Craft Spirits: Distilling the Facts Behind the Buzz

There is no consensus on how to define craft spirits, but common themes exist

Many trade associations exist representing the interests of micro-distillers, but they each define “craft” in a different way. There are some common themes across definitions, however; namely quantity of production and independent ownership.

Craft spirits are most prevalent in mature markets of Western Europe, North America, Africa and Australasia

The market share of craft spirits remains very small. The most developed market, and the market where the trend began, is the US, with a 2.6% volume share of the overall spirits market. Gin, vodka and whiskies are the biggest categories within craft spirits, as well as local country-specific liqueurs.

Underlying lifestyle trends are shaping the rise of craft spirits

The convergence of lifestyle trends in certain markets has led to the growth of craft spirits, notably the rise of the hip urbanite culture in much of the West, as a reaction against mainstream and corporate offerings and a desire for originality.

Tax incentives and lifestyle trends will help to further propel craft spirits

The growth of interest in locally-produced, authentic products across a range of categories favours the further growth of craft spirits. Furthermore, tax incentives in certain markets will also facilitate the creation of new micro-distilleries.

The erosion of the term “craft” could limit growth

A lack of consensus on a range of issues, including the use of bulk spirits, the definition of hand-made and the quantity of production, could erode the term “craft”, and subsequently, consumer confidence in craft spirits.

Ultimately, craft spirits are unlikely to reach the same level of market penetration as craft beer

The relative expense of setting up a micro-distillery and the time to get spirits, especially brown spirits, to market, are key barriers to growth. Also, the fact that industrial producers are now creating interesting stories around their brands and producing spirits with complex taste profiles means craft spirits will find it harder to differentiate.