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The Craft Spirits Scene and Australia’s Gin Craze

October 22nd, 2016

The craft spirits scene in Australia is burgeoning, with local distilleries gaining a stronger foothold in the spirits category. New players are coming into the market every year. Recently, Archie Rose and Young Henrys have emulated the success experienced by Four Pillars and West Winds. There are now more than 50 distilleries, and more are coming to the market each year. Many local distilleries emphasise the story behind them, which reflects consumers’ growing interest in provenance, which has been prominent in Australian produce. Tasmania’s Belgrove Distillery, for example, has all its grain grown on site, and is one of the few distilleries in the world which can make a claim of “paddock to bottle”.

White spirits recorded growth in both total volume and value in 2015. Within white spirits, gin, and in particular English gin, performed strongly, as consumers were captivated by its complex flavours. Its popularity also had much to do with its versatility, and the interest generated by the new products constantly coming onto the market, such Young Henrys, a distillery in New South Wales, which launched Noble Cut gin in March 2015. In its product, it has, like other local producers, added native flavours, such as pepperberry and bush tomato, along with classic botanicals like juniper, coriander and cassia bark. Melbourne Gin Company, set up by winemaker-turned-distiller Andrew Marks, has been popular for its artisanal approach in its method of production. Its products are batch distilled, blended and bottled by hand. Further adding to the personal touch are local distilleries selling direct from bars at their own sites. This includes Four Pillars, with its resident Gin Ambassador and Bartender in Residence Sam Ng, who informs customers how gin can be drunk in different ways.

Outlook

Whilst opportunities are aplenty for growth in spirits, the main inhibitor of growth is the excise tax structure. Currently, there are no concessions for small or new producers. Industry sources indicate that the government in Australia makes almost three times more revenue from one bottle of gin than the producer. This makes Australia’s spirits industry one of the highest taxed in the world. The challenge for local producers in concentrated areas like Sydney is that the market is tied up by the larger spirits companies, and, as a result, bartenders have less chance to use boutique products in their cocktails. The Australian craft spirits industry is still in its early stages, and local brands account for only a fraction of the spirits market. Stuart Gregor, cofounder of Four Pillars gin and president of the Australian Distillers Association (ADA) commented, “If we can fix the ridiculous taxation structure and the government can get out of our way, we can build a really sustainable, profitable, and excellent industry.”

Nevertheless, growth is expected for craft spirits, including local distilleries, as they spread their stories and products, and expand distribution. Products can already be found at popular on-trade clubs and bars, while Bad Frankies in Melbourne is a bar which only stocks Australian spirits, wines and beers. The specialist store Dan Murphy’s Double Bay, in Sydney, has set a new benchmark in drinks retailing since it opened in 2015. The store stocks more than 3,500 products, including a dedicated whisky section with over 400 brands. Dan Murphy’s has also launched Dan Murphy’s Connections, which is an online portal offering boutique and rare products that are not stocked in-store. About half of the products listed are in spirits, and the launch of Connections is an indicator of Australia’s growing interest in premium spirits. Also in the online channel, Nip of Courage, a domestic and international distributor of Australian-made craft spirits, will help to drive the growth of craft spirits.

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Sara Agostino

Sara researches the beverage and tobacco industries in Australia. Her professional interests include strategic, qualitative research and finding out about new consumer products. Sara holds a Bachelor of International and Global Studies (Honours) from the University of Sydney and also has an interest in yoga and traveling to new places.

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