Craft Spirits Market Report

Craft Spirits Market Analysis By Distiller Size (Large, Medium, Small), By Product (Whiskey, Vodka, Gin, Rum, Brandy, Liqueur), By Region (North America, Europe, Asia Pacific, South America, MEA), And Segment Forecasts, 2014 - 2025

Published: October 2017  |  95 Pages  |  Format: PDF  |  Report ID: GVR-1-68038-695-0

Industry Insights

The global craft spirits market size was valued at USD 6.13 billion in 2016 and is expected to witness a growth at a CAGR of 33.4% from 2017 to 2025. Craft spirits are domestically produced in distilleries, which have a production volume below 750,000 gallons. Millennial population with considerable purchasing power is expected to drive the market over the forecast period.

Craft spirits are produced by licensed distillers with specified production volume. They should have independent operations with less than 25% capital and operational control from an alcoholic beverage industry player. In the U.S., the product needs to have a label approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB). 

U.S. craft spirits market revenue, by distiller size, 2014 - 2025 (USD Million)

U.S. craft spirits market

The industry is mainly concentrated in North America, owing to sizeable demand in the U.S. The investments in the U.S. has increased at a promising rate over the past few years, due to favorable approval policies. The Alcohol and Tobacco Tax and Trade Bureau (TTB) received 13,867 new applications in 2012, which has increased by 24.4% from the number of claims in 2009 and 82% from that of 2006.

Millennials, born between the 1980s and early 2000s, represent a major demographic section of consumers for the alcoholic beverages industry, as they account for a significant share of the consumers frequently visiting restaurants and pubs. They appear to be the most influential buyers of various food and drink items, including craft spirits.

Younger millennials, who has just reached the LDA, appear to be the high potential consumer segment for the forecast years. Rising preferences for unconventional drinks by young millennials is expected to boost the demand, owing to their unique taste and flavor. Asia Pacific, North America, and Sub-Saharan Africa accounted for the major shares of the millennial population in 2016.

Millennial population in China was approximately 415 million in 2015, which is higher than the total labor force in the U.S. and Western Europe. The average annual income of Chinese millennials is predicted to reach USD 13,000 in 2024 from USD 5,900 in 2010. They prefer spending on leisure activities, including going to restaurants and pubs. This, in turn, is expected to mark a positive impact on the craft spirits demand in the region.

Simplified timelines required for registration and hassle-free approval process motivated the launch of various products in the U.S. industry segment. New entrants in the U.S. industry segment need to meet two legal requirements from the state level and federal level. At the national level, the producers require the Certificate of Label Approval (COLA), which takes about 3 to 12 weeks depending on the complexity and product category. The state level registration and approval are sanctioned within a time line of 1 to 8 weeks.

Spurring demand coupled with supportive policies have fueled significant investments in the U.S. craft spirits industry over the past few years. Total investments in the U.S. have increased by approximately 66% from 2014 to 2015. The number of craft distillers has increased at a remarkable rate over the past few years. The number of producers in the U.S. was 204 in 2010, which has grown at an impressive rate to reach 1,163 by 2015.

Distiller Size Insights

The global craft spirits market is segmented into three distiller sizes, namely, large, medium, and small, based on their production capacity. The large distilleries dominated the global industry, accounting for 59.3% share of the revenue in 2016. Distilleries with a production volume between 100,001 and 750,000 gallons are classified as large. 

The shares of the large distilleries is expected to increase, owing to ongoing consolidation activities in the industry. Substantial demand from consumers has attracted various established players in entering the industry. Numerous non-craft players are aiming to mark their presence in the industry by acquiring shares of small and medium distilleries

The small distilleries operate at a local level and distribute products locally.The number of small distilleries is expected to rise at a sluggish rate over the next few years, owing to intense competition from large distilleries. Production volume of medium distilleries varies between 10,001 to 100,000 gallons.

