- As the spirits industry continues to grow, it's also evolving to embrace trends and meet a wide range of consumer demands, from flavor to convenience.
- Startups in particular are driving this movement by creating products that include natural and better-for-you ingredients, exotic flavors and aromas, easy preparation, authenticity and convenient and portable packaging.
- Craft spirits are still a relatively small sector of the market, but many consumers, particularly millennials, are driving growth by integrating a "creative and unique ethos into their spirits-buying habits" and "(defining) themselves by more niche, higher-quality brands with a quirky backstory," Jonny Forsyth, global drinks analyst at Mintel, told Food Business News.
Reports released this year by the Distilled Spirits Council and Technavio both confirm that the spirits segment is growing at a faster clip than beer and wine. Part of the reason is health-related, because consumers may feel more control over sugar and calorie content by being able to select their mixers. How healthy and natural ingredients are, as well as how products are developed and manufactured, also factor in consumers' spirits purchase decisions, according to Technavio.
Bill Owens, president of American Distilling Institute, told Food Dive last year that the craft spirits industry was growing at about 30% per year. But craft distillers face a number of challenges when attempting to open a distillery, ranging from obtaining zoning permits to acquiring rare distilling equipment, he said.
Still, Owens believes craft spirits will eventually enjoy a similar growth pattern to what craft beer has seen over the past decade. As of 2015, craft beer now comprises about 12% of the overall beer industry in the U.S., according to the Brewers Associaton. The craft spirits industry currently makes up about 1% of the total spirits market, according to Owens.
But these trends are also critical for major players like Diageo and Constellation Brands, which produce both beer and spirit brands, and have to focus innovation investments in the right segments and brands to maintain consumer appeal and relevance. For Constellation, that has included investments in the Mexican beer and craft beer portfolios. For Diageo, that recently led to the first investment by the company's accelerator in a non-alcoholic spirits producer.