By Norrelle Goldring for the July issue of National Liquor News
The growth of craft and artisanal liquor is symptomatic of a number of broader trends impacting multiple categories. The ascendance of ‘hip urban’ culture in the western world, driven by millennials who view alcohol consumption as a unique and novel experiential event and who gain exposure to international liquor products while travelling, has seen the growth of craft beer and microbreweries, cellar doors and distillery doors.
Premiumisation has seen Australians continuing to drink less but better quality products. And globally, macro trends such as authenticity, heritage, storytelling and personalisation are all contributing to the growth of the ‘craft movement’.
Craft – what is it?
Defining craft can be tricky. It’s allied to artisan. Typically it means handmade, with high quality and/or niche ingredients, with minimal mechanization and low volumes, made by independent manufacturers. This last is a point of contention considering the large industry players acquiring, producing or otherwise investing in craft operations, the recent investment by Lion into Four Pillars being a case in point.
The definition of craft can also vary by and even within a category, so I’ve covered this off in the overview of craft in each category below.
Beer has driven the growth of craft in other liquor categories. It really took off in the USA in the 1970s as an evolution of home brewing and counter to the big brewers. An entertaining July 2018 article in MicroShiner also attributes it to a bunch of unemployed people as a result of the oil crisis looking for ways to keep themselves amused at a time that also saw the growth of back to the land and environmental movements and relaxed legislation. And a means to return to a thousands-of-years-old tradition.
In the US the definition of craft or microbreweries is typically based on production volumes. Where in Australia, according to Austrade at least, craft breweries are ‘mostly small businesses, owned and operated by families or mates who are passionate about making beer they’re proud to put their names to. The breweries are usually run on a small scale, using traditional ingredients and a hands-on approach’.
The growth of craft beer in Australia is well documented, along with the explosion of independent breweries now numbering more than 600 and the concomitant rise in profile of the Independent Brewers Association (IBA).
Roy Morgan’s 2018 consumer data indicates that Australian cider drinkers are demonstrating a growing preference for craft products, and have recorded the strongest value growth in alcoholic drinks in Australia over the last few years.
Information exchange service, Quora, defines craft cider as ‘made traditionally in small batches, produced naturally from apples and is neither carbonated nor pasteurised’. In October 2018 Cider Australia launched a 100 per cent Australian Grown trust mark, to support export pushes. Australian craft cider is defined by Cider Australia as ‘cider produced in Australia using 100 per cent Australian grown fruit,’ typically apples and pears.
Craft spirits are little more than a decade old but growing exponentially, admittedly off a small base. Typically craft spirits are whiskies, gin and vodka.
In the USA, small independent distilleries began popping up in the early-noughties. According to the American Craft Distilling Institute (ADI), in 2000 there were 24 craft distilleries in the US, 234 by 2011, and nearly 600 by 2014. As with craft beer, in MicroShiner’s July 2018 article, Cobey Williams attributes the explosion of craft distilling to the world’s highest oil prices in 2008, allied to a 10 per cent unemployment rate. Between 2008 and 2009, the number of micro-distilleries in the US nearly doubled. A 2016 article by Five and Spice pegged craft spirits at over two per cent of the market, potentially growing to 15 per cent in the following decade.
Now there are two craft spirit associations, ADI and the American Craft Spirits Association (ACSA). ADI defines a craft distiller by a 52,000 case annual max output and on-site distilling and bottling. Five and Spice points out the difficulties of the volume based yardstick, including ownership by large conglomerates. The ADI’s craft certification program only certifies distilleries with less than 25 per cent ‘owned or controlled by alcoholic beverage industry members who are not themselves craft distillers’. ACSA defines a craft distillery as one which produces fewer than 750,000 gallons annually and that is independently owned and operated, with more than a 75 per cent equity stake in their company and operational control.
One of the most fraught issues is whether a craft spirit is made by hand or from scratch, and what ‘from scratch’ means, given there are several components of the process that may or may not be done by hand. These include whether the distillation of the spirit itself is done by the distillery or whether already distilled spirits, such as those using neutral grain spirit (NGS), are purchased and subsequently modified, infused or blended. It can be hard to know whether a whisky from a craft distillery has actually been made at the distillery, or made elsewhere but blended at the distillery, or bought elsewhere and simply bottled at the distillery.
Euromonitor suggests that what links craft spirit definitions are scale of production, independent ownership, and manual production methods. And that from a consumer point of view, products typified by a strong sense of story, grounded in a locality, with an emphasis on quality, locally-sourced ingredients and a unique taste.
In Australia, while Tasmania’s Lark Distillery commenced operations in 1999, it’s really in the past few years where craft spirits have risen exponentially. A December 2018 article in the Sydney Morning Herald indicates Australian craft spirits are growing at 110 per cent versus 4.7 per cent for the total spirits market. There are indications that traditional international premium brands are beginning to suffer as a result, with Johnnie Walker down two per cent and Chivas Regal down 28 per cent. IRI data valued Australian craft spirits as a $17.1 million category, up from $10.8 million the prior year. Turnover from the independent producers averages $1m-$2m a year. The Australian Distillers Association tripled its membership from 2014 to 2017.
A 2017 article by Max Allen in Gourmet Traveller cited at least 110 local gins alone, up from 20 in 2014. Many feature unique native botanicals and flavours including lemon myrtle, strawberry gum, mountain pepperberry, finger lime, wattleseed, bush tomato, native lemongrass and even green ants.
What about wine?
It could be argued that wine has always been craft, if handmade by a small estate and sold mainly at the cellar door. Needless to say the USA has a Craft Wine Association, founded in 2016. Certified craft wineries have identifiable winemakers leading production from start to finish, annual production in lots of fewer than 5,000 cases, and grapes from identifiable vineyards.
Given the large number of estate-based small vintners in Australia, who often focus on lesser-known grape varieties and only sell through cellar door and direct, it’s surprising that craft wine hasn’t yet been formalised as a ‘thing’ here.
As craft grows across liquor categories it will be interesting to observe if Australian non-beer categories follow the examples of beer and the USA with the foundation of associations to serve the interests of the industry.