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Craft Spirits Update: Market Leaders Begin To Emerge

March 26, 2019

While the craft spirits business in the U.S. has endured some growing pains lately—among them an increasing number of distillery closures—its total volume keeps climbing. Impact Databank estimates that craft spirits—defined as domestic brands produced by independent distillers with a maximum volume of 250,000 9-liter cases—topped $3.5 billion in 2018, up 22% over the previous year. By volume, craft spirits shot ahead 17% last year to 7.1 million cases, and now account for 3% of the overall spirits market. Along with the growth, a clearer picture is emerging of who the market leaders are.

Smooth Ambler Spirits, the West Virginia distiller acquired by Pernod Ricard in December 2016, has undergone significant expansion. “We used to run one shift a day, five days a week. Immediately after the Pernod investment, we went to 24 hours a day, seven days a week,” says CEO and master distiller John Little. The distillery now produces about 3,000 barrels of its own whiskey annually. Smooth Ambler also has a sizeable sourced whiskey program for its Old Scout line—which includes American whiskey ($35 a 750-ml.), Single Barrel Bourbon ($65), and Single Barrel Select ($65). Smooth Ambler Contradiction ($50) blends the distillery’s wheated Bourbon and a sourced high-rye Bourbon. While Smooth Ambler enters new markets with a focus on Old Scout and Contradiction, its 100-proof Big Level Bourbon ($55) plays a leading role in certain markets.

Utah’s High West Distillery is another leader in the craft space, with volume now above 80,000 cases. In 2015, High West opened a 200,000-case distillery at Blue Sky Ranch in Wanship, Utah. A year later, Constellation Brands outbid the competition to acquire High West for an estimated $160 million. A recent High West milestone has been the introduction of own-make rye into its blends. “Rye distilled in our own pot still has been integrated into Double Rye ($35), Rendezvous Rye ($60), and Campfire Whiskey ($65), among others,” says High West marketing director Justin Lew.

Waco, Texas-based Balcones Distilling has ended allocation for the first time in five years, following the opening of a new distillery in 2016. The $33 million facility’s annual capacity is about 90,000 9-liter cases. The core Balcones portfolio includes Baby Blue corn whiskey ($40), Texas single malt whiskey ($70), Texas 100 Proof rye ($40), True Blue 100 Proof corn whiskey ($60), and Brimstone, a smoked corn whiskey ($60).

Westward American single malt whiskey ($85), from Portland, Oregon has also long contended with supply issues. “Westward’s availability is steadily increasing as more of our whiskey comes of age, but growing interest in the brand has caused supply to remain very tight,” says Westward CEO and co-owner Tom Mooney. Last fall, Diageo-backed Distill Ventures added Westward to its portfolio with a minority investment, and production capacity is expected to expand by about 40% in the near term. The brand laid down around 1,200 barrels last year, which will yield roughly 30,000 cases once it matures.

Denver, Colorado-based craft distiller Stranahan’s has expanded its presence into all 50 states. “Today, our weekly production is up to about 65 barrels or more,” says master distiller Rob Dietrich. Stranahan’s, which is part of the Proximo Spirits portfolio, has raised its profile by joining with Colorado’s Red Rocks Amphitheatre as the venue’s official whiskey.

Washington state-based Woodinville Whiskey Co. received a major boost when it was acquired by Moët Hennessy in 2017. Prior to that deal, Woodinville was available only in its home state. Last year, the brand expanded into northern California and Oregon with Southern Glazer’s as its distribution partner. This year, Woodinville plans to enter three to four new Western U.S. markets. Market Watch has more on recent developments within the craft distilling scene.—Kimberly Tharel

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