Craft spirits are handcrafted spirits produced with small distilleries with less distillation process. Various spirits such as whisky, rum, vodka, gin, and tequila are majorly consumed across the entire continent. The majority of the small distilleries have been focused on produced handcrafted gin due to their increasing demand in the bars and taste tours. Most craft distillation uses their local ingredients as most distilleries distribute their crafts in the local market. The United States majorly occupies the demand of the craft distillers. The total number of current working craft distillers in the USA is approximately 2,046 in 2019 from 1,835 in 2018. According to the American Craft Spirits Association (ACSA), the American craft spirit share's current volume share is approximately 5.6% of the total spirits market and has registered the highest growth rate in any liquor up-to 25% to 30%. The increased demands for local flavor spirits and growing consumption of handcrafted spirits have boosted the market's growth.
The Novel COVID-19 has crushed over the craft spirits industry due to forceful shutdown of craft distilleries and extended lockdown of distilleries in initial days. The craft spirits business had to step out with challenging decisions, such as the shutdown of testing rooms, production closures, and employees' furloughing. The spirits are imported from European countries such as the United Kingdom, Germany, Ireland, Italy, France, and Spain. However, before the pandemic, the U.S. government has imposed a 25% hike in the tariff charges of the spirits such as whisky, liqueurs, and cordials imported from European countries to boost the production market in American countries itself. The drastic hike has devasted the small craft spirits business, which was already struggling to sustain itself in the market.
The craft spirits was high as liquor stores were likely to drive the sale compare to the branded spirits as growing attribution of tasting rooms and gift shops.
Various companies have priory shown an upsurge in their revenue from craft spirits, which drastically impacted by pandemic. For instance,
In Craft spirits, the majority of the distribution share is being held by the wholesale distributors, such as cafes, restaurants, bars, hotels, and catering services. According to the article published by Distilled Spirits Council of the United States (DISCUS) and American Distilling Institute (ADI), 25% of the distilleries mentioned that they had lost due to the pandemic their wholesale business ultimately.
With restaurants and bars closed or operating at reduced capacity due to the pandemic, this has a ripple effect on distilleries. Sales to liquors stores or package stores have helped offset the effect somewhat.
“Government has the UK started with initiatives to regain the craft market with the hashtag of #ArtistSupportPledge. The initiative, supported by The Crafts Council, asks artists to post images using the hashtag while giving details of their works and price (up to a maximum of £200), and every time an artist reaches £1,000 of sales, they pledge to buy £200 of work from another artist.” Pandemic has boosted the market of direct to consumer channel for the distilleries and grocery industry, which a life savior for the craft spirits producers. The challenges faced by the on-premises sale, various companies have made their entrance through the e-commerce channel to distribute their craft distiller directly to the consumers in this pandemic.
“In August 2020, Terai India Dry Gin has launched in collaboration with The Proof Creative Team. “
-TERAI Dry Gin
Texas Distillery Launches New Whiskey During Pandemic
“Promoting a new spirit during a pandemic has been challenging. Not being able to do on-premise tasting has hurt the craft industry. People have continued to buy spirits, but they maybe only buy things that they already know.”
- Godevais, Texas Distillery
“COVID-19 has been the cause of a major shift across the board for the beverage industry — adversely affecting several areas including bars, restaurants and independent distilleries that have had to shut down tasting rooms and even pivot their production to supply essential hand sanitizer. But this has also led to a positive impact on e-commerce sales for the spirits industry and new customers purchasing online.
- Weiss says, Michael Weiss, CEO and founder of Lincolnwood, Ill.-based Spirit Hub
“The American Craft Spirits Association (ACSA) has been working closely with the U.S. Food and Drug Administration (FDA) and the Alcohol”
“Alcobrew launches One More Pure Craft Vodka”
- Alcobrew Distilleries
“We found that many craft gins in the U.K. were using ‘exotic’ ingredients like cardamom and cinnamon, which we already have in South East Asia, so we thought why not make use of it.”
“Craft gin RM Singapore Distillery has launched new products, made from a blend of Asian herbs and spices common in the region.”
- Craft Gin Firm
The disruptions in craft spirits and lockdown of the tasting distilleries and tours have slowed down the craft spirits market. The shutdown of on premises wholesale channel from where most craft spirits revenue is being extracted has drastically impacted the sale volume of crafted spirits. However, the development of the off-premises platform and the small distillers' website development have made an opportunity for local players. The high tariff charges established by the American and European governments have not scratched the giant spirit producers. In contrast, it has drastically impacted the small distillers, which cannot sustain in the stock market.
The majority of the initiatives to consume locally handcrafted products and government authorities' funding to boost small distillers' growth will help reshape the overall spirits market. Various craft spirits producers have shifted their workplace in the preparation of sanitizer to fight against the COVID-19 pandemic. Companies' strategic steps have helped them sustain in the market and with their brand equity among consumers.