Craft Spirits Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Whiskey, Vodka, Gin, Rum, Brandy, Liqueur, Others), By Size (Large, Medium, Small), By Distribution Channel (On-Trade Channel, Off-Trade Channel), By Region, By Competition 2018-2028

Market Overview

Global Craft Spirits Market was valued at USD 16.02 Billion in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 9.4% through 2028. In the alcohol industry, a craft spirits has become increasingly significant since it uses ingredients reasonably. It follows from the necessity of distillation transparency. Craft spirits' superior quality, flavour, and novelty are causing consumers all over the world to embrace them. Craft spirits are growing at an accelerated rate due to changes in global lifestyle. Distillation and fermentation are used to generate spirits, which is manufactured domestically and is included in the craft spirit industry. A certain production capacity is needed for craft spirits, often less than 750,000 gallons. To make craft spirits, a distiller's license that specifies the production capacity and autonomous operation is required.

Key Market Drivers

Consumer Preference for Unique and Authentic Products

In an era dominated by mass production and standardized offerings, the craft spirits market has thrived on the back of a significant consumer shift towards unique and authentic products. Discerning consumers, driven by a desire for more meaningful connections with what they consume, have increasingly turned to craft spirits as a symbol of individuality and authenticity. Craft spirits producers distinguish themselves through a commitment to small-scale, hands-on production methods. This emphasis on craftsmanship aligns with consumers' growing disdain for mass-produced, homogenized products. The craft movement, deeply rooted in the rejection of the one-size-fits-all approach, has resonated with individuals seeking an escape from the mainstream and a return to artisanal traditions.

Moreover, the narrative of authenticity plays a pivotal role in shaping consumer choices. Craft distilleries often share compelling stories about their origins, production methods, and the passionate individuals behind the spirits. This storytelling creates a connection between the consumer and the product, fostering a sense of trust and loyalty. Consumers are not just buying a bottle; they are investing in a narrative, a piece of the craft distillery's history that they can share and identify with. The trend towards authenticity extends beyond the product itself to the transparency of production processes. Craft distilleries, typically smaller and nimbler than their larger counterparts, can be more open about their sourcing, production methods, and even the challenges they face. This transparency resonates with consumers who value honesty and want to know the story behind what they consume.

Shift in Drinking Habits and Preferences

The craft spirits market has experienced substantial growth, thanks in part to a notable shift in drinking habits and preferences among consumers. This transformation reflects a departure from conventional drinking practices and a move towards a more discerning and adventurous approach to imbibing. One significant aspect of this shift is the rise of the cocktail culture. Consumers, especially in urban settings, are increasingly gravitating towards craft cocktails that showcase unique and high-quality spirits. This departure from the traditional emphasis on straight spirits or simple mixed drinks has created a fertile ground for the craft spirits market to thrive. Craft distillers, with their diverse and distinctive offerings, have become essential players in this evolving cocktail landscape.

Quality over quantity has become a mantra for a new generation of drinkers. Consumers are more interested in savoring the experience of a well-crafted, artisanal spirit than in consuming mass-produced, generic alternatives. This shift is particularly evident among the millennial demographic, known for their preference for premium and authentic products. Craft spirits, often positioned as premium offerings, align perfectly with this trend, providing consumers with a more refined and personalized drinking experience. The demand for flavor diversity has also contributed to the changing landscape of drinking preferences. Craft distillers, unencumbered by the need for mass market appeal, are free to experiment with a wide array of botanicals, grains, and aging processes. This experimentation results in a rich tapestry of flavors, appealing to consumers who seek variety and complexity in their spirits. The craft spirits market, with its emphasis on flavor innovation, satisfies the evolving palates of consumers who are no longer content with one-dimensional taste profiles.

Furthermore, the growing interest in health and wellness has influenced drinking habits. Consumers are more conscious of what they consume, and this extends to their choice of alcoholic beverages. Craft spirits, often produced with a focus on quality ingredients and traditional methods, resonate with consumers seeking a more mindful and responsible approach to drinking. This aligns with the broader trend of moderation and the pursuit of well-being, driving consumers towards spirits that offer a more refined and thoughtful drinking experience. The educational aspect of the craft spirits market also plays a crucial role in shaping drinking habits. Consumers, now more than ever, are interested in learning about the stories behind the spirits they consume, the production processes involved, and the people behind the brands. Craft distilleries often engage in educational initiatives, tastings, and tours that provide consumers with insights into the craftsmanship and artistry behind their products. This educational component not only enhances the consumer's appreciation for craft spirits but also fosters a deeper connection with the brands.

