Craft Spirits Growing Fast and Getting Bigger

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The annual Craft Spirits Economic Briefing report dives deep into craft spirits trends and shows volume, value, distillers and investment way up.

 

The trajectory continues to arc high for American craft distillers, and the latest figures show a big year now that all numbers from 2016 have been tabulated.

The craft distilling industry sold nearly six million cases in 2016, up 18.5% in volume compared to 2015. That translates to $3 billion in sales, an increase of 25% by value, according to a recent presentation by the American Craft Spirits Association (ACSA), Park Street, and the IWSR, “The 2017 Craft Spirits Data Project.”

At the annual Craft Spirits Economic Briefing held at Kings County Distillery in New York, the figures presented showed that the market share of US craft spirits reached 2.6% in volume and 3.8% in value in 2016, up from 1.0% in volume and 1.2% value in 2011.

Other key findings: The number of active craft distilleries in the US grew by 20.8% over the past 12 months to 1,589 as of August, 2017. Meanwhile, industry investments are on pace to double this year. As of August, 2017, industry investments reached $600 million in 9 months, up from $398 million for the entire 2016 calendar year.

The Craft Spirits Data Project, which was first introduced in 2016, is a research initiative that aims to provide a reliable fact base for evaluating performance and trends in the US craft spirits industry. Importantly, for purposes of the research, US craft spirits are defined as distilled spirits that are produced in the United States by licensed producers that have not removed more than 750,000 proof gallons (just under 400,000 cases) from bond, market themselves as craft, are not openly controlled by a large supplier, and have no proven violation of the ACSA Code of Ethics.

While bars and restaurants are an important component of craft spirits’ growth, distillery and tasting room sales make up 34% of all sales for small craft distilleries. Direct sales at the distillery are said to be important for all craft distillers but especially important for small craft producers (between 0 and 10,000 proof gallons removed from bond annually).

The report indicates that some states are “craftier” than others, with California (148 craft distillers), New York (123), Washington (106), Texas (86), and Colorado (80) leading the pack, making up more than 34% of US craft distillers. Oregon, Pennsylvania, North Carolina, Ohio and Florida make up the rest of the top 10 states.

Closely watching, of course, are the large companies who have taken a stake or bought outright many of the emerging craft powerhouses. While they, like craft brewers bought by mega-brewers AB InBev, Heineken, Constellation and others, will no longer be counted by this project, consumers have shown they don’t really care very much about ownership, or that at least the addition of a distribution powerhouse behind a growing beer or spirit maker will more than make up for a loss in caché among early adopters. They’ll be keeping an eye on trends and also staying alert for others growing fast and preparing to cash out.