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The tremendously rising demand for premium sized and high-quality craft spirits among consumers is driving the global market of craft spirits. The Growth in the craft spirits sector is prominently attributed by the growing social acceptability of mild alcohol consumption among consumers, especially amongst the youth. The rapid emergence of demand for premium quality craft spirits owing to changing cultural attitudes of the young and affluent population is a major contributor to the growth of the craft spirits market worldwide.
The prominent industry players are embarking upon various business activities and strategies such as adopting new marketing techniques, expanding product portfolio, and merger & acquisition activities to increase their prominence in the global market. For instance, in August 2017, Diageo has completed 100% acquisition of one of the fastest-growing tequila brand Casamigos. Diageo has paid USD 1 billion to acquire Casamigos.
The rising demand for premium sized alcoholic beverages is expected to drive the global craft spirit market during the forecast years. The tremendously increasing number of craft spirit distilleries is anticipated to boost the sales of craft spirit. For instance, in 2018, the number of craft distilleries in the United States raised by 15.5% to 1,835 distilleries, according to the American Craft Spirit Association. High-end hotels and restaurants are keen to bring craft spirit into their portfolio. Furthermore, in the growing culture of pubs and night clubs, craft spirit businesses are gaining momentum across various parts of the globe. The customer preferences about craft spirit seem to be associated with the innovation of fresh flavors, exploration of quality as well as product craftsmanship. The changing consumer taste and expectations is gradually altering their buying behavior which triggers them to favor on-trade consumption of craft spirits. Therefore, an increasing number of restaurants and brewpubs are anticipated to leverage the sales of craft spirit positively. Furthermore, the perception towards the consumption of alcoholic beverages has changed and the young generation is casual about the habit of consuming alcohol which in turn is expected to increase the sales of craft spirits.
Key Market Driver -
Rising Demand for Premiumized Alcoholic Beverages
Key Market Restraint -
Increasing Consumer Shift towards Low Alcohol Containing Beverages
The rising concerns about the adverse effect of alcohol consumption is encouraging consumers to opt for low alcohol-containing beverage consumption such as wine, beer, and others. The increasing consumer shift towards craft beer and craft wine is anticipated to hamper the market growth of craft spirit.
The prominent players operating in the global craft spirit market are Diageo Plc., Pernod Ricard, Remy Cointreau, William Grant and Sons Ltd., Rogue Ales, Anchor Brewers & Distillers, House Spirits, Copper Fox Distillery, and Others
The whiskey segment is expected to hold a significant share in the global market of craft spirit. The unique flavor, taste, and texture offered by the juniper berries in the preparation of whiskey is anticipated to increase the sales of whiskey. The product innovations such as flavored whiskey is further anticipated to impact the sales of whiskey positively. Furthermore, the increasing popularity of gin among consumers is expected to boost the demand for gin. The players operating in the market are focused on new product launches to fulfill consumer demand. For instance, in August 2019, Downton Abbey has expanded its product portfolio with the launch of new super-premium London Dry Gin.
The on-trade sales of craft spirit are anticipated to witness significant growth in forthcoming years. The increasing number of small and medium-sized pubs, clubs, lounges, and restaurants that offer premium quality craft spirit complemented with entertaining activities such as music, dance floor, and free snacks is anticipated to leverage the sales through the on-trade distribution channel. However, many consumers especially in developing regions prefer off-trade alcohol consumption due to price concerns.
North America is anticipated to hold the major chunk of the global craft spirit market owing to the high popularity of alcoholic beverages across countries such as the U.S. For instance, according to the U.S. Department of Commerce, in the U.S. alone, consumers spend more than USD 230 billion annually on alcoholic beverages. The increasing demand for handmade beverages with unique flavor, coupled with the high purchasing power of the consumers is expected to boost the sales of premium sized craft spirit. The growth in creative, innovative cocktails and the rising “cocktail culture” in the U.S. is expected to aid the make craft spirits such as super-premium tequila and vodka trendy.
Asia Pacific is expected to witness considerable growth in the upcoming years. The major impact of westernization is anticipated to leverage the consumption of craft spirit within the region. The increasing number of the younger population, along with the rapid urbanization and rising disposable income is expected to boost the sales craft spirit within the region. Expanding the tours & travels industry across Asian and Southeast Asian economies such as Thailand, Malaysia, and others is expected to aid the market growth positively. Moreover, increased innovation and product launches in the premium portfolio have also provided a further fillip to this trend of alcohol consumption. For instance, in February 2020, Natural Distilling Co, an Australian craft distilling company announced the launch of Hemp Gin and Hemp Vodka.
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