Despite hopes for a robust recovery, the alcohol industry continues to face significant hurdles as it grapples with the prolonged impact of the COVID-19 pandemic. Recently, another well-known spirits company succumbed to financial distress, marking a continued trend in the industry. Montana Distillery, renowned for its eclectic vodka varieties and artisanal spirits, filed for Chapter 11 bankruptcy on April 29, 2023.
This move reflects the broader challenges that have been plaguing the craft beer and spirits sector, with numerous businesses struggling to navigate through economic instability and changing consumer behaviors.
The Decline of the U.S. Beer Market
The Brewers Association’s annual report, released on April 16, 2023, painted a sobering picture of the craft beer industry’s current state including Montana Distillery. The report revealed a 5.1% shrinkage in the U.S. beer market’s volume last year, illustrating the ongoing adversities and problematic environment faced by brewers nationwide.
Despite this downturn, the association also noted a slight increase in the number of operating breweries—up from 9,824 in 2022 to 9,906 in 2023. However, the closure of 418 breweries at a nearly 4% rate indicates that many are still struggling to keep their doors open.
Last Call: Another Brewery Files for Bankruptcy; Stone Seeks to Dismiss MillerCoors' Counterclaims: Meanwhile, the San Diego-based craft brewery calls MillerCoors' attempt to receive exclusive common law rights to “Stone,” “decades stale, i.e., just … https://t.co/m3wGAEqzR6
— Luv Beer (@Luv_CraftBeer) April 24, 2024
The Impact on Iconic Breweries: Montana Distillery
San Francisco’s Anchor Brewing, a bastion of the craft brewing movement since 1896, also felt the sting of these challenging times. The Montana Distillery filed for Chapter 11 in July 2023 and ceased operations, a significant blow to the craft beer community.
This trend is not isolated, as several other smaller breweries, such as Flying Fish Brewing of Pennsylvania and Forgotten Boardwalk Brewing of New Jersey, have also entered bankruptcy protection in recent months.
The Spirited Struggle Continues
The spirits segment has not been immune to the industry’s hardships. Lee Spirits Co., a Colorado-based distiller known for its premium gin and vodka, filed for Chapter 11 bankruptcy on March 8, 2023, after a desperate attempt to overcome the pandemic’s impacts.
The company’s shutdown included its Colorado Springs tasting room, and Brooklyn’s on Boulder Street, symbolizing a broader issue within the spirits industry, which saw a mere 0.2% increase in supplier sales and a 1.2% rise in volumes last year.
Montana Distillery’s Fight for Survival
The bankruptcy petition submitted by Montana Distillery details the company’s efforts to relocate and restructure its operations to alleviate the effects of growing costs and dwindling sales.
Originally based in Missoula, Montana Distillery moved to Stevensville in 2020, where it opened a new tasting room on Christmas Eve.
Despite introducing a variety of flavored vodkas and unique spirits like Fallen Dove Gin and Careless Creek Red Sheep whiskey, the economic pressures proved too overwhelming, leading to its financial capitulation with liabilities ranging between $500,000 and $1 million.
A Sector in Search of Stability
As these breweries and distilleries navigate through bankruptcy and restructuring, the entire alcohol industry is reminded of the fragility of its market and the ongoing need for adaptation and innovation.
The path forward will require a deep understanding of shifting consumer preferences, strategic financial management, and perhaps a bit of luck as these businesses strive to find their footing in a post-pandemic world.
With no events on the horizon and an online store still in the “Coming Soon” phase, Montana Distillery, like many others, faces a daunting journey toward recovery.
