“‘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.)
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.
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.
Kings County Bottled-in-Bond Bourbon was released today for the first time in Massachusetts. Only 24 bottles of the award winning bourbon were allocated to Hub Beverage, the Boston-based distributor of craft spirits. Kings County Bottled-in-Bond Bourbon is now available in just four liquor stores stretching from the North Shore to the Cape.
Kings County is among the very first craft distillers to release what can be considered the highest class of American whiskey. Bottled-in-Bond is a designation created in 1897 for American spirits that are produced by one distillery in one distillation season, aged in a federally bonded warehouse under U.S. government supervision for at least four years, does not contain any additives, and is bottled at 100 proof.
In the old days, this was a way to protect the consumer from adulterated whiskey and brands that were merely bottling whiskey from other distilleries. Adulterated whiskies are less of a problem now, but some brands claiming to be “craft” are sourcing their whiskey from wholesale producers, making Bottled-in-Bond meaningful again.
Kings County Bottled-in-Bond Bourbon is made from a mash bill of 80% New York State organic corn and 20% English malt. It was twice distilled in 26-gallon pot stills and entered new-oak, 15-gallon barrels at 116 proof.
The result is a whiskey robust for its age; even as it compares to older craft and commercial bourbon whiskeys. A pungent nose of corn, hay, and peppery spice gives way to a richly textured flavor with notes of cinnamon, chocolate, and molasses.
Kings County Bottled-in-Bond Bourbon won Best-in-Category (Small Batch Bourbon under 5 years) and Double-Gold at the 2017 San Francisco World Spirits Competition. It also won four gold medals at the 2017 International Whisky Competition for Best American Whisky, Best Bourbon, Best Small Batch Bourbon, and Best Bourbon 4+ Years.
Kings County Bottled-in-Bond Bourbon is available at Ball Square Fine Wines (Somerville), Cambridge Spirits (Cambridge), and Liquor ‘N More (Dennis) and Wine Connextion (North Andover) while the very limited supplies last.
Kings County Distillery is New York City’s oldest operating whiskey distillery, the first since Prohibition. Founded in 2010, Kings County uses New York grain and traditional distilling equipment to produce whiskey in the Brooklyn Navy Yard, just steps from the former waterfront distillery district and the legendary site of the 1860s Brooklyn Whiskey Wars. Every drop the distillery sells is made in the Brooklyn Navy Yard.
In 2013, Kings County co-founders Colin Spoelman and David Haskell published The Kings County Distillery Guide to Urban Moonshining (Abrams), which has since sold more than 50,000 copies. In 2016, they published Dead Distillers: A History of the Upstarts and Outlaws Who Made American Spirits (Abrams, 2016).
The number of small distilleries in America grew from around 500 to over 2,000 in just six years. Over the same six years the largest distilleries lost 2.3% points of market share. These government-reported data confirm the quick emergence of craft spirits, who are following in the footsteps of craft brewers.
Craft spirits first took off in California, Colorado and Texas but growth has spread across the US. There now 118 distilled spirits producers (DSP) permit holders across New England and another 163 in New York. Almost all of them are small and started within the last 10 years.
Consumers are noticing and asking for craft spirits, and liquors stores and restaurants are responding. More liquor stores are allocating shelf space to craft spirits, just as they starting doing for craft beers in the 1990s. “I recognize and appreciate the quality and passion that these products represent,” says Larry Venezia, General Manager at Giles Wine and Spirits in Woburn, MA, “and looking forward I feel that this will be an important segment of our business.”
The number of small distilleries grew 265% from 2010 to 2016 to a total of 2050. Growth slowed 2016, but that was after 27% growth in 2015, 29% growth in 2014, and 35% growth in 2013. The 2016 data include 113 producers who sold 10,000 to 100,000 proof gallons, 1,628 producers who sold under 10,000 proof gallons, and 309 producers who are just getting started and/or still aging spirits and haven’t reported any sales.
Depending on your definition of craft spirits producers that number could be whittled down or boosted. For example, the American Distilling Institute also has a 100,000 proof gallon annual sales cap, and also requires that craft producers not be controlled by a larger distiller, or buy from a larger distiller. The American Craft Spirits Association is more flexible and sets the cap at 750,000 proof gallons.
Forage in Cambridge, MA, is a farm-to-table restaurant that puts a modern twist on classic dishes with a focus on local ingredients. “Our guests appreciate food that comes from their surrounding community and now we can do the same behind the bar,” says Joe Choiniere, Bar Manager. “It definitely adds to the experience when we can introduce guests to a unique, delicious local gin or whiskey.”
