October 20, 2016
The American Craft Spirits Association (ASCA), the International Wine and Spirits Research (IWSR), and Park Street today presented highlights from the Craft Spirits Data Project (the Project) at the inaugural Craft Spirits Economic Briefing at the Nomad Hotel in New York. The Craft Spirits Data Project, which was announced earlier this year, is a research initiative to provide a solid and reliable fact base for evaluating performance and trends in the U.S. craft spirits industry.
The year-long Project, which seeks to quantify the number, size, and impact of craft spirits producers in the U.S., is an effort led by ACSA, IWSR, and Park Street, with collaboration from key government and industry organizations, including the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB), the National Alcohol Beverage Control Association (NABCA), American Beverage Licensees (ABL), the Wine & Spirits Wholesalers of America (WSWA), and data partners Acturus, Liquor.com and Nielsen.
For the purposes of the Project, U.S. craft spirits were defined as distilled spirits that are produced in the U.S. 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.
Key findings and highlights revealed during the briefing include the following:
1) The U.S. craft spirits industry is growing rapidly. As of August 2016, there were 1,315 craft distillers active in the U.S. The U.S. craft spirits market reached 4.9m cases and $2.4bn in retail sales in 2015, growing at a compound annual growth rate (CAGR) of 27.4% in volume and 27.9% in value between 2010 and 2015. The market share of U.S. craft spirits reached 2.2% in volume and 3.0% in value in 2015, up from 0.8% and 1.1% in 2010, respectively.
2) Exports offer an additional runway for growth. Exports of U.S. craft spirits reached 523,000 cases in 2015, adding more than 10% of additional volume to U.S. craft distiller total sales.
3) Employment and investment are on the rise among craft distillers. Employment in the U.S. craft spirits sector has been on the rise. In 2016, the industry employed over 12,000 full-time employees (FTEs). Investments by the U.S. craft industry have reached close to $300 million in 2015, which primarily covered the build out of tasting rooms and other visitor experiences, equipment to increase production capacity, and associated labor costs.
4) There is the potential for craft spirits to achieve market share parity with craft beer. Many surveyed retailers and wholesalers see the potential for craft spirits to perform in line or better than craft beer over time. With craft beer market share currently at 11% in the U.S., the craft spirits market is expected to continue to grow rapidly.
5) Direct sales and home state sales are crucial for small craft spirits producers. Direct sales at the distillery are important for all craft distillers but especially important for small craft producers (between 0 and 100,000 proof gallons removed from bond annually), where direct sales make up 25% of all total sales. Home state sales outside the distillery for small producers comprise 67% of all sales.
6) The U.S. craft distilling market is fairly concentrated. Geographically, the market is concentrated as well. The top five states by number of craft distilleries (CA, NY, WA, CO & TX) make up 35.6% of U.S. craft distiller universe, and the next five states (OR, PA, NC, OH, FL) comprise an additional 16.5% of the market.
7) Respondents provide actionable recommendations for continued growth. Surveyed distillers, retailers, and wholesalers provided actionable recommendations to the U.S. craft spirits industry and its regulators to help the industry continue to grow. Craft spirits producers point to excise tax parity as one of the most critical keys to success in the future. Taxes on distilled spirits are among the nation's highest, comprising 54% of the typical spirits product's purchase price. As ACSA has previously emphasized, craft spirits producers remain disadvantaged compared to our nation's craft brewers and small wineries that receive a significant reduction in their Federal Excise Tax (FET) rate. Today, a craft spirits producer pays 6 times more FET than a craft brewer and 17 times more FET than a small winery for equal quantities of beverage alcohol.
The IWSR will be releasing a comprehensive US Craft Spirits Report including the consumer perceptions on craft and additional industry data. For more information, please contact Brandy Rand, VP US Marketing & Business Development, firstname.lastname@example.org
Source: PR Newswire
October 18, 2016