The Craft Distillery Market 2016: Normal is as Normal does Michael Kinstlick CEO, Coppersea Distilling ADI Research Economist
U.S. Craft Distilleries How Many? What Products Are They Making? Where Are They? Where Are We in the Market Development Cycle?
Craft Distillery Market Snapshot 2016 1193 Unique U.S. listings in ADI Directories 2006-2016 1009 Unique U.S. listings in 2017 ADI Directory (year-end 2016) 2100 Listings in TTB DSP permit holders file (late-2016). 1121 Operating Craft Distilleries as of year-end 2016 871 Identified Operating Craft Distilleries as of year-end 2016 Remainder are Known & Estimated Hidden Entrants # of Entrants is (still) doubling every three years Approximately 1150 Producing Craft Distilleries in 2016.
Potential Entrants: New TTB DSP s are Pre-producers 2500 TTB Permittees 2010-2016 2000 Approximately 300 adds and 50 drops 2098 1825 1500 1588 1320 1000 926 500 560 679 787 0 7/1/10 1/1/11 7/1/11 1/1/12 7/1/12 1/1/13 7/1/13 1/1/14 7/1/14 1/1/15 7/1/15 1/1/16 7/1/16 1/1/17 Data: TTB, Michael Kinstlick
Recent Years Listings More Likely to be Producers 1 Cumulative Producers by ADI Listing Year 0.9 0.8 About 70% of new ( T-1 ) listings from 2015-17 in production 0.7 0.6 0.5 0.4 0.3 0.2 0.1 Only 35% of new ( T-1 ) listings from 2009-14 in production 0 T-4 T-3 T-2 T-1 T T+1 T+2 t+3 t+4 t+5 Data: ADI, Michael Kinstlick 2009 2010 2011 2013 2014 2015 2016 2017
Craft Distilleries: New Entrants 1982-2016 250 New Production Craft Distilleries By Year * 225 200 175 150 125 100 75 50 25 0 Data: TTB, ADI, Michael Kinstlick
U.S. Production Craft Distilleries, 1982-2016 1400 In-Production Craft Distilleries 1200 1000 800 600 400 200 0 Data: TTB, ADI, Michael Kinstlick
Craft Distilleries What are they making? 100% % Producers in Category by Entry Year 75% 50% 25% 0% Vodka Gin Whisky Rum Other <2010 2011-12 2013-14 2015-16 Note: Multiple-category firms mean these %-ages do not sum to 100% Data: ADI, Michael Kinstlick
Craft Distilleries Whisky? Yes, Please! % of Whisky Producers by Entry Year 100% 90% The hidden entrant gap 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 & prior 2001-05 2005-10 2011-13 2014 2015 2016 Data: ADI, Michael Kinstlick
Craft Distilleries By State, 2006 22 States have 0 16 have 1 12 have >1 Data: ADI, Michael Kinstlick
Craft Distilleries By State, 2016 Data: ADI, Michael Kinstlick
Craft Distilleries By State, 1990-2010 1990 2000 2005 2010 Data: ADI, Michael Kinstlick
Craft Distilleries vs. Craft Breweries Craft Distilleries vs Microbrews by Industry Age (Microbrew start = 1961, Craft Distilleries = 1982) 6000 5000 4000 3000 2000 1000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 222324252627282930 31 32 3334353637 383940 41 42 43 4445 4647 484950 51 52 53545556 MicroBreweries Data: TTB, ADI, Michael Kinstlick, Glenn Carroll, Anand Swaminathan, Bart Watson / Brewer s Association Craft Distilleries
Conclusion Number of Craft Distilleries in the market will reach 2000 within 5 years. Exits will start to become part of the landscape. Craft Distilled spirits consumption is solidly in earlyadopter phase. Craft Distillers have 2% US Distilled Spirits ($) market share Craft Brewers have 15-20% US Beer ($) market share The renewal of American distilling is following a classic pattern of industry resurgences.
Data & Methods What is a Craft-Distillery? 1. Independent Firm Below a certain production volume. (40-50k 9L cases, generally) 2. Distilling spirits themselves 3. Bottling & Marketing them directly Definition Excludes Barrelers & Bottlers Importers Rectifiers Infusers Contract Distillers Data ADI Directories, 2006-2017 TTB DSP permit holders foia file (online, 2010-2016) State Guild websites
About the Author Michael Kinstlick comes to the spirits industry from a 20 year career in finance, technology, and insurance. He co-founded Coppersea Distilling, LLC with distiller Angus MacDonald in 2011. Coppersea is currently producing distinctive whiskies and eaux de vie using its heritage-methods distilling practices and is available in 12 states. Michael has a BA in Economics from Columbia University, a MS in Industrial Engineering from Northwestern, and a MBA from the Haas School of Business at U.C. Berkeley.