July 19, 2016

Craft beer sales plunge, are craft spirits next?

Recent US sales figures for Craft Beer took a surprising beating.
Falling Craft Beer sales should sound alarm bells as consensus thinking imagined never ending rivers of gold.

Is there anything here we can learn to then apply to the Craft Spirits industry? Are spirits in for a rough landing?

Here are some thoughts:
  •  Fragmentation
More and more “craft” spirit producers are opening daily, adding a continuous progression of line extensions that don’t really propel the spirits industry forward.
  • Confusion reigns within its borders
Endless Spirit choices lead to potentially unending confusion with today’s time and attention poor Millennials having insufficient interest nor capacity to discern between nuanced competitive offers.
  • The Flavour Saviour Category
A tendency to “innovate” built only on adding or changing flavour does not translate into committed long term consumers – as a “what’s next or new” philosophy never seems to build loyalty. In fact consumers are encouraged to continuously leap frog across competitive brands.
  • Beer is Cheap, Spirits are not
Beer is relatively cheap compared to Spirits. It’s easier for consumers to jump beer brands daily or weekly, yet with Spirits, individual consumers can only buy and consume so much.
  • Paralysis
Similar to wine paralysis, too much choice encourages consumers to make no choice at all.
  • There’s not enough retail shelf space
Where do you display a growing tidal wave of new Spirit brands either on or off premise?
Just because a producer introduces new variants or line extension or brands doesn’t automatically mean a retailer, consumer or bar manager can range it. Limited space means you really need to be good, powerful, and creative and/or have a terrific back story that’ll earn physical presence on shelves or bars. Just making something for the sake of it is absolutely no guarantee
  • Authenticity & experience
With an unending conga line of producers claiming craft heritage , the issue of arising consumer/bartender wariness as authenticity and genuine experience takes a back seat to fast bucks.
Evidence at this stage doesn’t automatically translate to an issue with the Craft Spirits category, yet, however saying that, it possibly pays to be somewhat circumspect.