The already lucrative global craft spirits market is expected to reach USD 80.43 billion by 2025, according to a new report by Grand View Research, Inc.
The demand for craft spirits is mainly driven by consumers growing a preference for premium and authentic drinks with unique tastes. People born between 1980s and early 2000s have accounted for the largest share of consumers in the industry.
A major share of the millennial population has just reached the Legal Drinking Age (LDA), while the other section comprises employed consumers with significantly higher purchasing power. The millennial population segment has fueled significant demand, owing to their preference for unconventional and experimental alcoholic beverages.
Whiskey was the most consumed variety of the craft spirits, followed by gin, vodka, and rum. Gin has gained wide consumer acceptance owing to its unique taste and flavor developed by juniper berries. The craft distillers focus on the use of different spices, fruits, herbs, and botanicals to produce innovative products. They procure raw materials from family-owned farming houses who have strong experience in producing grains and fruits.
The industry is mainly concentrated in North America, owing to sizeable demand in the U.S. Europe has been the second-largest market for the product over the past few years. The economically developing countries in Asia Pacific, Central & South America, and the Middle East & Africa are expected to gain traction over the forecast period. The industry in these countries is not entirely explored and thus offer huge growth opportunities for players.
Further key findings from the report suggest that the global craft spirits market was valued at USD 6.13 billion in 2016 and is expected to grow at an impressive CAGR of 33.4% from 2017 to 2025, owing to growing consumer tastes and preferences towards unconventional and experimental alcoholic beverages. In addition, it was found that craft spirits are produced by licensed and independent distillers who produce alcohol of a volume less than 750,000 proof gallon. However, large distilleries are expected to dominate the industry over the forecast period, accounting for around 59.7% share of the industry volume by 2025. The shares of medium and small distilleries are expected to decline over the next few years, with large players focusing on acquisitions to strengthen their competitive positions.
Naturally, Whiskey was the largest product segment of the global industry, owing to surging demand for flavored products formulated using ingredients such as whole spices and herbs. Quite predictably, given its recent strides forward, Gin is anticipated to be the fastest-growing product segment of the market over the forecast period, owing to augmented use of the products in cocktails.
North America dominated the global industry, accounting for around 53% share of the total revenue in 2016. Consumers who have just reached the Legal Drinking Age (LDA) have played the key role in driving the product demand in North America. Asia Pacific is expected to create lucrative opportunities for distillers owing to tremendous potential in countries such as China, India, Thailand, Indonesia, Malaysia, South Korea, Australia, and Japan. China accounted for the largest share of the Asia Pacific industry in 2016, due to growing millennial population in the country. The share of China is expected to increase at a significant rate with increased consumer spending on recreational activities such as eating and drinking out.
Key players in the future industry will include Pernod Ricard, Diageo plc, Rémy Cointreau, Anchor Brewers & Distillers, Rogue Ales, and William Grant & Sons. The market is likely to move towards consolidation, owing to entrance of established players in the market through acquisitions.