Craft spirits producers grew their market share from just 0.5% of volume in 2010 to 1.5% of volume in 2016. With craft spirits mostly on the premium to super premium end of the spectrum, their share of total sales revenues will be even higher.
The largest producers saw their market share move in the opposite directly, falling from 98.5% of the market volume to 96.2%. The balance of the volume went to medium sized producers who sell between 100,000 and 750,000 proof gallons a year.
The alcohol business is highly regulated and taxed in most countries, and the regulator in the US is the Alcohol and Tobacco Tax and Trade Bureau (TTB). Every distillery, no matter how small, must have a license from the TTB. Every distillery, no matter how small, is required to file regular reports and pay federal excise taxes.
The TTB publishes some of these data and they provide insights into the American spirits business. One is the TTB’s reports on taxable removals by beverage spirits producers, which includes the number proof gallons that producers and bottlers removed from their plant for sale or export. The same TTB report also breaks the totals down by size of the producer and includes the total number of producers.
Note: Updated in July 2017 with TTB data for 2016.
Hub Beverage is a fully licensed Massachusetts wholesaler!
We spent months traveling across New England and meeting our many craft spirit producers. They can be found in the culinary hotspot of Portland, tucked into the White Mountains of New Hampshire and Green Mountains of Vermont, down the Atlantic coast to Connecticut, and everywhere in between. These craftsmen, craftswomen and entrepreneurs are putting their unique touch on traditional spirit categories, and they’re pursuing the great American tradition of breaking a few rules to create new categories.
A number of these craft spirit distillers and producers are founding members of Hub Beverage’s portfolio and we’re very proud to represent them in Massachusetts! Please be sure to stop by and say hello whenever you’re in the neighborhood.
Of course you should also look for these and other craft spirits to be increasingly available in the Boston metro area. Ask for them in your favorite bars, restaurants and liquor stores. Contact us if you want help finding any products we distribute or if you’re interested in having us distribute your products. Subscribe to our mailing list to be the first to learn when new products are available and what new tastings are announced.
“It is a truth universally acknowledged, that a person in possession of a good gin is in want of nothing else.”
So say the makers of Back River Gin (borrowing from Jane Austen)
Back River Gin is made in a copper alembic still by Keith Bodine in Union, ME. With degrees in Food Science and Oenology from UC Davis, Keith opened wineries in California, Virginia and China before founding Sweetgrass Winery and Distillery in 2005. They now use over 70,000 lbs. of Maine-grown fruit and grain each year producing hand-crafted wines and spirits with a distinctive Maine terroir.
Back River Gin is made in the London tradition with a Maine twist: blueberries. The combination of organic botanicals, sea air, and Maine blueberries give the gin its refreshing taste. Spirit Journal says “The aroma’s unlike any other gin in the world, and better than a whole slew of them… Finishes ultra-clean, amazingly tart and acidic, yet eye-poppingly fresh.” Wine Enthusiast calls it “a creative and sophisticated gin” and a Best Buy.
Maine’s favorite craft gin sports new packaging for 2018. The front label is a deep nautical blue with clean text. The back label reinforces that it’s a contemporary gin Made in Maine. The inside of the back label displays the waterway for the Back River flowing into Hockomock Bay, and it looks great viewed through the front of the bottle.
Based on feedback from bartenders and cocktail enthusiasts, Tamworth Distilling recently tweaked Blue Lion and Von Humboldt’s Turmeric Cordial. Now both are brighter and more flavorful and the ABV was lowered from 40% to 20% — making them ideal cocktail modifiers.
Named for the plant’s distinctive blue dandelion-like flower, and inspired by its history of use in coffee and other beverages, Blue Lion is a different kind of bitter spirit sure to appeal to amaro fans. This liqueur combines the “dark roast” notes of roasted chicory root with rye seeds, cinnamon, dandelion root, and cane sugar for a bittersweet, spicy flavor.
Palette: Chicory Root, Rye Seeds, Black Walnut Leaf, Bitter Orange Peel, Gentian, Cinnamon
Pairings: Works well with brandies and whiskies.
The turmeric root balances bright & warming flavors against a complex backdrop of sweet, woodsy spice and gentle bitterness in this new version of Turmeric Cordial. Bitter orange and ginger exaggerate the turmeric’s fruitiness and the bright, floral-spice bouquet of coriander and cardamom is layered on top. Possesses a mild, golden honey sweetness.
Palette: Turmeric, Ginger, Bitter Orange, Coriander, Bitter Melon, Cardamom, Grains of Paradise, Galangal, Zedoary
Pairings: Works well with aquavit, gin, vodka and whiskies.
