The latest joint-report from just-drinks and The IWSR, published this week, looks at the non-scotch whisk(e)y category. Ben Cooper considers what the findings of this research mean for the smaller whisk(e)y distillers around the World.

One of the undoubted success stories in the beverage alcohol market of recent times has been the development of the micro-brewing sector. Now, it appears that a parallel trend is gathering pace in the whisk(e)y category, with strong growth in the craft spirits arena.

A new just-drinks/IWSR report suggests the growth in craft whiskeys is mirroring the trend seen in micro-brewing, with the growing numbers and success of micro-distillers in the US driving the trend. "A craft spirits boom is sweeping the world, and the US is the epicentre of the movement," the report states. "In the US it is estimated that around 40 new distillers enter the market each year."

Reflecting a further parallel with the micro-brewing trend, the renaissance in both craft beer production and craft distilling had their origins in northern California. Two notable pioneers in the craft-distilling field, Germain-Robin and Jaxon Keys (also known as Jepson Spirits), both founded in 1982, are from the region.

However, craft distilling has spread into many other states. In 2004, craft distilleries could be found in just 12 states. But, by 2005, this had increased to 25 and, by 2011, micro-distilleries had been set up in some 45 states. By 2011, the number of registered operating craft distilleries in the US totalled 234.

California remains the heartland, being home to some 29 small distilleries, followed by New York, which has 22. The Pacific North West is also described in the report as a "hotbed of craft-distilling activity", along with Texas. However, the report suggests the current rate of growth in micro-distilling is "unsustainable" and expects there will "eventually be a shake-out".

As has been seen in craft brewing, craft distilling is bringing creativity to the whisk(e)y market. "Many craft producers are experimental and innovative by nature," the report continues. "Some have been credited with bringing back long-forgotten styles and relatively new innovations."

One of the factors supporting the creative influence craft distillers are having is the fact that US regulations regarding the ageing of whisk(e)y are less exacting than in some other prominent whisk(e)y-producing countries. "Luckily for US whiskies, there are no regulations on the minimum time needed for maturation, whereas, according to Canadian and UK law, there is a long wait before you can hope to get returns on your investment."

Given the premium attached to aged whiskies, and the importance given to age statements in whisky marketing, it is interesting to note the attention craft distillers are gaining with non-aged, 'new-make' whiskeys, bottled straight from the still or after just a few days of maturation. "These craft distillers started introducing new-make spirits just to get some income and it opened up a whole new market for white whiskey," Fred Noe, master distiller at Beam Inc, tells just-drinks.

Noe also points out that craft distillers are responsible for rekindling interest in "other forgotten styles, such as rye whiskey".

There is direct evidence of these trends in the craft brewing segment influencing the mainstream category. For example, Beam opened a craft distillery in October, which is focused on small-batch production. Able to produce one barrel of whiskey at a time, this distillery is clearly being used as something of a test-bed. "We are kicking some ideas around today," Noe continues. "It could produce Jim Beam Single Barrel, but we haven’t decided on anything. It gives us a lot of possibilities."

Another major company seemingly taking a lead from the minors is Brown-Forman, which began rolling out its own Jack Daniel’s un-aged Tennessee Rye Jack nationwide in the US in February 2013.

For Brown-Forman, the innovation appears to have further advantages in terms of attracting new consumers. The company's master distiller, Jeff Arnett, says he expects the new product to appeal more to non-traditional whiskey drinkers.

By the same token, Arnett believes white whiskies have less appeal to traditional whisk(e)y drinkers who may compare them with aged products. However, he says this is not a "fair comparison" and white whiskies should only be compared with other un-aged products.

While sounding slightly dismissive of the white whisk(e)y trend, describing it as "probably a curiosity" and remaining unconvinced that it will have a long lifespan, Arnett welcomes the creativity that craft distillers are bringing to the market. "It creates interest in the category and that is a good thing," he says.

With regard to white whiskeys specifically, Arnett tellingly cites a further factor which is fuelling their growth, namely their use in cocktails.

Mixologists, he says, are "always looking for something new to mix with. They are taking these white whiskies and are doing a lot with mixers over the top of them, working with them as a base."

In addition to opening its new craft distillery, Beam has added a clear whiskey to its portfolio called Jacob’s Ghost, which has been aged for year in a new charred oak barrel. With Jacob's Ghost, the company is hoping to appeal to consumers attracted to white whiskey, but aims to provide a better-tasting product. "The white whiskey trend is certainly growing, and we’re seeing a lot of new offerings in the market. The problem is that un-aged, high-proof moonshines simply don’t taste that good. That’s why we see a huge opportunity with our latest US innovation [Jacob’s Ghost]," says Beam whiskey general manager Chris Bauder.

Underlining where white whiskies may benefit from becoming ingredients in cocktails, Bauder adds: "Jacob’s Ghost is a one-year aged white whiskey. The time it spends in charred American oak barrels gives the liquid the essential wood influence that is prominent in Bourbon, while also producing a versatile and mixable product, which works great in cocktails that typically feature vodka, rum or Tequila.”

The interest of multinational companies is generally a sure sign of market potential and so it is proving with craft distilling. In June 2012, Diageo acquired Cabin Fever Maple Flavored Whisky, a small distiller founded by the Robillard family. This followed the acquisition by William Grant & Sons of New York producer Tuthilltown Spirits in September 2011.

It is easy to see why the interest of major spirits companies has been aroused given the success in craft beer. It is comparatively early days for craft distilling but, if it follows the pattern seen in craft brewing, the potential would appear to be considerable. According to Nomura, if the craft beer segment continues to grow at its current rate, it will account for around 10% of the massive US beer market by 2017.