Product Insights

Whiskey held the largest share of the market over the past few years, and a similar trend is expected to continue over the forecast period. In terms of revenue, the segment accounted for 42.5% share of the overall industry demand in 2016, and the share is estimated to increase over the next few years. Growing consumer demand for flavored whiskey, formulated using exclusive ingredients, is anticipated to propel the market growth. 

Craft gin segment has experienced substantial growth over the past few years, owing to rising consumer demand. Distilleries have taken a strategic approach to use unconventional ingredients such as lemon, orange peels, almond, grape, saffron, coriander, spices, anise, and cinnamon to enhance the taste and flavor of products.

Eastern European countries were the principal consumers of craft vodka over the recent past. Production of vodka does not involve the use of various ingredients as contrary to its counterparts, including gin and whiskey. As a result, lack of availability of innovative drinks is estimated to hamper the growth of the product segment.

Global craft spirits market revenue, by product, 2016 (%)

Global craft spirits market

Regional Insights

North America accounted for the largest share of the global industry in 2016, mainly driven by the growing consumer demand in the U.S. The region accounted for 53.6% share of the total revenue in 2016. Growing millennial population in the region is projected to propel the demand over the forecast period. The number producers in the U.S. has grown at a robust rate, owing to secure approval policies adopted by regulatory organizations.

Asia Pacific is expected to witness robust growth over the forecast period, due to increased purchasing parity, coupled with the significant growth of millennial population in emerging countries, including China, India, Malaysia, Thailand, and Indonesia. Enormous potential in the unexplored markets of these countries is expected to create lucrative opportunities in this region. Economically independent millennials in Asia Pacific are living with parents, which lead more spending power to them. As a result, millennials in countries such as China and India tend to spend more on leisure activities, this, in turn, is projected to impact the product market in the region.

Europe was the second-largest region of the global industry, followed by Asia Pacific in 2016. Europe is anticipated to experience sluggish growth over the next few years, owing to rising geriatric population. A strong influence of American craft products is expected to propel the industry segment in Central & South America. South Africa is predicted to drive the industry segment in the Middle East & Africa over the forecast period.

Competitive Insights

The key players in the market include Pernod Ricard, Rémy Cointreau, Diageo Plc, Anchor Brewers & Distillers, House Spirits, William Grant & Sons, Rogue Ales, and Copper Fox Distillery. The industry has the presence of players of varying sizes classified as large, medium, and small distilleries.

Growing popularity of the product among consumers has attracted numerous international players to add craft spirits in their portfolio. The companies are entering the market through the acquisition of small shares of distilleries operating at local levels. Participation of the international players is expected to intensify the competition over the forecast period.

Report Scope

Attribute

Details

Base year for estimation

2016

Actual estimates/Historical data

2014 - 2016

Forecast period

2017 - 2025

Market representation

Volume in thousand gallons, Revenue in USD Million & CAGR from 2017 to 2025

Regional scope

North America, Europe, Asia Pacific, Central & South America, MEA

Country scope

U.S., Germany, UK, China, Japan, Brazil, South Africa

Report coverage

Revenue forecast, company share, competitive landscape, growth factors and trends

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Segments covered in the report:

This report forecasts volume and revenue growth at global, regional & country levels and provides an analysis on the industry trends in each of the sub-segments from 2014 to 2025. Grand View Research has segmented the craft spirits market by, distiller size, product, and region.

  • Distiller Size Estimates & Trend Analysis (Volume, Thousand Gallons; Revenue, USD Million; 2014 - 2025)

    • Large

    • Medium

    • Small

  • Product Estimates & Trend Analysis (Volume, Thousand Gallons; Revenue, USD Million; 2014 - 2025)

    • Whiskey

    • Vodka

    • Gin

    • Rum

    • Brandy

    • Liqueur

    • Others

  • Regional Estimates & Trend Analysis (Volume, Thousand Gallons; Revenue, USD Million, 2014 - 2025)

    • North America

      • U.S.

    • Europe

      • Germany

      • UK

    • Asia Pacific

      • China

      • Japan

    • Central & South America

      • Brazil

    • MEA

      • South Africa

Key questions answered by the report
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