US craft spirit industry on the rise as producers double on-premise investments
The ongoing data project is an effort led by ACSA, Park Street, and the IWSR, with collaboration from government and industry organizations, including the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB), the National Alcohol Beverage Control Association, American Beverage Licensees, and the Wine & Spirits Wholesalers of America.
The craft distilling industry sold nearly six million cases in 2016, up 18.5% in volume compared to 2015, and reaching $3bn in sales, an increase of 25% for the 2015-2016 period, The Craft Spirits Data Project found.
Producers invest in on-site experiences
As of August 2017, industry investments such as construction of tasting rooms and visitor experiences, equipment to increase production capacity, and labor costs reached $600m and is on track to reach nearly $800m at the end of the year, according to the data.
Investments in onsite construction have become more important to small craft spirits distillers (between 0 and 10,000 proof gallons removed from bond annually) as direct and tasting room purchases made up 58% of their total sales.
“On-premise retailers suggest that producers invest more resources against the consumer, both in terms of tastings, other consumer pull strategies, and branding,” The Craft Spirits Data Project stated.
On-premise retailers also recommend that producers focus on narrowing their product selection to fewer, higher-quality spirits.
Mirroring this industry recommendation, the average investment of a US craft producer has been increased by 14.6% from $276.8k in 2016 to $317.3k in 2017.
‘Craftiest’ states
The number of active craft distilleries in the US grew by 20% to 1,589 locations between August 2016 and August 2017. New Jersey, Michigan, and Maryland each registered an over 40% growth rate in the number of distillery openings, according to The Craft Spirits Data Project.
Geographically, the US craft spirits market remains heavily concentrated with California, New York, Washington, Texas, and Colorado leading the pack by number of distilleries making up 34.2% of the craft distiller sector.
Similarly, sales of US craft spirits are mostly local as more than 50% of cases are sold in the home state of the distiller, the data project revealed.
