For the first time in the three years that the American Craft Spirits Association (ACSA) has been issuing its annual economic reports, the growth in sales outpaced the number of new craft distillers, the trade organization reported.
The number of active craft distillers grew by 15.5% over the last year to 1,835 in August 2018. The data comes from The Craft Spirits Data Project, a study led in conjunction with the ACSA, the International Wine and Spirits Research (IWSR) and advisory services consultancy Park Street.
Of those 1,835 distilleries, 33.7% were concentrated in five states: California (156), New York (134), Washington State (122), Texas (108) and Colorado (99). The next five states, Oregon, Pennsylvania, North Carolina, Ohio and Florida, comprise an additional 18.4% of the market.
In terms of sales, the craft distilling industry sold nearly 7.2 million cases in 2017–up 23.7% in volume over 2016–with $3.7 billion in sales and 29.9% growth by value.
Exports of U.S. craft spirits reached 598,000 cases in 2017, adding more than 7.7% of additional volume to the distillers’ total sales.
Craft spirits still represent only 3.2% volume and 4.6% in value of the U.S. market.
That said, “an inflection point has been reached,” said Harry Kohlmann, CEO of Park Street. It’s no longer just about growing numbers of craft distillers; those distillers are starting to produce and sell more units.
“2017 was the first time that volume in the market is growing faster than the number of distillers,” Kohlmann said. “This is a healthy metric for this industry, and good for new distillers entering the market.” Specifically, the volume of the average U.S. craft distiller reached 4,096 cases in 2017, up 0.9% from the previous year.
Looking ahead, retailers and wholesalers surveyed see craft spirits matching the growth of craft beer over time.
Craft beer currently holds a 12.8% market share, compared to 3.2% for craft spirits.
Meanwhile, in 2017, investment by the craft spirits industry increased by over $190 million to $590 million in total, doubling from $299 million in 2015. These investments primarily covered the build out of tasting rooms and other visitor experiences, equipment to increase production capacity, and associated labor costs.