By the late 1700s New England was arguably the distilling capital of the American colonies, and the spirit of choice was rum. Then Americans transitioned to whiskey in the 1800s as prices for molasses rose and those for grains fell, and distillers left the east coast for the midwest.
Now roughly 200 years later, craft distilleries are on the rise across New England and are making everything from absinthe to gin to whiskey. Throw in harbors, lighthouses, mountains, fall foliage, historic inns and great food and you have a New England Craft Distillery Trail that rivals trails in Kentucky.
Boston was founded in 1630 and is the home of the American Revolution and a number of firsts, including America’s first college, first public park, first public school, first subway, etc. Boston also has the largest airport in New England with direct flights between most major US cities and beyond. It’s a good place to start.
Privateer is in Ipswich, about 30 miles northeast of Boston and is one of Boston’s best known craft brands, and visiting is an easy day trip. (Try to swing by Gloucester before or after.) As their name suggests, Privateer is all about rum. Silver Reserve and True American Amber are their delicious, go-to rums, but try to get a sample (or a bottle!) of the very limited Queen’s Share. The Queen’s Share is made by redistilling the seconds, which is the cut between the hearts and the tails, then aged and bottled at cask strength.
GrandTen was built in an old iron foundry in Southie, just a short walk from the Andrew Square or Broadway T stations. The team make their own gins, rums and liqueurs, and they source some whiskey from Ireland. Maybe most importantly for our purposes, they were the first Boston distillery to have a full bar, which is open Thursdays through Sundays. Try to visit on Friday evenings for a more educational tour and tasting (reservations required).
There are another 10+ craft distilleries just in and around Boston.
Portland is a two hour drive from Boston if you stick to major highways, which is efficient but really boring. Better to make a few pit stops along the way, spend some time on the coast, and arrive in Portland in time for dinner.
The first stop heading north is Smoky Quartz just across the NH and MA border. The distillery is named after the official New Hampshire gem stone and is a proudly Veteran-owned and operated, grain-to-glass distillery. The distillery is small and very friendly, you’re likely to be guided Kevin Kurland, the owner and distiller, or his father. Their unaged and aged Granite Coast rums shouldn’t be missed. Don’t knock their Moonshine until you try it, but finish your tasting with their V5 Bourbon and its 100% corn mash bill.
The idea for Wiggly Bridge was conceived at a family dinner after a joking statement of “let’s make our own whisky.” Being fortunate enough to travel to the Caribbean, they decided to build and operate a small handmade copper still on the island of Montserrat to put their research to the test. It wasn’t long before they built their own still in an old barn in York, ME. Their White Rum is made, in part, using a dunder pit — a practice that sounds disgusting but results in gorgeous, funky fruity flavors associated with traditional Jamaican rums. That White Rum is also aged in their used bourbon barrels, softening the funky fruits and adding caramel and vanilla. Those used bourbon barrels are from their flagship Small Barrel Bourbon, a high-rye bourbon at home in any whiskey collection.
The Sweetgrass Tasting Room and Shop is conveniently located in downtown Portland. The winery, distillery and farm is in Union, about an hour north, where you can combine a tour and tasting with a hike, a picnic and some time in the countryside. No matter which tasting room you visit you’ll discover one of Maine’s most popular craft gins: Back River Gin. This craft, small batch, pot distilled gin has robust juniper, stimulating botanicals, and a uniquely smooth finish. It’s a contemporary style gin that works for a classic Martini, or a G&T, and more. You should also try their Cranberry Gin, Apple Brandy, fruit wines, and homemade bitters.
Plan to finish your day at Liquid Riot on Union Wharf with a view of Casco Bay. Liquid Riot takes their name from an riot in 1855 against a prohibitionist State law and a temperance City mayor in defense of their right to produce and consume liquids of their choice. Great choices is what Liquid Riots provides too, with a full restaurant, a brewery and a full range of craft spirits and cocktails. One of our favorites is the Old Port Single Malt, which is cherry wood smoked and ideal for drinking in front of a fireplace. Another favorite is Fernet Michaud, a fernet with a hint of mint that makes a perfect Toronto Cocktail and after-dinner sipper.
After a good night of rest, take the scenic route west on ME 25, continue through NH, head north through Franconia Notch, then west to Stowe, VT — all with plenty of sights and stops along the way.
Tamworth Distilling built a gorgeous distillery in the heart of Tamworth, a historic New Hampshire Village. Taking their cues from 19th Century Transcendentalists of New England, they are inspired by the surrounding atmosphere. Ingredients are sourced from local farmers and their water is sourced from the pristine Ossipee Aquifer. A portion of each bottle sold goes to the Tamworth Land Trust. You can taste all of this love and care in a delicious and unique range of garden-infused gins, cordials, infusions and limited release spirits, many of which are only available at the distillery.
