WSWA Access Brand Representative Kat Hantas from 21Seeds Tequila Champions Three-Tier Alcohol Distribution in California

Jan 10, 2022
SACRAMENTO, CA
“The existing routes to market in California help new brands to compete. Importantly, these regulations promote stability in the marketplace that allows craft brands like mine to invest in future growth with confidence.” – Kat Hantas, CEO and Founder 21Seeds Tequila

 

WASHINGTON, D.C. – Last November, CEO and Founder of 21Seeds Tequila and WSWA Access Brand Representative Kat Hantas submitted commentary to California’s Governmental Organization Committee on marketplace competition and the roll of wholesalers in maintaining California’s safe and diverse marketplace.

 

In her testimony Hantas focused on the opportunities current regulations create for craft, startup and small production wine and spirits brands like 21Seeds and how DTC distilled spirits shipping could create barriers to entry and make it more difficult for California-based brands and retailers to thrive.

 

“Widescale loosening of these regulations in the manner under consideration today would undermine the level playing field and seriously disadvantage companies like mine in favor of out of state businesses that are terribly difficult to regulate similarly. The increase to the regulatory burden would on its own detract from California’s ability to ensure the marketplace in-state is still functioning well,” said Hantas.

 

Tomorrow, the GO Committee will vote on California Senate Bill 260 which, if passed, would allow for the direct-to-consumer (DTC) shipment of distilled spirits into California. WSWA stands with Wine & Spirits Wholesalers of California (WSWC) and urges the California Senate to VOTE NO ON SB 620.

 

Read Kat Hantas’s full submission below:

 

I am a passionate and driven entrepreneur who cofounded a company based in California and chose to enter into a very competitive segment of the alcohol industry. As a female owned, operated and driven craft brand, 21 Seeds Tequila is an American spirits success story.  

 

While our road isn’t without bumps and curves, our journey has been exciting over the last 2 1/2 years – and I can report like many craft brands in the use, this is our spirits renaissance, and it continues to get better. 

 

 

As a craft brand entering the crowded, male-dominated Tequila space, it was intimidating to say the least. How could we compete against the biggest and most established brands? The answer lays, in part, in regulations, which are critical in ensuring a level-playing field for industry members big and small to compete. 

 

California’s alcohol regulatory system must strike an important balance fostering free-market competition of socially sensitive products. The existing routes to market in California help new brands to compete. Importantly, these regulations promote stability in the marketplace that allows craft brands like mine to invest in future growth with confidence.  For example, a big supplier like many of the legacy Tequila brands and a startup brand like 21 Seeds have the SAME restrictions and as well as access. Neither of us are allowed to pay for better retailer shelf space – we often stand shoulder to shoulder and compete for the consumer’s glass.  This is an important regulation that helps ensure our products compete on the merits – on story telling – on label creativity and most of all value. 

 

Widescale loosening of these regulations in the manner under consideration today would undermine the level playing field and seriously disadvantage companies like mine in favor of out of state businesses that are terribly difficult to regulate similarly. 

 

The increase to the regulatory burden would on its own detract from California’s ability to ensure the marketplace in-state is still functioning well. Why would we even consider pursuing this course of action when so many other marketplace solutions and innovative paths are available? 
 

I am happy to share the after launching 21 Seeds Tequila in 2019, we have not only been able to compete, but we are now the leaders in the premium flavored tequila category. This is a major accomplishment for my team, our distribution partners, retailers who have provided space for craft brands to be showcased, and consumers who are open to exploration and have connected with our brand.
 

Many companies view regulations as impediments to doing business. But in the alcohol industry, regulations help companies compete. I’m glad to be in an industry that has restrictions on companies, so the marketplace isn’t completely play-to-play. These regulations are important to have so that a small, growing, woman-owned company like mine can enter into an established market and compete with quality products. I respectfully ask that this committee takes a close look at this issue and not move forward with removing the important regulatory structure that has led to the success of so many businesses like mine.