US spirits producer Heritage Distilling Company is to close its tasting rooms and shift to contract production.
In a statement yesterday (23 October), the company said its decision stems from a review addressing “shifting market dynamics” and “financial realities” in the beverage-alcohol industry.
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The closures, effective 31 December, are driven by a “challenging” tax and regulatory environment in Washington and Oregon, it added.
Five retail tasting rooms in the states are set to be shuttered.
Heritage also cited reduced alcohol consumption and the “repeated legislative blocking” of efforts to equalise taxation for low-proof RTD beverages with wine and beer.
Moving forward, Heritage will concentrate on its “higher margin” direct-to-consumer channel and expand wholesale volumes.
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By GlobalDataThe company plans to strengthen partnerships with tribal communities through its Tribal Beverage Network (TBN) programme, focusing on branded tasting rooms near casino properties.
The restructuring is projected to reduce annual operating expenses by over $5m and “accelerate” profitability in its craft spirits segment.
The company is a wholly owned subsidiary of Heritage Distilling Holding Company, which became a publicly traded company in November 2024.
Heritage Distilling Holding Company rebranded to IP Strategy in September.
The change reflects a shift towards an intellectual property (IP) treasury model, focusing on $IP tokens within the Story blockchain network.
The company estimates the IP economy at $80tn and aims to offer investors regulated equity exposure to this market without direct cryptocurrency ownership.
Heritage Distilling Company achieved profitability for the first time in 2024.
The company generated a net income of $710,458 last year, versus a net loss of $36.8m in 2023.
Net sales rose 5.4% to $8.4m. The growth was driven by a 28.8% increase in product sales, which Heritage Distilling said was largely due to the launch of the Special Operations Services product line in 2023.
The company also achieved positive EBITDA for the first time, with that metric reaching $4.5m, compared to a loss of $32.8m in 2023.
Alongside achieving profitability last year, Heritage also entered Colorado, Kentucky and Oklahoma and introduced new products.
