Major Spirits Players Invest Behind Their Craft Brands

Among the thousands of craft distilleries launched in the U.S. over the past decade, a select few have gained enough traction to be able to sell to a larger firm, including some of the biggest players in the drinks business. When that happens, it affords the upstart brands improved distribution and opportunities to expand production. Overall, craft’s share of the total U.S. spirits market is now above 7% in value terms, up from less than 3% in 2015, according to Impact Databank. Craft value in the U.S. is approaching $8.5 billion on volume of nearly 15 million cases.

Constellation Brands was an early mover in the space, purchasing High West, Copper & Kings, and Austin Cocktails, among other craft plays. Moët Hennessy acquired a minority stake in Vermont-based craft distiller WhistlePig, as well as adding Washington state’s Woodinville to its portfolio. Meanwhile, Bacardi and Proximo bolstered their whiskey stables with Angel’s Envy and Stranahan’s respectively.

Pernod Ricard has been particularly active, acquiring West Virginia’s Smooth Ambler, Kentucky’s Rabbit Hole Distillery, Texas distiller Firestone & Robertson, Castle Brands (parent company of Jefferson’s Bourbon), and others. Diageo is also in the mix—its most high-profile craft purchase happened in 2022 when it acquired Texas whiskey company Balcones Distilling. That same year, Campari purchased Kentucky’s Wilderness Trail Distillery. Among the above carving out significant volume, Jefferson’s grew 11% to just under 200,000 cases last year, Angel’s Envy is above 300,000 cases, and High West has reached 170,000 cases, according to Impact Databank.

In February 2022, Heaven Hill Brands made a splash when it snapped up Samson & Surrey, including the portfolios of artisanal players F.E.W. Spirits, Brenne French whisky, Ocho Tequila, Widow Jane American whiskey, Bluecoat gin, and Vago mezcal. Samson & Surrey was doing $40 million in sales at the time. Robert Furniss-Roe, who co-founded the company with fellow Bacardi veteran Juan Rovira, continues to serve as CEO of Samson & Surrey.

“The partnership has opened the door to aligning our distributor footprint in the U.S. and being part of a dedicated sales division,” says Rovira. “In that sense, you have a sales team that is providing a higher level of focus behind our portfolio, and over time that will translate to even larger acceleration in terms of how we increase distribution and our penetration in the market.”

Jill Burns and Kelly Gasink, co-founders of Texas-based Austin Cocktails, see myriad benefits from being aligned with Constellation, not least of which is distributor support. “Just having the leverage of being within a portfolio that the distributor cares about is probably the biggest change,” says Burns.

Investment from bigger players also provides craft distillers funds to boost output. At Jefferson’s, Pernod is investing $250 million over five years to build a state-of-the-art, carbon neutral distillery, with aging warehouses in Marion County, Kentucky and a visitor center. The facility, which is anticipated to produce 115,00 barrels and 7.5 million proof gallons a year, is expected to open this fall.

Rovira of Samson & Surrey says Heaven Hill’s ownership has allowed for more aggressive production and expansion than would otherwise have happened. “We’ve been doubling the size of the company every two years and we’re planning to triple the size of the company in the next five years,” he says. “So that requires more liquid, more supply.”

Furniss-Roe adds that it’s not just capital investment that Heaven Hill provides. “It’s also about expertise,” he says. “For example, if we had an engineering debate to do with building a distillery facility, we would have to go externally and find a spirits or distillery engineering expert somewhere for hire. That’s now internal.”—Daniel Marsteller

Tagged : Austin Cocktails, Balcones, Blue Coat, Constellation, Diageo, Few, Firestone & Roberston, Heaven Hill, Jefferson's, Pernod Ricard, Rabbit Hole, Samson & Surrey, Widow Jane

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