Craft spirits sales grow 7.3% in 2020

US craft spirits sales increased at a slower rate last year, while employment levels dropped by nearly 50% when compared to 2019, according to new data.

The craft spirits market in the US rose 7.3% to 12 million nine-litre cases in volume last year, with the growth rate falling to single digits. In 2019, the market increased by 24% to 11.9m cases.

The American Craft Spirits Association (ACSA) unveiled the figures as part of its 2021 Craft Spirits Data Project.

The ACSA said employment in the US craft industry was heavily impacted by the pandemic. The number of full-time employees surpassed 30,000 in 2019 but plummeted by nearly 50% last year to 16,865.

In value terms, the US craft spirits market reached US$6.7 billion in sales, increasing at a yearly rate of 9.8%. Craft spirits market share of total US spirits reached 4.7% in volume and 7.1% in value last year, up from 2.2% in volume and 3% in value five years ago, and 4.6% in volume and 6.9% in value in 2019.

Furthermore, exports of US craft spirits fell by 32.9% to 104,000 cases in 2020, compared to the previous year. Just under half (46%) of the total US craft business occurs in the distillers’ home state, with exports adding 0.9% to the overall volume.

In December 2020, the Craft Beverage Modernization and Tax Reform Act (CBMTRA) was made permanent. The bill reduces federal excise tax on distilled spirits from US$13.50 to US$2.70 per gallon for the first 100,000 gallons produced in the calendar year.

Since the enactment of CBMTRA, investments by craft producers have continued to rise, the ACSA noted. In 2020, the amount of capital invested by the US craft industry was US$759m, a rise of more than US$61m (up 8.7%) from 2019. The trade group said the main reason for reinvesting was expansion to meet consumer demand and increasing visitor space.

The number of active craft distillers in the US reached 2,290 in August 2021, an increase of 1.1% compared to the same month last year.

The top five states for craft distillers are California (190), New York (180), Washington (135), Texas (135) and Pennsylvania (117, up from 109 in 2020), which together make up 33% of the market. Pennsylvania overtook Colorado for the first time, which has historically been in the top five.

The Craft Spirits Data Project was first introduced in 2016 and aims to quantify the number, size and impact of craft spirits producers in the States. The study is created in collaboration with consultancy Park Street and key industry groups, including the Alcohol and Tobacco Tax and Trade Bureau (TTB) and the National Alcohol Beverage Control Association (NABCA).

The 2021 project was revealed during the ACSA’s Annual Distillers’ Convention and Vendor Trade Show (4-6 December) in Louisville, Kentucky.

Craft spirits in the US are expected to ‘vastly outperform’ the growth of mainstream brands in the coming years, according to IWSR Drinks Market Analysis.