US home to 1,300+ craft spirits producers

The US craft spirits market is growing “rapidly”, recording 1,315 active craft distillers as of August 2016 according to collaborative research initiative The Craft Spirits Data Project.

Collaborative research initiative The Craft Spirits Data Project is led by the ASCA, the IWSR and Park Street

Lead by The American Craft Spirits Association (ASCA), the International Wine and Spirits Research (IWSR), and advisory firm Park Street; the project aims to provide a “solid and reliable fact base” for evaluating performance and trends in the US craft spirits industry.

The initiative’s new report reveals five-year CAGR growth is running at 27.4% in volume and 27.9% in value for the category – which reached 4.9 million cases and US$2.4bn in retail sales in 2015.

The market share of US craft spirits reached 2.2% in volume and 3% in value in the same year – up from 0.8% and 1.1% respectively in 2010 – while exports hit 523,000 cases, adding more than 10% volume to total US craft distiller sales.

For the project, US craft spirits were defined as “distilled spirits that are produced in the US by licensed producers that have not removed more than 750,000 proof gallons (or 394,317 9L cases) from bond, market themselves as craft, are not controlled by a large supplier, and have no proven violation of the ACSA Code of Ethics”.

Geographically, the report found the US craft distilling market to be “concentrated”, with the top five states (states containing the highest number of craft distilleries) making up 35.6% of the category: California, New York, Washington, Colorado and Texas.

The next five states – Oregon, Pennsylvania, North Carolina, Ohio and Florida – comprise an additional 16.5% of the market.

The Craft Spirits Data Project research also revealed that distillery investments reached almost US$300 million in 2015, were primarily devoted to the build of visitor experiences, equipment to increase production capacity, and associated labour costs.

Going forward, producers outlined excise tax parity as one of the “most critical” keys to success. According to the report, taxes on distilled spirits currently comprise 54% of the average spirits product’s purchase price – with craft spirits producers paying 17 times more Federal Excise Tax (FET) than a small winery and six times more FET than a craft brewer for equal quantities of beverage alcohol.