Threats Facing the Whiskey Category

Goals

To understand the threats facing the US spirits/whiskey category. Some of the topics to cover include how much the category has been disrupted by small batch craft products and whether or not it is losing market to craft/small batch spirits.

Early Findings

CRAFT SPIRITS

  • Craft spirits are referred to as the "next big thing" in the US spirits industry. Since 2015, the craft spirits industry has grown by 19% annually and is expected to "grow by approximately 15%-20% per year through 2022."
  • Experts predict that craft spirits will eventually have more relevance in the US liquor industry than craft beer has in the US beer industry.
  • In 2018, it was reported that craft spirits "significantly outperformed" its expectation, by volume and value growth in the US spirits industry.
  • The compound annual growth rate for overall spirits from 2010 to 2017 was 2.8% while that of craft spirits was 25.8%.
  • From 2018 to 2022, "total spirits volumes are expected to have a CAGR of 2.1%, while craft spirits is forecast to have a CAGR of 22%."
  • As described by experts, "the recent growth trajectory of craft spirits coupled with the vast number of distilleries currently in planning suggests the future is bright for the craft spirits industry.
  • In 2017, there were 760 craft distilleries in the US compared to only 60 in 2013.
  • While craft liquor is "growing at a crazy rate," to say it is disrupting the spirits industry might be a stretch seeing as it only accounts for 2% of the US spirits market. By 2020, however, it is expected to make up 8% of the spirits market and might be considered disruptive at that time.
  • Most US consumers, however, prefer buying craft spirits. To combat this threat, large spirit companies in the US are buying small craft companies. For example, "William Grant & Sons bought Hudson whiskey, Proximo Spirits purchased Hangar 1 vodka and Stranahan whiskey, Gruppo Campari bought Forty Creek whisky, and Bacardi purchased Angel's Envy Bourbon."

CRAFT WHISKEY

  • Within the US craft spirits industry, craft whiskey is gaining traction. Although not yet crowded, (craft vodka, liqueurs, rum and gin are currently somewhat crowded), craft whiskey saw a 28.1% growth in 2017 and is expected to have a CAGR of 24.3% by 2022.
  • Craft whiskey makes up 37% of the craft spirits industry.
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