Innovation and Experimentation in Craft Distilling

At the heart of the craft spirits renaissance lies a commitment to innovation and experimentation in the craft distilling process. Craft distillers, unbound by the constraints of mass production, have embraced a culture of creativity, pushing the boundaries of traditional distillation methods. This dedication to innovation has not only resulted in a diverse array of distinctive spirits but has also played a pivotal role in shaping the identity and success of the craft spirits market. Craft distillers thrive on the freedom to experiment with a wide range of ingredients, techniques, and aging processes. Unlike large-scale producers that often prioritize consistency and economies of scale, craft distillers revel in the opportunity to create spirits that are unique, artisanal, and reflective of their individualistic approach to the craft. This commitment to experimentation resonates with consumers seeking novelty and authenticity in their drinking experiences.

One area of innovation in craft distilling is the use of botanicals and flavor infusions. Craft spirits producers frequently explore unconventional combinations of botanicals, herbs, spices, and fruits to create distinctive flavor profiles. This emphasis on botanical diversity appeals to consumers who are increasingly interested in exploring complex and nuanced taste experiences. From floral-infused gins to pepper-infused vodkas, craft distillers leverage botanical innovation to set their products apart in a crowded market. Furthermore, the craft spirits movement has witnessed a resurgence of traditional and regional distillation methods. Craft distillers often draw inspiration from historical practices, resurrecting traditional recipes and production techniques. This nod to the past, coupled with modern innovation, results in spirits that embody a sense of heritage and craftsmanship. Consumers are drawn to the authenticity of these products, appreciating the blend of tradition and innovation that defines craft distilling.

The aging process is another arena where craft distillers showcase their ingenuity. While large-scale producers often rely on industrial aging methods for efficiency, craft distillers embrace small-batch, hands-on approaches. From experimenting with different wood types to utilizing unique cask sizes, craft distillers craft spirits with distinctive flavor profiles that evolve through meticulous aging. This dedication to the art of aging contributes to the premium and nuanced qualities of craft spirits. Moreover, craft distilleries frequently engage in collaborative ventures, pushing the boundaries of innovation even further. Collaborations with local breweries, wineries, and other distilleries allow for cross-pollination of ideas, resulting in unique products that showcase the diversity of the craft spirits landscape. These collaborations not only foster a sense of community within the industry but also generate excitement and curiosity among consumers.

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Key Market Challenges

Intense Competition and Market Saturation

The craft spirits market, once characterized by its novelty and distinctiveness, now grapples with the formidable challenge of intense competition and market saturation. The exponential growth in the number of craft distilleries has created a crowded landscape, making it increasingly difficult for both new and existing players to stand out in a sea of options. One of the primary contributors to market saturation is the relatively low barrier to entry for craft distilleries compared to more traditional industries. The allure of crafting unique, small-batch spirits has attracted a wave of entrepreneurs, leading to a proliferation of craft brands across various categories, from gin and vodka to whiskey and rum. As a result, consumers are presented with a dizzying array of choices, making it challenging for individual brands to capture and retain attention.

Moreover, the competitive landscape is not only shaped by other craft distilleries but also by larger, more established spirits producers. As craft spirits gain popularity, major players have taken notice and entered the craft arena themselves, either through acquisitions of successful craft brands or by launching their own craft-inspired lines. This dynamic adds another layer of competition, as craft distillers must contend with the marketing power and distribution networks of industry giants. Distribution channels become a battleground in this competitive environment. Securing shelf space in liquor stores and placements in bars and restaurants is a constant challenge. Larger producers often have well-established relationships with distributors and retailers, making it more challenging for craft distillers to secure prominent placements. Limited visibility on store shelves and in bars can hinder the discoverability of craft spirits, exacerbating the impact of market saturation.

