Eastside Distilling Net Loss Triples as Sales Decline

Eastside Distilling reports sales in the third quarter fell to $3.1 million from$3.3 million a year earlier due to lower spirits sales from Azuñia volume related to a reduction in discounting, a price increase in 2021 and two large one-time inventory purchases in 2021; offset by increased Craft C+P sales from its new digital can printer.

The net loss for the third quarter was $2.7 million, three times the $900,000 it reported a year earlier.

The company said its spirits volume has been "soft" during 2022, "primarily due to terminating deep discounting of Azuñia tequila in 2021. In addition, we faced challenges with distribution partners that resulted in out of stocks at retail and missed programming windows."  The net result is that spirits sales plunged to 7,459 cases in the third quarter from 9,725 cases a year earlier. "The majority of these issues are behind us as we head into the fourth quarter," Eastside said.

"Finally, we saw cost increases across much of our direct and indirect costs. While a substantial amount of our raw materials is owned, such as our whisky, and not susceptible to price inflation, imported tequila and other materials such as glass increased through the year. These challenges are expected to continue in the last quarter of 2022. The decline in distributed sales was offset by a direct sale of nearly 1,500 barrels sold for $4.4 million during 2022."

The company has sought to diversity operations by becoming a contract provider of cans and packaging services.  That business "continues to face challenges and opportunities," Eastside said.  One of those challenges has been uncertain supply of cans, although Eastside said it believes it now has "an adequate supply of cans."