Are Cocktail Bars Leaving Craft Spirits Behind?

Most of us have a favorite small-batch spirit—an off-the-radar brand of whiskey or gin that we then proudly introduce to our friends and family. Most of us, too, likely learned about it at a bar, where, after a brief chat, a bartender pulled out a bottle and said, “You ought to try this,” and poured a short shot.

For the past couple of decades, craft spirits and craft cocktail bars have enjoyed a friendly, bountiful relationship. Smaller, independent spirits brands have counted on bars to get the word out about what they’re making. In turn, craft cocktail bars have enjoyed offering guests high-quality, lesser-known brands, encouraging return visits. But is that symbiotic relationship fading? 

According to several small spirit producers, the answer is yes. 

“In the last couple of years, there’s been a tremendous amount of change,” says Tyson Schnitker, founder and distiller at Skaalvenn Distillery in Minnesota. “Back when we first started, bars were all about the new stuff on the block. They were super interested in craft spirits. And then, basically, since 2020, everything changed.”

The pandemic hit the spirits business hard in 2020 for all the obvious reasons. Many bars were closed for weeks or months or more, stifling cash flow and disrupting the longtime drinking habits of their regular customers. Craft distillers were also affected as spirits sales slid overall.

And as the restrictions of the pandemic faded, inflation soared. Bar managers found themselves dealing with rising prices for supplies, while customers resisted increasingly expensive drinks as they coped with higher bills for groceries and everyday expenses. As a result, craft bars and craft distillers found they were no longer in the same boat, enjoying the same rising tide. As the ship started to founder, and they boarded separate lifeboats, each focused on their own survival.

Craft spirits are more costly to produce at their smaller scale, and thus cost more for bars to use. That was fine when customers were happy to spend freely on premium drinks. But with rising prices of supplies and pressure to keep cocktail costs down, bar managers found themselves caught between using a mass-market spirit that cost $18 a bottle (and possibly less, with sales incentives from a distributor) and a craft quality spirit that was $40. They chose survival.

“The issue is not that they don’t support craft,” says Kris Koenig, cofounder and distiller at Golden Beaver Distillery in Chico, California. “It’s that it doesn’t make economic sense.”

A recent discussion among bartenders on Reddit centered around the economics of pour costs in deciding what spirits to use. “At the end of the day, it’s a business trying to sell products, and there has to be a middle ground between creativity, price point, and what people will actually buy,” wrote Incognitopear. Another bartender, High_Life_Pony, added, “Business is tough. Big brands have big promotional budgets. Almost every spirit on our menu has paid to be featured.”

The shift has been vexing for many craft distillers. Few have generous marketing budgets, and they find themselves competing among a burgeoning number of craft distillers—approximately 3,000 nationwide at present—all vying to be carried by a limited number of wholesalers, who offer access to bars. And wholesalers tend to push larger, more profitable brands. That’s a problem. 

Chand Harlow, co-owner and distiller at Wonderbird Spirits, which makes highly regarded gins from rice in Taylor, Mississippi, says that bars are a vital part of spreading the word when they enter a new market. “Startup distillers can’t advertise like Tito’s or Jim Beam, and are dependent on word of mouth,” he says.

He’s found the most dependable generators of word of mouth are bartenders. “Our presence at bars and restaurants is more of a branding and marketing thing,” Harlow says. “The only way we’re going to make money is if we get consumers to buy bottles at liquor stores.” But they won’t know to ask for it if they don’t know about it.

Jack Shute, head of sales and commercial operations at Oaklore Distilling Co. in Charlotte, North Carolina, which makes bourbon and rye, agrees that it’s a tremendous boost to get their product into bars, even if it’s not featured in cocktails. “It’s like a little billboard,” he says of seeing their label on the backbar.

But it’s not just economics at play. In the age of the high-concept cocktail and an increasingly saturated industry where bars strive to differentiate themselves, there’s greater emphasis on housemade products—house-infused spirits, inventive syrups and proprietary tinctures. Such twists can also keep customers returning, as it’s harder to replicate these creations than, say, a Manhattan variation using products easily bought at any liquor store.

“In the baseline culture of bartending, it’s no longer about taking care of the guests, it’s about showcasing yourself,” says Alex Pisi, bar director of Washington, D.C.’s Eastern Point Collective, which oversees bars including The Wells and The Duck & The Peach. Drinks become more complicated, more showy and less tied to base spirits, he adds. “My friends send me recipes, and I’m like, dude, I’ve been doing this [job] for 22 years, and I’d have a hard time making this.”

While the golden age in which craft distillers and craft bartenders danced together may be drawing to a close, distillers still see cocktail bars as a reliable route to market. It just might take more effort.

That often involves education—distillers and importers taking the time to travel to bars and conduct tastings to ensure the ever-evolving cast of bartenders is aware of their products. “We have done a lot of staff education and some pricing incentives which have helped us to stay on top of the bar scene as a local brand in Colorado,” says Michael Myers, president and distiller at Distillery 291, a whiskey distiller in Colorado Springs. For Nicolas Palazzi, owner of PM Spirits, which imports a wide range of artisanal products, talking to sommeliers at restaurants has also become a focus when entering markets. “Artisanal spirits are very much agricultural products,” Palazzi says. “I want to talk about the land and how it’s grown.”   

And while economics may mean that craft spirits won’t be in the well or on the cocktail list, with some work, bartenders and servers can steer customers looking to upgrade their spirits. “Given that nobody really knows who we are, especially out-of-state people, those staff trainings are imperative,” says Shute. “If somebody orders a Buffalo Trace, we say don’t upsell them on Angel’s Envy or WhistlePig. Sell them on the local brand, because first and foremost, it’s a better product.”