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Craft Renaissance In Finland Spreads Abroad

February 4th, 2017

Russian sanctions opened doors for Finnish craft spirit exports

Finnish alcohol products in recent years have become a worldwide hit, and surprisingly, the Russian sanctions imposed by the EU in 2014 might have helped to boost the export of the products to European and Asian markets. For the third year in a row, Finnish food exports are being led by alcoholic beverages, which netted EUR37 million in the first quarter of this year.

After the sanctions imposed on Russia by the EU, the Finnish export of food and groceries went down significantly and the industry had to look for new sources for growth. Several small and large breweries saw the opportunity and increased their budget for exporting their products. As a result, many small distilleries now try to keep up their production capacity with growing demand. Finnish alcohol producers look for growth outside the borders of a country where alcohol sales and even marketing are highly restricted.

Niche players draw consumers’ interest

Craft spirits is a fairly young phenomenon in Finland, only a couple of years old. Products from niche players are usually priced from premium to super-premium price segments. Due to the impressive supply, Finns favour products from domestic small distilleries over foreign brands. In fact, the volume sales of domestic super premium spirits, comprising of craft spirits, have already exceeded the foreign brands in the same category. The craft segment in Finland is estimated to reach a volume of 300,000 litres in 2017. Yet compared to the overall spirits market, craft spirits represent only a small part of consumption. After all, mainly small distilleries are responsible for the trend, with limited production capacities, in addition to which many of them export up to half of their production.

Finnish alcohol products have gained a reputation worldwide for their premium packaging and distinctive usage of high quality ingredients. The small distilleries increased consumers’ interest by communicating their values of honesty, quality and sustainability, without having a big budget for marketing. Niche distilleries often use a ‘bottom-up’ approach when introducing their products to new markets, the first step being a careful mapping of local trends and consumer preferences by talking with the key players in horeca after which a strategy on distribution is formed. For small producers, social media as well as online shops have become important channels for marketing their products.

The cool brand names and packaging as well as qualitative ingredients respond well to the intensifying alcohol trends around the globe. Consumers are increasingly looking for the highest possible quality when it comes to alcoholic drinks, as well as originality which reflects the booming growth of craft spirits. Moreover, packaging plays a key role in craft spirits which often equates to simplicity and catchy brand names, communicating a story to the consumer. The Japanese in particular have found the simple Finnish design appealing as it corresponds well with their own style. Finally, Nordic ingredients such as berries and grains are in high demand globally due to the fact that they symbolise both quality and health and wellness.

Finnish craft players brand their products well

Among the persistent companies one can expect to hear more of is Helsinki Distilling Company, which produces craft spirits such as dry gin, premium aquavit and applejack produced from Finnish apples. The company exports its products to Nordic countries, Japan, Germany, Estonia, Benelux, Italy and the UK. One of the company’s product, Helsinki Dry Gin was awarded The Spirit of the Year 2016 in Destille Berlin, the leading craft spirits fair and competition in Europe.

Another interesting player is the Kyrö Distillery, producer of Napue Gin which won the world’s best gin award at The International Wine and Spirit Competition (IWSC) in 2015. In just a couple of years the company has managed to gain a reputation globally and now exports to both Asian and European markets. The company’s craft offering can be bought, for instance, via Amazon and duty free in Helsinki-Vantaa airport where the popularity of Napue has exceeded known British gin brands.

Finnish family-owned alcohol producer Lignell & Piispanen is planning to increase its exports to equal about half of its turnover. The company markets its products as Arctic luxury liquors, made with such Nordic berries as cloudberries, lingonberries and blueberries.

Just the beginning

Although still young and with a low volume base, craft spirits are in high demand and thriving. It is still too early to say whether craft spirits will reach similar success compared to its predecessor, craft beer. Spirits in many markets face tougher legislation in both distribution as well as taxation. Yet, considering Finland’s unusually regulated alcohol industry, it is likely that the domestic producers continue to seek growth from exporting. After the success in European and Asian markets, many distilleries’ next ambition is the US, which would require an excellent network of contacts as well as the ability to cope with the complex distribution regime.

The companies have all the ingredients for success and judging from the worldwide recognition, there is no doubt about the quality of the craft spirits of small Finnish distilleries. Despite the fact that the producers have managed to brand their products well, they still need to increase their marketing efforts to reach more fame and a whole lot of daring will to penetrate such big markets as the US.

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Salla Korpivaara

Salla Korpivaara is a Research Analyst at Euromonitor International. She has a Master's degree in Social Sciences from the University of Helsinki and has been working with different research projects for years. Professional interests include tracking latest consumer trends, health and wellness products as well as sustainable product innovations. Feels like home when working in a multi-cultural team.

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