The coronavirus, or as it's commonly known now as COVID-19, continues to change the way Americans do business and live their daily lives. From forcing families to work and learn from home while they shelter in place, to business distributions, to the impact on the stock market, we are all facing new and unprecedented challenges. The liquor industry is no exception. Across America, restaurants and bars have been ordered to close, can offer carry-out service only, or have been forced to restrict the number of patrons allowed on their premises. Retailers, on the other hand, have seen their shelves stripped bare as customers fill their carts and stock up on everything from toilet paper and cleaning supplies to alcoholic beverages.    This month's article will discuss many of the issues impacting the liquor industry in the wake of COVID-19.

Retailers were one of the first businesses impacted by COVID-19. Panicked consumers flocked to grocery stores, convenience stores, pharmacies and big-box stores and cleaned out the shelves, leaving little to nothing left for the consumers that followed. As these stores attempted to keep up with demand, many were forced to limit store hours to allow for restocking and cleaning of stores. Others have restricted the number of shoppers allowed in the store at one time in order to try to control the spread of the virus, creating long lines and frustrated shoppers. But, after stocking up on essentials, it appears that shoppers have turned their attention to spirits. Across the country, shoppers have begun to stock up on beer, wine and spirits driving up sales tremendously in comparison to this time last year. Unfortunately, the high demand for spirits is likely to be very short-lived.

In fact, some states, such as Pennsylvania, have begun closing their state-run liquor stores. Likewise, breweries, distilleries, brew-pubs and wineries have been forced to close their tasting rooms or host any events. Many states have limited the number of people that can gather in order to try and minimize the spread of this disease. As reported by Forbes, Torres, Spain's leading wine and brandy company, is expecting a major hit, anticipating a 50% fall in March (after a major decline in February). This trend is expected to continue while global commerce continues to slow in the face of the ever-evolving pandemic. Economic forecasts indicate restaurants and the food service industry could sustain $225 billion in losses and eliminate 5 to 7 million jobs over the next three months. Despite the economic turmoil these industries are facing, many businesses are changing and evolving to adapt to the current state of affairs.

A number of restaurants are offering carry-out dining options and to-go alcoholic beverages. Others are increasing their delivery options or implementing them where they once did not exist. The same holds true in the retail space. Many retailers have turned to curbside or in-home delivery to meet customer demand.  Manufacturers, such as alcohol distillers, are trying to stay afloat by producing hand sanitizer to keep up with demand. It remains to be seen how this will impact supply in the long run.

On March 19, the Alcohol and Tobacco Tax and Trade Bureau (TTB) waived certain provisions of its internal revenue law regarding distilled spirits. In doing so, the TTB provided certain exemptions and authorizations to distilled spirits permittees in order to allow them to produce hand sanitizers. Normally, a distillery needs an industrial manufacturing permit to make denatured alcohol. However, under these exceptions, existing distilled spirits permittees can immediately begin producing hand sanitizer without first having to obtain authorization. Distilled spirits permittees manufacturing hand sanitizer under these exceptions must produce products consistent with the World Health Organization's guidance. All permitted distilled spirits permittees may manufacture hand sanitizer products that are comprised of denatured or undenatured ethanol, glycerol (not less than 1.45% of the finished hand sanitizer product on a volume basis), and hydrogen peroxide (not less than 0.125% of the finished hand sanitizer product on a volume basis), without first obtaining formula approval from TTB. For more information see https://www.ttb.gov/images/newsletters/archives/2020/ttb-newsletter03172020sp.html.

 It is hard to know what the future will hold in these uncertain times. However, one thing is clear: Americans are resilient and will adapt to the challenges that COVID-19 has caused. The liquor industry is one of the most resilient industries in this nation and will no doubt find a way to preserve through these uncertain times.

Jason Canvasser is a partner in Clark Hill's Detroit. Michigan office. As part of his practice, he routinely counsels national clients on a number of issues relating to the sale, manufacturing and marketing of alcohol.