Distribution Challenges and Shelf Space

While crafting exceptional spirits is the core of the craft distiller's art, ensuring those spirits reach consumers is a challenge that cannot be overlooked. The distribution landscape poses significant hurdles for craft distilleries, encompassing everything from securing shelf space to navigating complex distribution networks dominated by larger producers. One of the central challenges is the competitive nature of the distribution process. Larger, established spirits producers often have well-established relationships with distributors and retailers, giving them a competitive advantage in terms of securing prominent placements. Craft distillers, with limited resources and production capacities, find themselves in fierce competition for a share of the limited shelf space available in liquor stores and on the menus of bars and restaurants.

Securing distribution deals is not only challenging but also crucial for the growth and sustainability of craft distilleries. Many distributors may be hesitant to take on smaller, niche brands, preferring to focus on larger-volume products with broader market appeal. This presents a Catch-22 situation for craft distillers: without adequate distribution, their products may struggle to reach consumers, but distributors may be reluctant to take on brands that lack established market presence. Moreover, the rise of e-commerce and direct-to-consumer sales presents both opportunities and challenges. While online platforms provide a potential avenue for craft distillers to reach a broader audience, regulatory restrictions and logistical complexities can hinder the seamless implementation of direct-to-consumer sales strategies. Craft distillers must navigate a patchwork of regulations, limiting their ability to sell and ship products directly to consumers in some regions. Craft distillers often resort to building personal relationships with local retailers and bar owners to secure placements. While this approach can be effective, it is resource-intensive and may not scale well as distilleries seek to expand their market reach. Additionally, the emphasis on local relationships can inadvertently limit the geographic diversity of a craft distillery's distribution, hindering efforts to grow beyond regional boundaries.

Key Market Trends

Innovation in Flavor Profiles

The craft spirits market is witnessing a remarkable trend characterized by a relentless pursuit of innovation in flavor profiles. Craft distillers, unencumbered by the constraints of mass production, are pushing the boundaries of traditional taste experiences. This trend not only reflects a desire for uniqueness but also an eagerness to cater to consumers who seek adventurous and complex flavor profiles in their spirits. Craft distilleries are redefining the notion of what a spirit can taste like by experimenting with a diverse range of botanicals, grains, and aging techniques. While traditional spirits often adhere to well-established flavor profiles, craft distillers are embracing a more creative and experimental approach. This is evident in the rise of unique botanical infusions, non-traditional grain choices, and innovative aging processes that impart distinctive flavors to the final product. One significant aspect of this trend is the resurgence of interest in indigenous and locally sourced botanicals. Craft distillers are exploring the rich tapestry of flavors offered by regionally specific plants, herbs, and spices. This not only adds a layer of authenticity to the spirits but also creates a sense of terroir, connecting the drinker to the unique environmental and cultural characteristics of a particular locale.

Furthermore, craft distillers are experimenting with unconventional grain choices beyond the traditional barley, corn, and rye. Quinoa, millet, and spelt are finding their way into mash bills, contributing unique flavor profiles to spirits. This departure from convention aligns with consumers' growing interest in diverse and health-conscious choices, reflecting broader culinary trends that emphasize alternative grains for their nutritional benefits. Aging techniques are also a focal point of innovation in the craft spirits landscape. Traditionally, spirits were aged in oak barrels for specific durations, with the wood imparting characteristic flavors. Craft distillers, however, are exploring alternative wood types, barrel sizes, and aging durations to create spirits with nuanced and unexpected flavor profiles. Some are even experimenting with non-traditional materials like clay or stainless steel to age spirits, offering a departure from the familiar taste associated with oak-aged spirits.

Sustainability and Eco-Friendly Practices

As global awareness of environmental issues continues to grow, the craft spirits market is experiencing a notable trend towards sustainability and eco-friendly practices. Craft distilleries, often characterized by their commitment to authenticity and localism, are embracing environmentally conscious initiatives to meet the increasing demand from consumers for products that align with their values. One of the primary aspects of this trend is the emphasis on sourcing sustainable and locally produced ingredients. Craft distillers are forging partnerships with local farmers and suppliers who adhere to eco-friendly agricultural practices. By prioritizing locally sourced grains, botanicals, and other raw materials, craft distilleries not only reduce their carbon footprint associated with transportation but also support local economies and contribute to the preservation of biodiversity.

