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Much has been made of the effect that the rise of the craft spirits segment has had on the broader spirits category. Ian Buxton, however, believes that effect isn't quite as powerful as some have previously feared.

In the most recent year for which we have statistics, the number of new distilling licences in the UK tripled. Something similar is happening in the US and Europe and, anecdotally, there are at least as many more new distilleries planned in the UK for 2016/17 as in the previous year.

That’s a lot of new ‘craft’ distilleries, a lot of articles and news reports, even more excited blogs – and a lot more new products, generally launched on a hope and a prayer, all clamouring for shelf and bar space. Or, to put it another way, a lot more sound and fury – but what does it signify?

Let us assume that another 100 new craft distillers open their doors in in the UK next year. Most will make a few thousand litres of alcohol annually, some will reach the heady heights of 50,000 litres and a few may even make 100,000 litres (after which point I’d argue they aren’t really a craft distiller anymore). Let’s grant each of my theoretical 100 distillers 25,000 litres of production (most will be delighted). That’s a total of 2.5m new litres of alcohol (mostly gin and vodka) added to the UK’s total production. Or, to put it another way, not very much at all. In fact, it’s about a quarter of the new production that has just come on stream at Pernod Ricard’s new Dalmunach single malt whisky distillery. Rather less than the expansion plans for The Glenlivet or... well, you get the point and, buoyant though the sector is, there won’t be 100 launches anyway.

Interesting, colourful and fun though they are, the vast majority of these new operations aren't currently, do not aspire to be and never will be, anything more than a lifestyle business for an owner-operator (and let’s forget about the inevitable failures). They’ll enjoy their brief moment in the media spotlight and then the ladies and gentlemen of the fourth estate will move on (for the most part even the failures will go unrecorded). While some, like Vivienne Muir of NB Gin, talk ambitiously of a “transitional phase moving to global brand status” others are content with a home in some old farm buildings, or even the disused railway arches of Hackney Downs, where Mark Marmont of 58 Gin distils, bottles, labels and then sells every bottle himself.

There's little wonder, then, that leading analysts have concluded that we’re all getting a little too excited about the sector. In the US, where the craft distillers are further developed than in many markets, Rabobank senior wine & spirits industry analyst Stephen Rannekleiv believes the “threat to major distillers has been overblown".

I’m not actually sure who thought they were a threat in the first place. While they assuredly bring variety and some innovation to the party, as my figures illustrate their absolute volumes are pretty inconsequential. So Rannekleiv is, of course, correct.

And, after the initial flurry of excitement, the scepticism is spreading amongst the industry giants, Earlier this month, Diageo’s global head of innovation, Michael Ward, told just-drinks that “I don't think you've got products that are materially different in well-established categories, price-points and age characteristics that mean that craft isn't bringing to spirits what craft has brought to beer.”

There have been successes, of course, most notably in gin where the time from raw materials to shelf is short. No one can deny the rise of Sipsmith and contenders such as Edinburgh Gin with their export successes and national supermarket listings are growing fast. Indeed, Edinburgh has rapidly outgrown its in-pub distillery and has a new, larger still ready to fire up as soon as plans for its new home are confirmed. Brands such as these appear to have found a real gap in the market and a market in that gap, at least while the current gin boom lasts (that should give them at least a few years to cash out).

But, the big boys have got this covered anyway. Diageo has its incubator fund project Distill Ventures; William Grant & Sons simply bought the Hudson Whiskey brand, leaving production at its Tuthilltown craft home (somewhat expanded) and, even more recently, Pernod Ricard has just started its own Irish whiskey micro-distillery. Invest in promising start-ups; buy something you like or just do it yourself: there wouldn’t seem to be any barrier to entry here for the big players looking to be small – on the label at least!

Will we hear more about craft? One problem is the lack of any representative industry body to speak for them as the Scotch Whisky Association does for Scotch producers, though the recently-formed Scottish Craft Distillers Association seems well-founded and is said to be picking up English members frustrated at the lack of any effective trade group south of Hadrian’s Wall.

Of course we will be hearing more about - and from - the craft distilling industry and, acutely conscious of how much easier it is to stand on the side-lines commentating than actually doing it myself, I wish them the very best of luck.

But, lots of articles from over-worked and under-paid hacks aside, they're not going to change the world, merely the odd hipster bar. Relax, everyone, and wish them luck: they’re going to need it.


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