Between Tamworth, NH, and Stowe, VT, you’ll drive by Caledonia Spirits, the makers of Bar Hill Gin. If you love gin and love honey and love a combination of the two, then pull over and buy some of both!
OK, it’s not a distillery but a can of Heady Topper deserves to be on anyone’s list. The Alchemist is a family run brewery specializing that famous, fresh, unfiltered IPA that set the New England standard. Heady Topper is brewed in Waterbury but you can taste it and their other beers at their visitor center in Stowe, VT.
Instead of taking the interstate the entire way back to Boston, head 60 miles south to Middlebury first. After some touring and probably some lunch, head east through the northern part of the Green Mountain National Forest and then back to Boston.
From their solar-powered distillery, Appalachian Gap are handcrafting a line of delicious, unique spirits. Founded in Middlebury by a former chef and a biochemist, the team carefully — and painstakingly — crafts spirits to meet our their own exacting standards. Mythic Gin is their rendition of an 18th century style of gin where the flavor of the grain forms the backbone of its complex yet clean flavor. Papilio honors the state butterfly of Vermont by distilling a blend of agave and maple syrup. Ridgeline Whiskey is aged in new oak barrels, ex-bourbon barrels, and port wine barrels, and will appeal to those wanting a layered whiskey. There are usually some special edition products to try too.
SILO is located in a newly-built barn distiller in the same Artisan Park as the Harpoon Brewery in Windsor. SILO was founded by Vermonters dedicated to making innovative craft spirits. Their process is completely hands on, starting with grains from Grembowicz Farm in North Clarendon, VT. Everything else is done right there in their barn distillery. In the tasting room and on the patio you can sample the freshest Cucumber Vodka you’ll ever have, along with a number of other infusions. The team also make two gins, three whiskies and there are usually limited edition spirits to try too.
Harpoon was the first brewery in Massachusetts since Prohibition, and they have Brewing Permit #001 to prove it. Then in 2000, Harpoon purchased the former Catamount Brewery in Windsor. In addition to giving Harpoon the extra brewing capacity they desperately needed, it now includes a full restaurant. So grab a bite to eat and a pint or two before making the two hour drive back to Boston.
The craft spirits market in the US is young and growing quickly. Starting from next to nothing ten years ago, craft spirits were 2.2% of the spirits market in 2015 (using the broad ACSA definition). That same year there were almost 1300 craft spirit producers, which has been growing at a 16% compound annual growth rate since 2007. Some of those newly issued distilled spirits plant (DSP) permit holders may not have started production or may not have product ready to sell, but those are still some impressive numbers.
That kind of growth is fantastic for producers, distributors and retailers — and consumers who now have more opportunities to go beyond well-known national brands and try more locally produced artisan brands. It also raises the obvious question of what exactly makes something a craft spirit?
Craft brewers got a much earlier start and growth picked up in 1976 after a tax cut on the first 60,000 barrels sold, as long as the brewery produced fewer than 2 million barrels a year. The market took off again after going mainstream in the 1900s when The New York Times and others started publishing stories about microbreweries.
Looking back, craft beers in the 1990s looked a lot like the craft spirits market of today as craft beer was also about 2% of total sales back then, today it’s around 12% of total beer sales and growing.
Those of us drinking beer in those earlier days could have pretty easily identified what was craft or not. But it wasn’t until 2005 that the newly formed Brewers Association defined a craft brewer as (1) an independent company, (2) making two million barrels or less, and (3) using traditional ingredients and methods. That definition was updated in 2014 – with lots of controversy – to six million barrels and there’s more “flexibility” on ingredients. (add link)
The most well known definition of the emerging craft spirits market comes from the American Distilling Institute (ADI), which looks to have used the Brewers Association as inspiration. The ADI’s definition is sure to be debated and modified over time too, and there’s already a separate certification for craft blenders. But this ADI certification of craft distilled spirits is a start:
Another way to identify craft spirits is to rely on your common sense and your gut and, to paraphrase the late US Supreme Court Justice Potter Stewart, “to know it when you see it.”
The emphasis is on authenticity and craft. We humans have a historical and innate sense of when something is made by a craftsman or craftswoman. We can see and appreciate craftsmen’s direct involvement in the creation and production, a combination of art and science, of the final product. We can sense that something is lovingly and carefully handmade, and that it embodies the maker and where it was made – what the French call terroir. This is just as true with today’s craft spirits as it is with cheese, coffee and wine.
So use all your senses and your knowledge, explore and try new things, and enjoy yourself. At a time when everyone is increasingly aware of the dangers of over imbibing, there’s no better time to make what you do choose to drink really count!