The Rise of Craft Spirits: A Global Trend

The craft spirits market has rapidly transformed from a niche sector to a burgeoning global industry. This market encapsulates the sale of craft spirit products that are produced using locally sourced ingredients and innovative techniques.

Growth Statistics
In 2021, the global craft spirits market stood at $17.72 billion, and by 2022 it’s projected to reach $22.72 billion, marking a compound annual growth rate (CAGR) of 28.2%. If the market continues on this trajectory, by 2026, the craft spirits industry will be valued at an impressive $66.04 billion with a CAGR of 30.6%.

Varieties and Distribution
The market consists of a wide variety of craft spirits, including whiskey, gin, vodka, brandy, rum, and more. For instance, whiskey is a liquor derived from the fermentation of wort, sourced from ingredients like rye, corn, and barley. These spirits are produced by distilleries of varying scales – large, medium, and small. Consumers can access these spirits through off-trade channels (like liquor stores) and on-trade channels (like bars and restaurants).

Regional Insights
North America led the way in the craft spirits market in 2021, but it’s the Asia Pacific region that’s projected to be the fastest-growing during the forecast period. However, the craft spirits industry is gaining traction worldwide, spanning regions such as Western Europe, Eastern Europe, South America, Middle East, and Africa.

Market Catalysts
The increasing number of craft distilleries is a significant factor propelling the growth of this market. An article by Beverage Master revealed that between August 2020 and August 2021, craft distilleries in the US increased by 1.1%. This rise is directly attributed to the increasing demand for craft spirits.

Additionally, heavy investments in the sector signal the industry’s potential. For instance, in March 2022, Diageo India invested a whopping $200 million in its craft spirits project. In the same month, United Spirits invested $31.50 million in craft gin-maker Nao Spirits and Beverages. Such investments reflect the sector’s growth and the promising future of craft spirits.

The Momentum of Craft Spirits
Craft spirits have witnessed a staggering growth in popularity. Since 2011, the number of distilleries has surged by approximately 35% per year. The market for craft spirits grew by 19% annually since 2015. In the U.S. alone, the craft spirits market has seen growth of approximately 20% per year by value since 2012 and is anticipated to grow by 15%-20% annually through 2022.

The definition of craft spirits might vary, but a common thread is that they are produced by licensed distilleries that distill and bottle on-site, with a maximum production volume of 750,000 gallons of spirits annually.

Retailers and wholesalers are particularly optimistic about craft spirits. 60% believe that craft spirits will overshadow the influence of craft beer in the liquor industry. Given that craft beer currently holds less than 12% of the U.S. market share, the potential for craft spirits is vast.

Craft spirits are no longer just a trend; they are a significant market force in the liquor industry. Their emphasis on local ingredients, innovative techniques, and distinct flavors make them a favorite among consumers, ensuring their continued growth and prominence in the global market.