding agreement before the start of the new fiscal year on 1 October. It essentially means funding for the US government has been cut off.
During the shutdown, federal employees are expected to be hardest hit as they will not be paid while the shutdown is in effect.
The Distilled Spirits Council of the US (Discus) has warned the shutdown will have a detrimental effect on the industry, directly impacting the Alcohol and Tobacco Tax and Trade Bureau (TTB), which is responsible for permitting, regulating and collecting taxes on distilled spirits.
Distillers are only allowed to operate in the US with a TTB-approved permit. No spirit can enter the marketplace without one, and many spirits makers must have their products approved by the TTB. Products must also receive a Certificate of Label Approval (Cola) before being bottled and distributed between states, as required by the Federal Alcohol Administration Act.
In 2023, the TTB received almost 198,000 label applications and 27,000 formula submissions for alcoholic beverages.
Discus said in a statement: “Distillers, large and small, rely on timely approvals to remain competitive in the marketplace. Any disruption to these services will directly hinder distillers’ ability to bring new products to market, expand into new states, or make necessary label changes.
“The fall season is a critical time for spirits product launches and holiday planning. The shutdown will result in delayed product launches, missed market opportunities, lost sales and tax revenue, and lasting harm to the wider hospitality industry, which contributes significantly to the US economy.
“The distilled spirits industry generated US$6.7 billion in federal excise tax revenue last year and supports more than 1.6 million jobs nationwide.
“We urge Congress to act swiftly to resolve the shutdown and ensure uninterrupted operations at TTB to protect American consumers, distilleries of all sizes, and the broader US economy.”
The US has been a tough market for spirits recently, as both domestic and international producers grapple with tariffs. In August, the coalition Toasts Not Tariffs pleaded with US president Donald Trump to implement fair and reciprocal trade policies with the EU.
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