If you’re in the beverage industry we’re sure you know that craft spirits are all the rave these days. According to Statista, there were 57 craft distilleries in the United States in 2005. You read that right; 57. In 2019 there were an estimated 1,836; that is over a 3,000% increase in 15 years!
But what exactly is a craft spirit? Many struggle to define this popular term. While most, if not all, distillers like to regard what they do as a craft, they do not all earn the term craft spirit. In general, the idea is that a craft spirit is produced by a small “mom and pop” distiller and the threshold is set by production volume. Hence, a brand like Tito’s started out as a craft spirit but today they move too many cases to be considered one. But beyond just volume, craft spirits are thought to have a warm friendly face and not a corporate face - that’s where brand identity comes in.
While there may be discussion about who qualifies and who doesn’t, everyone is in agreement that the industry is exploding. In fact, according to a report released by the American Craft Spirits Association, the industry grew 26% just from 2016 to 2017; and Americans still can’t get enough.
So what happened? A survey by Nielsen reveals that Millennials are partly to blame for this big shift, as they are drawn to the idea of small local craft spirits, the “etsy shops” of alcohol, if you will, rather than the big brand names. As more and more people are moving away from the big competitors to unique, vibrant and cool craft distilleries, more and more competitors are moving in on the market. And not just new craft spirits but the big scary corporate guys are beginning to capitalize on the term “craft” as well.
The hard facts we’re faced with today is that it’s simply not enough to be a craft spirit, there was a time, a decade or so ago, when that alone was a selling point. But as good ol’ lady capitalism would have it, that has gone from a selling point to a “so what?”.
Now craft spirits need to understand brand strategy and storytelling the way their big competitors do in order to stay in business. We’re not saying you need to become them and lose what makes you you. In fact, we’re saying you need to get better at understanding, communicating and capitalizing on what makes you you. And you need to understand how to find the customer out there who is tired of drinking Grey Goose and dying to know your story.
To recap, between 2005 and 2019 the craft industry has grown with an average yearly increase of 37%, the question is are you ready for that kind of competition?
At FIG we work with craft spirit brands not only to help them develop their brand but also help them build mutually beneficial partnerships with large partners. Contact us to learn more about becoming one of our strategic sourcing suppliers.