Earlier this week, the American Craft Spirits Association (ACSA) unveiled its latest economic report as part of the 2024 Craft Spirits Data Project, and the news was grim. For the first time since the project began nearly a decade ago in 2016, American craft spirits sales declined, concerning news for an industry that is already operating on thin margins compared to brands and distilleries backed by major corporations.
The ACSA, which works in partnership with consulting firm Park Street, meets every year to reveal the latest data on craft spirits sales, market share, and exports. Here are some of the highlights from this year’s report: Craft spirits’ market volume decreased by 3.6 percent in 2023, which as mentioned earlier is the first decrease since 2016. The craft market share also decreased slightly when compared to that of large producers. While these numbers may seem small, they represent real challenges for an industry that cannot compete with the scale, budget, and name recognition that legacy distilleries owned by giant companies like Suntory Global Spirits, Diageo, and Campari have.
Becky Harris, founder of Catoctin Creek and ACSA government affairs lead, says that this report did not come as a surprise to her, and that while many will say this is the result of the broader economic condition, that’s not the whole picture. “Since 2017, there has been consistent, if slowing, growth in craft spirits sales as a share of the larger market in both value and volume. After a somewhat flat year in 2022, this year we see the first decrease in both. Yes, spirits as a category is down, but craft spirits producers are hurting more.” She points to consolidation at wholesale and retail levels and antiquated routes to market as having a major effect. “Compounding this issue is the narrowing of the wholesale funnel,” she says, “an issue ACSA has highlighted quite significantly of late which continues to steadily choke off market access to newer and less heavily capitalized brands.”
It should be noted that the report wasn’t all bad news, because it did highlight some areas of growth and opportunity. For example, there were a number of craft distilleries that closed, but overall the number of distilleries rose to 3,069 (a slower rate than recent years, however). More companies are reinvesting in their businesses, a sign that there is inherent value to be found in the industry. Sales of craft spirits remain strong in distilleries’ home states, and exports increased by 5 percent (which is still lower than the numbers before tariffs set during the Trump administration). Also, while employment numbers haven’t rebounded to pre-Covid levels, they are increasing with more than 29,000 people now working at or for craft distilleries.
Taking a wider look at all of this, it’s important to note that it’s not just the craft industry that is taking a hit. As we’ve reported, major companies like Diageo, Brown-Forman, and Moet-Hennessy have also reported slowdowns in sales and lower stock prices. They’ve attributed this to factors like over-stuffed portfolios, inflation, and consumers just drinking less overall as the sober curious mindset continues to take hold, things that could also be affecting the craft industry. It’s also possible that the industry could be reaching a point of saturation—more than 3,000 craft distilleries is great as far as consumer choice and creativity is concerned, but it might also be a bit overwhelming for some buyers. Combine that with the lingering effects of the pandemic, a time when people were buying a lot of booze but mostly sticking to their trusted comfort brands, and it could be that the craft industry is stabilizing at a new normal.
If this news bums you out, there is something you can do: go out and buy a bottle from your favorite craft brand, or try one you’ve never tasted before. There are so many great options out there from distilleries like Chattanooga Whiskey, Kings County, Catoctin Creek, Frey Ranch, and Redwood Empire (not to mention craft operations that are technically owned by big companies like Woodinville and Westland). Raise a glass to your favorite, and let’s hope the news next year is better.
