Craft spirits sales decline for first time in years

A new report from the American Craft Spirits Association (ACSA) has highlighted current market challenges as craft spirits sales dropped for the first time since 2016.

The ACSA held its Annual Craft Spirits Economic Briefing in Washington DC on Tuesday 17 September, presenting data on the number, size and impact of craft spirits producers in the US.

For the first time since the Craft Spirits Data Project (CSDP) was introduced in 2016, US craft spirits market volume has decreased, down by 3.6% to 13.5 million cases in 2023 versus 14m in 2022. In value terms, sales fell to US$7.8 billion following a 1.1% decline.

In August, the ACSA traded statements with the Wine and Spirits Wholesalers of America (WSWA), debating present routes to distribution offered to craft distillers, namely access to direct-to-consumer (DTC) shipping. The WSWA claimed broader industry trends like inflation and overstocking were to blame for craft struggles.

“While we know the entire spirits industry is facing economic challenges – a counterpoint we’ve now heard several times – the 2024 CDSP demonstrates that our community of small business owners are more significantly impacted by this climate,” ACSA CEO Margie AS Lehrman said. “Since 2017, there has been consistent, if slowing, growth in craft spirits sales as a share of the larger market in both value and volume. After a somewhat flat year in 2022, 2023 reflects the first ever decrease in both.”

Craft brands losing share to large producers

The report found that US craft spirits producers are losing overall market share to large producers, decreasing from 4.9% to 4.6% in volume in 2023, and from 7.7% to 7.5% in value.

While the ACSA reported a significant number of craft distillery closures, the number of active craft distillers in the US grew, up by 11.5% to 3,069 last year.

What’s more, despite overall sales declining, employment numbers are up from 27,368 in 2022 to 29,373 in 2023. Those figures are lower than pre-Covid numbers, when 31,000 full-time domestic employers were reported in 2019.

Growth opportunities remain varied, as large craft producers focus on home states and exports, the ACSA noted. Medium-sized producers lead growth on nearly all fronts, while small producers, which represent 90% of the craft category, focus on home-state sales.

Exports of US craft spirits increased, reaching 179,000 nine-litre cases in 2023, representing an increase of around 5%. However, that number is lower than pre-tariff exports of 566,000 cases in 2017. Although the average amount invested by a craft producer declined to US$310,000 in 2023 from US$337,000 in 2022, the total investment by all craft producers continued to increase, reaching US$885m in 2023.

The report also found that certain states embrace craft distilling more than others, with California increasing its number of distilleries from 245 to 370 and Pennsylvania  increasing from 117 to 177. Texas saw a light increase up from 163 to 177, while New York experienced a decrease, down from 210 to 199.

In August, Governor Kathy Hochul signed Senate bill 2852-A, making New York the ninth state and district to pass DTC legislation and Becky Harris, past ACSA president and founder of Catoctin Creek Distilling, said craft distilling would thrive in states that allow alternate routes to market, like DTC shipping, self-distribution, satellite tasting rooms, and permits for farmers markets, festivals and other events.

“These privileges have enabled access to customers for the small producers who cannot find distribution partners, and the opportunity to build a distribution on-ramp, growing their sales sufficiently that their brands become attractive to wholesalers,” she said.

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