Craft Spirits Take Market Share Again in 2017

“‘Tis impossible to be sure of any thing but Death and Taxes.” That was written by Christopher Bullock in The Cobbler of Preston back in 1716, echoed by Benjamin Franklin in 1789, and it still rings true today.

 

It’s also why we can rely on our friends at the Alcohol and Tobacco Tax and Trade Bureau (TTB). Each year the TTB publishes an annual report summarizing how many distilleries are registered in the US and how many proof gallons they reported. And since those distilleries have to report “taxable removals” leaving their facilities, we can tease out some interesting market numbers. (See our analysis from last year.)

 

Small Distilleries Increase 20%

First, the number of craft distilleries continues to grow. In 2016 there were 2,050 distilleries that each produced fewer than 100,000 proof gallons per year. That grew 20% to a total of 2,454 small distillers in 2017. Solid evidence there’s no slowdown in the craft distillery market.  

 

Growth was everywhere. There were 511 distilleries waiting to sell their first barrel, up from 309 last year. The number of small distilleries already generating sales also grew with over 1,800 reporting up to 10,000 proof gallons and 125 reporting up to 100,000 proof gallons, an increase of more than 10% over last year. The middle of the market also grew with the number of “medium” producers increasing from 32 to 36 in 2017.

Number of small, craft distilleries in 2017

 

 

Losses at Macro Distillers

The TTB groups the largest producers in the over 750,000 proof gallon category. To put that into perspective, 750,000 proof gallons is the equivalent of 4.7 million bottles of 80 proof booze. It’s a lot. And those macro, industrial-sized producers can far exceed 750,000 proof gallons — Wild Turkey produces over 10 million proof gallons a year with a control room that looks like computer networking lab.

 

In 2017 there were 41 distilleries in this group. That’s down from 42 in 2016, but it’s been consistently around 40 distilleries since 2010. That’s despite ongoing consolidation, with Bacardi acquiring Patron, Diageo acquiring Casamigos, Rémy Cointreau Group acquiring Westland, etc.

 

Still, the largest distilleries have lost 2.5% market share points since 2010. They still captured an impressive 96% of the total market last year, so they’re not going out of business any time soon. But the smaller distillers are having an impact and grew their volume-based market share to 1.5% — and given their premium prices their market share is even higher when looking at revenues.

 

Distilled spirits market share change in 2017