Nice. I think the words running together is a valid stylistic choice, though I do find it a bit distracting. Maybe you could put a little centered dot between the words to indicate the separation without changing the actual spacing?
M I S S•LADY
S M A L L•B A T C H
R O O T•B E E R
A very light "dot" that is sort of star-like to match the flourish on the font could work, though you'd have to play around to get the right feel and it might add too much weight to the center of those lines.
But I'm not saying you need to make any changes, just a possibility that struck me. Your label looks great as it is.