TLDR: 2023 was a bad year for craft spirits

A company called Park Street puts out this amazing report every year called the Craft Spirits Data Project. (Link)

There are thousands of craft distilleries in the US; almost all are small and private.

Park Street aggregates a ton of data to provide interesting takeaways on what’s happening in the craft spirits market.

The only problem:

The 2024 report, which covers annual results for 2023, just came out a few weeks ago.

I don’t judge them for that. It’s probably intensive to gather and I’m super grateful that they provide it, but much of it is old news.

General Summary: Not Great

Total spirits sales were flat in 2023, including craft and the big guys.

That was primarily driven by the continued hangover from the huge COVID spike and lower consumer spending.

But the Park Street report revealed an interesting subtrend beneath that:

For the first time in the history of these reports, craft lost market share to the big guys.

That’s a reversal of a decades-long trend. What’s going on?

Do consumers prefer Jack Daniels to Jimmy’s caramel buckwheat bourbon?

I don’t think so and I’ll tell you why for a couple of reasons.

Distributor Consolidation

I love government-mandated margin guzzlers as much as the next guy…

and who doesn’t love a competition-smothering oligopoly?

But for argument’s sake let’s consider what, if any, potential drawbacks could arise if every brand in the country is essentially forced to choose between a couple of distributors

Each brand ends up stuck in a portfolio with a bunch of its competitors, including those from the big multinationals.

Who do you think gets the attention and resources of the distributor?

The craft brand or the international giant who pays their salary with millions of cases?

As distributor consolidation continues, craft brands will have a harder and harder time reaching the consumer.

Also RTDs

Spirits-based RTDs were the bright spot of growth in 2023 for the spirits market.

RTDs have waaay lower margins than traditional spirits and require substantial volume and distribution to make any money.

This is an area that will always be dominated by big guys with resources, so as RTDs grow in market share, that will move the needle from craft brands in market share as well.