Craft spirits: Is micro-distilling going big?

Craft spirits on the rise

Craft beer saw a phenomenal rise in popularity over the past decade or so, with market share of total beer reaching the low double digits in its key core markets and further growth expected in developing regions – despite largely going flat recently. Nevertheless, craft spirits are now on the rise, and the leading players in the industry will be asking themselves how they can avoid a repeat of the complacency–induced loss of market share faced by big Beer.

A difficult category to define

While a tricky category to define, craft spirits tend to be categorised as spirits produced by small-scale, independently-owned distilleries, using manual production techniques. Different associations and organisations have all defined ‘craft’ spirits in different ways, but scale of production, independent ownership, and manual production methods are the key themes across these definitions. From a consumer point of view, craft spirits are often typified by products with a strong sense of story, grounded in a specific locality, with an emphasis on quality, locally-sourced ingredients and a unique taste. And there can be no denying that, however craft is defined, this new sort of spirits product is becoming increasingly popular in certain mature alcoholic drinks markets.

Consumer lifestyle trends have allowed the category to develop

Understanding what is driving interest in craft spirits is crucial to being able to offer spirits products which respond to consumers’ needs. Lifestyle trends, typified by the growth of a hip urbanite culture in many parts of the western world and beyond, as well as underlying consumer megatrends shaping a range of product categories, have played a key role in facilitating the rise of craft products across a range of spirits categories, especially gin, vodka and whiskies.

Multinationals will take a multifaceted approach

Acquisitions are a strategy which corporate players are likely to continue to pursue, and there has already been a host of acquisitions of small craft distillers by leading multinationals. That being said, adapting the marketing message and diversifying the product offering will also play a crucial role as the spirits industry adjusts to a changing category where craft products start to become, and will remain, an important part of the landscape which cannot be ignored.

To read more about the topic and gain a deeper understanding of the craft spirits market, including its origins, definition, estimated size in key geographies, leading players, and key issues impacting future development, read Euromonitor International’s latest in-depth report: “Craft spirits: Distilling the facts behind the buzz”.