Legislation to expand sales of spirit-based ready-to-drink (RTD) cocktails in California is moving forward today, after the state Senate unanimously passed a bill allowing those products to be sold in grocery and convenience stores.
If passed into law, the bill S.B. 277, introduced on February 1, will allow licensed beer and wine retailers to sell “low ABV spirits beverages” in containers no larger than 16 oz. for off-premise consumption. Those beverages must not exceed 10% ABV and contain “distilled spirits mixed with other ingredients, including non-alcohol components or alcohol components.” The bill will now be re-referred to the committee on appropriations, as do all bills with a fiscal impact, and moved to the Assembly for consideration.
Existing legislation requires retailers to obtain a separate license to carry spirits-based RTDs; as a result, beer- and wine-based RTDs are now sold in more than 28,000 locations in California, while spirits-based RTDs are sold in 14,000 locations, according to the Distilled Spirits Council of the U.S. (DISCUS).
Lobbying for legislation that expands the reach of spirits-based RTDs, as well as the reduction of states’ excise tax rates on them, is a priority for the industry trade group, which has argued that products with similar ABVs, regardless of the alcohol base, should be treated equally.
Beer advocacy groups have worked to defeat such allowances, claiming that base matters, and that expanding the reach of RTDs results in a bigger payout for out-of-state liquor producers rather than local beer and wine producers.
At the Craft Brewers Conference in Nashville earlier this month, Brewers Association (BA) government affairs leaders Marc Sorini and Katie Marisic also argued that canned cocktails are being used as a recruiting tool for higher ABV spirits.
“This is going to be a long struggle because the liquor folks want what we have, which is lower taxes and higher availability,” Sorini said at the conference.
Since the growth of RTDs began heating up the battle for the coldbox, similar bills proposing changes to tax rates and retail channels have been introduced across the country. The RTD category value is expected to increase by an additional $11.6 billion over the next five years, and the number of spirit-based SKUs on the market in the U.S. has risen by approximately 70% between 2020 and 2022, according to drinks data company IWSR.
The results of those efforts so far have been mixed. In 2022, similar bills were defeated or stalled in Alabama, Arizona, Hawaii, Kentucky, Maryland, Washington and West Virginia. In 2021, tax reductions for spirits-based RTDs were signed into law in Michigan and Nebraska. Last year, a new Vermont law also lowered state excise tax on spirits-based RTDs and allowed for wider distribution.