Finally, Craft Spirits Are Growing Faster Than Non-Craft Spirits

New research by IWSR Drinks Market Analysis shows increased interest in craft spirits, particularly gin and whiskey

The stills at O'Shaughnessy Distilling Co. in Minneapolis. Craft spirits are set to grow faster than non-craft spirits over the next five years.
Stills at O'Shaughnessy Distilling Co. in Minneapolis
Kirk Miller

According to new research by IWSR Drinks Market Analysis, we’re slowly but surely becoming a nation of craft spirits drinkers.

The new report shows that craft spirits — defined as products made in the U.S. by licensed producers that have “not more than 750,000 proof gallons (or 394,317 nine-liter cases) removed from bond and who market themselves as craft” — registered a volume gain of around 8% in 2020, while non-craft spirits volumes had closer to 5% growth.

While only representing 5% of volume and 7% of value of the total U.S. spirits market, researchers suggest this is a trend upwards that’s likely to continue; IWSR predicts a +21% Compound Growth Annual Rate (CAGR) in U.S. craft spirits for 2020-25, compared to just 4% for non-craft tipples.

Even the COVID-19 pandemic, which forced the closure of tasting rooms and limited opportunities for spirits makers at bars and restaurants, couldn’t keep the drinks market down. Basically, spirits producers thrived as they switched to different sales methods, particularly in e-commerce (and particularly in states that loosed their alcohol legislation). “While there was a substantial deceleration in growth, craft producers and indeed the total U.S. beverage alcohol market as a whole, performed better than projected last year due to consumption switching to the home-premise,” says IWSR analyst Ryan Lee.

Interestingly, the higher prices of craft spirits has helped those distillers gain traction, particularly in market share value. “The craft category has benefited from premiumization as higher average prices help U.S. consumers become accustomed to premium-plus offerings,” says Lee. One prominent example: While the average price of gin in the U.S. is under $17, a craft gin averages $30.

As for where the gains are headed? Pretty much all spirits categories should see growth, but IWSR sees big gains ahead in craft rum, Tennessee whiskey, blended whiskey, craft gin, flavored whiskey and agave-based spirits that are not tequila, which “faces substantial supply challenges.”


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