Furthermore, the adoption of organic farming practices is gaining traction within the craft spirits community. Distillers are choosing organic ingredients to minimize the use of synthetic pesticides and fertilizers, promoting soil health and biodiversity. This commitment to organic farming aligns with the broader societal shift towards healthier and more sustainable lifestyles, resonating with consumers who prioritize products that are both ethically produced and environmentally friendly. Sustainable production practices extend beyond sourcing to the actual distillation process. Craft distillers are implementing energy-efficient technologies, recycling initiatives, and water conservation measures to reduce their environmental impact. Some distilleries are investing in renewable energy sources, such as solar or wind power, to power their operations, further enhancing the sustainability of their production.

Segmental Insights

Type Insights

In 2022, the whisky category dominated the market of total sales worldwide. The remarkable and unique flavour that the aforementioned product domain offers is the reason for the segment's rise. Due to advancements in product development throughout the years, whisky has been able to provide some medical benefits. More and more distillers are expanding their offerings by including a wider range of herbs and spices, both for flavour and health benefits. Additionally, polyphenols, an antioxidant that has been demonstrated to reduce LDL (bad cholesterol) and boost HDL (good cholesterol), are abundant in whisky. Whisky can help with the dangerously elevated cholesterol that affects about 51% of Americans.

During the forecasted period, the gin segment is projected to develop at the fastest CAGR. By incorporating local botanicals, aged expressions, novel flavours, and other innovations, brands are expanding their appeal to consumers. A 750 ml bottle of gin sold in the US last year cost, on average, USD16.77 at retail, whereas an average artisan gin costs more than USD 30.

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Regional Insights

North America made the largest contribution to the global market in 2022. Over the forecast period, the region's growing millennial population is expected to drive demand. Because of secure approval policies developed by regulatory bodies, the number of manufacturers in the United States has increased at a rapid rate. Asia Pacific is expected to witness a fastest CAGR during the forecasted period due to growing purchasing parity and the large rise of the millennial generation in emerging nations such as China, India, Malaysia, Thailand, and Indonesia, the market is predicted to expand at the fastest CAGR. Huge potential in these countries' underdeveloped marketplaces is likely to provide lucrative opportunities in this region.

Recent Developments

In 2022 - The largest beverage alcohol company in the world, Diageo, announced today that it is planning to build a new USD 245 million distillery to help achieve its growth goals and maintain the momentum of its Crown Royal Canadian Whisky brand. The new distillery will produce no trash for landfills and be carbon neutral thanks to resource efficiency technology and 100% renewable electricity.

In 2022 - The purchase of "Samson & Surrey," which included Brenne French Whisky, Tequila Ocho, Bluecoat Gin, Mezcal Vago, Widow Jane, and Few Spirits, was announced by Heaven Hill. The acquisition will add high-growth, super-premium brands to Heaven Hill's portfolio in some of the fastest-growing categories in the industry.

Key Market Players

• Heaven Hill Distilleries, Inc.
• Diageo plc
• Pernod Ricard
• Constellation Brands, Inc.
• Suntory Holdings Limited
• Bacardi Limited
• Campari Group
• Sazerac Company, Inc.
• Highwood Distillers
• Rogue Ales

Report Scope:

In this report, the Global Craft Spirits Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Craft Spirits Market, By Type:

o   Whiskey

o   Vodka

o   Gin

o   Rum

o   Brandy

o   Liqueur

o   Others

• Craft Spirits Market, By Size:

o   Large

o   Medium

o   Small

• Craft Spirits Market, By Distribution Channel:

o   On-Trade Channel

o   Off-Trade Channel

• Craft Spirits Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  France

§  United Kingdom

§  Italy

§  Germany

§  Spain

o   Asia-Pacific

§  China

§  India

§  Japan

§  Australia

§  South Korea

o   South America

§  Brazil

§  Argentina

§  Colombia

o   Middle East & Africa

§  South Africa

§  Saudi Arabia

§  UAE

§  Turkey

§  Egypt

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Craft Spirits Market.

Available Customizations:

Global Craft Spirits market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).