Distilleries
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 2,753 distilleries in the US produce liquors, blend liquors, and blend and mix liquor and other ingredients. Major product categories include vodka, whisky, rum, tequila, and gin. Firms may also produce other types of alcoholic beverages, including beer and wine.
Strict Regulation
The alcoholic beverage industry is heavily regulated.
Concentrated Distribution
The distribution system for wine and spirits is concentrated and continues to consolidate.
Industry size & Structure
The US distillery industry consists of about 2,230 establishments that employ over 27,000 workers and generate between $37-38 billion annually, according to the American Craft Spirits Association.
- The US craft spirits industry consists of about 2,753 active distillers that sell over 14 million cases of product, generate $7.9 billion in sales, and employ over 27,368 workers, according to the American Craft Spirits Association. A craft spirit distillery produces no more than 750,000 proof gallons and is not controlled by a large supplier.
- The distillery industry is highly concentrated; the top 50 companies account for 92% of industry revenue. The craft distilling industry is also concentrated; less than 2% of producers are responsible for 56% of cases sold.
- Large firms with distillery operations, such as Diageo, Pernod Ricard, Brown Forman, Suntory (Jim Beam), and Bacardi, typically do business in foreign markets.
- Over half of distilleries are formed as partnerships.
Industry Forecast
Distilleries Industry Growth
Recent Developments
Oct 29, 2024 - Weak Pricing Power
- Producer prices for distilleries were relatively unchanged again in July compared to a year ago, extending to over a year a series of mostly monthly flat comparisons. The flat trend in producer prices tracks weakening sales for distillers and subdued demand for alcohol following a surge during the pandemic. Sales for the US distilleries industry are forecast to grow at a 4.6% compounded annual rate from 2024 to 2028, comparable to the growth of the overall economy but below average growth rates in recent years, according to the latest projections by the Interindustry Economic Research Fund. Meanwhile, employment by breweries, wineries, and distilleries grew 3.4% year over year in July to a new high for the industry, per the BLS.
- With the reimposition of retaliatory tariffs on American Whiskey and other distilled spirits looming, the Distilled Spirits Council of the United States (DISCUS) has submitted a report to the Office of the United States Trade Representative (USTR) identifying the key foreign trade barriers impeding US exports. Per the October report, major trade barriers faced by US spirits exporters around the world include retaliatory tariffs, discriminatory taxes, regulatory standards, and certification and labeling measures. The European Union’s retaliatory tariff on American Whiskey – part of the steel-aluminum dispute – is scheduled to be reimposed at 50% on March 31, 2025, while its 25% retaliatory tariff on US rum, brandy and vodka is due to be reimposed in July 2026, if there’s no agreement with the EU on aircraft subsidies. Both tariffs are currently suspended -- resulting in recent record high spirits exports -- and DISCUS is advocating for their permanent removal.
- Tensions are brewing between distillers and distributors following a recent article in Food & Wine magazine that suggests US craft distilleries are in crisis. In short, the July article describes how a lack of distributors is inhibiting the growth of the craft spirits industry in the US and proposes legal direct-to-consumer (DTC) spirits shipping as a remedy, a solution opposed by distributors who see DTC shipping of spirits as a threat to the three-tier system of alcohol distribution, and their livelihoods. The American Craft Spirits Association (ACSA) blames the dominance of the three-tier distribution system for the distribution challenges facing the craft spirits industry. For its part, the Wine and Spirits Wholesalers of America, the national trade group for wine and spirits distributors, in a press release, accused the ACSA of seeking to deregulate and dismantle the three-tier system put in place following prohibition under the guise of “modernization.”
- A recent survey that polled 1,000 Americans 21 years of age and older about their current drinking habits and future plans for alcohol consumption found that 41% plan to drink less in 2024, Fox Business reports. The survey published by NC Solutions found that 49% of millennials and 61% of Generation Z respondents said they want to drink less, a worrisome trend for producers and retailers of alcoholic beverages. Gen Zers are prioritizing their mental health over alcohol consumption, with more than a third (36%) surveyed saying they are going alcohol-free for their mental health, specifically. Other reasons given for reducing or eliminating alcohol consumption include improving physical health, losing weight, and saving money, according to Fox Business. The survey also found that consumers are increasingly choosing non-alcoholic brands that mimic alcoholic drinks and that mocktails (alcohol-free cocktails) are expected to be a major trend in 2024.
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