Craft distilling was at its peak in the 1880s when 8,000 distilleries served an American population of approximately 50 million. Since then the number dwindled, reaching near-extinction in 1990 when a paltry seven distilleries were making spirits for 250 million Americans. At a craft distilling conference in 2015, researcher and distiller Michael Kinstlick forecast 1,000 American distillers, according to an article published in Wine and Craft Beverage News.
While Canadian-made spirit sales have dipped, it’s certainly not because of market demand. As revenue from Canadian-made spirits declined by 2.4% between 2004 and 2012, imported liquor revenues grew by 6.6% annually over the same time period. Canadians are thirsty, and demand is currently being met by foreign products.
That may be set to change.
Encouraged by the success of a booming provincial craft beer industry, Alberta has pledged support for provincial craft distillers as a way to encourage investment into the market and capitalize on growing demand for locally produced food products. Even without regulations and a program in place, Alberta distillers are beginning to open their doors.
Hell’s Basement Brewery and Medicine Hat Brewing Co have proven there’s a market in Medicine Hat for two breweries. As distilling continues its rise in Alberta, it’s not out of the question for two distilleries to operate in the city as well. Proximity to high-quality ingredients including potatoes, barley and other grains, as well as a trading area population of 100,000 will keep demand for spirits high. And as Medicine Hat continues its recovery from the 2015-16 recession, people will return to work, creating even more demand for a good, locally-produced spirits.
- A program for small distillers, wineries and meaderies is in the works.
- By 2018, an estimated 1,000 licensed craft distilleries will be in operation nationwide. In 1990 there were only seven.
- That market is currently capturing roughly 1 percent of market share.
- “What’s the upper limit? I don’t think there’s any ceiling in market share.”
- Distilling is the last piece in the artisan renaissance that has reshaped consumerism
- Craft distillers tend to be well-capitalized professionals with strong business plans and patience
- Many distilleries are opening tasting rooms and gift shops
- “The U.S. spirits market faces a growing threat of substitution,” analysts at Credit Suisse said. “A market that had been characterized by large-scale national brands is becoming increasingly focused on local, authentic, small-batch production.”
- After compound annual growth of about 50 percent since 2010, craft distillers — or those producing under 100,000 cases per year — now account for about 2 percent of the U.S. market, the largest and most profitable in the world.
- The number of U.S. craft distilleries jumped from about 200 in 2011 to about 600 in 2014, lifting sales volume from about 700,000 cases in 2010 to about 3.5 million last year.
- In 2012, 38 establishments were operating in Canada with the majority in Ontario (10), British Columbia (9) and Quebec (8). The industry generated revenues of $744 million and employed 1,280 people. Sales of spirits in Canada totalled 222 million litres in 2013, with 148 million litres representing Canadian spirits. Canadian production of distilled spirits is highly concentrated among a few firms and the bulk of domestic spirits production in Canada is foreign-owned. The industry is a net importer of spirits, with imports totalling $914.2 million in 2014 while exports amounted to $602.9 million in the same year. The United States accounts for 90% of exports; the majority of imports come from the United States (37%), followed by the United Kingdom (20%), Ireland, France, and Mexico.
- Between 2004 and 2012, sales of goods manufactured by the Canadian distilling industry decreased 2.4% from $762.3 million to $744.2 million. Imports of spirits had an average annual growth rate of 6.6% during the same period while exports shrank at an average annual rate of 1.2% before rising again in 2013. As a result, imports represent a greater proportion of the domestic market, increasing to 80% in 2012 compared to 74% in 2004. Between 2004 and 2012, direct employment declined from 1,969 employees to 1,280. In recent years there has been an increase in the number of smaller distilling companies that specialize in supplying niche market products, and the emergence of a number of artisan distilleries located throughout Canada that make small batches of spirits such as vodka, gin, brandy liqueur and Canadian Whisky.
- Number of craft distilleries in the market will reach 2000 within 5 years
- Craft distilling has 1.5% of the market
- Craft beer has 15% of the market
- The Craft Distilling market is no longer in its infancy. The pioneers of the 90’s and 00’s yielded to the explosion in new entrants over the past few years. And now we are seeing some of those entrants departing. The next phase of the market will see increasing numbers of Exits, even as the number of new Entrants continues to grow.
- The dynamics of consumer demand and the prior examples of farm wineries and craft brewers suggest that the Craft Distilling market is far from saturation. However, the days of bottling GNS-based Vodka and calling yourself “The First Distillery in Which-Where County Since Prohibition” may be over. Knowledgeable consumers are seeking truly local products with panache and differentiation.
- The next milestone, 2000 Craft Distillers, will not take nearly as long as the 23 years for the first 1000. But it will take longer than three years for the next doubling to that level. We predict another 1000 net entrants over the next 5 years, and that the number of Craft Distilleries will ultimately match the number of Craft Breweries.
- Spirits Canada
- Alberta Craft Distillers
- American Distilling Institute
- American Craft Spirits Association
Education and Training
University and college
Five day Courses
- Moonshine University
- Urban Distilleries
- BC Distilled
- Siebel Institute
- Artisan Craft Distilling
- American Distilling Institute
Two day Courses
- Eau Claire Distillery
- Park Distillery
- Red Cup Distillery
- Rig Hand Craft Distillery
- Stone Heart Distillery
- Krang Spirits
- Strathcona Spirits
- Hansen Distillery
- Wild Life Distillery
- Raw Spirits
“Two primary things lead to failure in launching and operating a new micro-distillery: Lack of detailed, long-range business planning, and under-capitalization – not enough money. If you are planning to become a distiller, do your homework and prepare a detailed plan.” — CanadianWhiskey.org