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 2,800 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.

Concentrated Distribution Channels

The US distribution system for wine and spirits is concentrated and continues to consolidate.

Heavy Government Regulation

The alcoholic beverage industry is heavily regulated by federal, state, and local governments.

Industry size & Structure

The US distillery industry consists of about 2,800 establishments that employ over 20,000 workers, produce 251 million cases of spirits, and generate about $31 billion annually, according to the Distilled Spirits Council.

    • The US craft spirits industry consists of about 2,265 active distillers that sell over 11 million cases of product, generate $6.1 billion in sales, and employ over 30,000 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; almost 2% of producers are responsible for almost 58% of cases sold.
    • Large firms with distillery operations, which include Diageo, Pernod Ricard, Brown Forman, and Bacardi, typically have business in foreign markets.
    • Over half of distilleries are formed as partnerships.
                              Industry Forecast
                              Distilleries Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Nov 28, 2022 - Distillers Facing Rising Costs
                              • Shortages and the rising cost of grain, energy, and glass – along with other inputs – are challenging distillers worldwide, The Spirits Business reported in October. A survey conducted by trade group the Scotch Whisky Association (SWA) found 57% of distillers have seen energy costs increase by more than 10% in the past year, with 29% seeing their energy prices double. Almost a third (30%) of Scotch distillers expect energy costs to double in the next 12 months. Islay, Scotland distillery Kilchoman has reported price increases between 20% and 40% for most things, according to founder Anthony Wills. “This is something that isn’t going to slow down anytime soon,” he said, citing issues with the supply of cardboard, glass, and corks. “We are holding all our pricing at the moment until the end of the year, then we’ll see where we are.”
                              • The Michigan Senate in November 2022 passed a bill that would make the state the latest to permanently allow the sale of cocktails to-go from restaurants, bars, and distilleries with tasting rooms, the Distilled Spirits Council reports. The bill, which passed by a wide margin (37-1), now goes to the House for consideration. In July 2020, Michigan Governor Gretchen Whitmer signed HB 5811 into law allowing cocktails to-go in sealed containers until 2026. During COVID-19, more than 35 states began allowing restaurants and/or bars to sell cocktails to-go as an economic relief measure via executive orders or other temporary measures. If passed, Michigan would become the 19th US state – along with the District of Columbia – to make COVID-era cocktails to-go measures permanent.
                              • Defying decades-high inflation, sales of premium spirits increased in Q2 2022 compared with the same quarter last year. As measured by the Distilled Spirits Council of the United States (DISCUS) Luxury Brand Index, which tracks sales of top-end spirits brands, tequila posted the largest increase with a 43% annual growth rate followed by American whiskey, up 30% year over year. Scotch whiskey, Cognac, and Irish whiskey rose 13%, 9%, and 7%, respectively. Historically, the spirits sector has proved resilient during hard economic times and Q2 2022 was no exception. Between Q2 2017 and Q2 2022, all spirits categories included in the LBI increased their annual growth ranging from 8% (Scotch and Japanese whiskey) to 45% (tequila and American whiskey), with an average rate of 24%, according to DISCUS.
                              • Ready-to-drink cocktails were the fastest-growing spirits category in 2021, according to a recent report by the Distilled Spirits Council of the United States (DISCUS). Revenue from RTD cocktails rose 42.4% in 2021 and reached $1.6 billion. Of 2,000 adults surveyed by DISCUS, 55% prefer spirits-based beverages to other RTD alcoholic drinks. About 94% of respondents said they select RTDs because they offer preferred flavors, 92% value the convenience of RTDs, and 82% like the taste of RTDs over beer. However, spirit-based RTDs still lag malt-based ones, the top adult beverage RTD category. While 47 states allow the sale of malt-based RTDs in grocery stores, spirits-based RTD sales are banned in 16 of those states.
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