[Whiskey Decision] 💥 Craft Distillery Boomtowns

The first Repeal Day, December 5th, 1933, fell on a Tuesday. Who in their right mind would announce the biggest 'booze is back' on a Tuesday? That's like planning your epic 21st birthday party on a Wednesday afternoon. It’s less 'roaring back' and more 'quietly tiptoeing back into legality. 90 years later, and Repeal Day falls on a Tuesday... again. It’s like déjà vu with a hangover. But unlike our 1933 pals, we're spoiled for choice (San Antonio, Colorado, Ohio, and California to name a few) It's the one Tuesday where you tell your boss, 'Sorry, historical obligations,'.

In today's dispatch, we're diving headfirst into:

• Boom Town - Craft Spirits Distilleries: like tech in the 90s

• Worthy Reads: Sampling some of the best from around the web

• Cocktail: A toast to the end of Prohibition

🏭Boom Town: Craft Spirit Distilleries

Booming like over optimistic tech in 1990s. The competition is fierce and craft distillers are fighting an ever changing set of regulations and red tape. Walk a few miles you’re likely to trip over a new craft distillery - craft distilleries had 14X growth from 204 to 2,687 (2010 vs. 2022). Helping drive $16 Billion in domestic sales in 2022.

Zooming out, total US craft spirits case production nearly tripled from 4.9 million to 13 million between 2015 and 2021. With the top 1.7% of producers accounting for 59% of volume - a slight decline from 61.8% in 2015. Leaving the the industry’s power dynamics at the craft spirits level largely unchanged.

Yet average production volume per distillery increased only 13% over the same period. It's a microcosm of the wider alcohol industry - more brands vying for limited shelf space. How can small craft producers stand out when customers are bombarded with choices like cereal in a 1980’s supermarket?

📖Defining Craft Distilleries and Grouping by Size

Ok we admit the section title is a bit, blah - but come on we are talking definitions. We promise they are necessary to better shape our story. Craft Spirits Data Project (CSDP), reported 2,687 active US craft distilleries as of August 2022. This includes producers with other spirits besides whiskey. How a craft distillery is defined:
- <394,317 (9L cases)
- Self Identified as craft distiller
- <50% of the DSP is owned directly/indirectly by producer of a distilled spirits whose combination annual production exceed to the previous totals  

Now with ‘craft’ definition behind us let’s use the TTB’s tiered system sizing up individual distilleries (production in 9L cases):
Small: <5,258
Medium: 5,258 - 52,576
Large: 52,576 - 394,317

Three sizes and three distinction levels of competition.

🧨Small Craft Distillers: A Story of Explosive Growth

A Leap in On-Location Sales Small craft producers have witnessed a meteoric rise in on-location sales, soaring from a modest 25% of revenue in 2015 to a whopping 47.3% by 2021. From 149,000 cases to an astounding 685,000! This surge is akin to a small seed sprouting into a towering oak in just a few seasons.

Shifting Market Dynamics But here's an intriguing twist: while their tasting room sales have skyrocketed, these small producers are seeing a decrease in their ability to drive sales at local liquor stores. Back in 2015, these local sales comprised 67% of their revenue, but by 2021, this number had shrunk to 45% - even as the volume sold increased by over 50%. The competition is fierce - just ask the folks at Bo & Ivy or All Points West.

The Magic of Visitor Experiences The answer might just be in creating enchanting visitor experiences. Think of these tasting rooms as the craft spirits equivalent of Willy Wonka's factory – brimming with charm and Instagram-worthy moments that outshine even the most iconic landmarks. Such enchanting experiences not only draw in crowds but also turn visitors into passionate brand ambassadors, spreading the word like wildfire across social media channels.

🌟Medium Producers: The Rising Stars

Scaling Up with Panache Shifting focus to medium producers is like switching from standard to high-definition – everything becomes clearer and more impressive. These operations have managed to double their on-site sales percentage from 12% to 29% between 2015 and 2021, with total case production quadrupling from 1.3 million to 4.4 million during this period. However, the average production per distillery has shown a more conservative growth. The key question here is: how can these rising stars in the craft spirits galaxy harness this momentum for sustained commercial success?

🗼Large Craft Producers: Future Industry Titans?

Navigating Changing Tides Large craft producers, the behemoths of the craft world, have seen their on-location sales grow by 230% between 2015 and 2021. Yet, they face their own set of challenges, with their dominance in home state sales eroding rapidly – a decline from 32% to a mere 12.9% in just six years. This shift in the market landscape has seen them redirect their focus, with out-of-state sales surging from 55% to nearly 70% of their revenue. For these giants, success lies in broadening their distribution reach, flowing far and wide like the mighty Mississippi River.

The Future of Craft Spirits: More Battles to Come

Navigating the Uncharted Waters As we gaze into the future of the craft spirits industry, questions loom large. Can small brands carve out their niche and flourish under the shadow of larger, well-funded competitors? The path ahead is fraught with challenges and risks, reminiscent of pioneers venturing into the unknown. However, the potential rewards are as glittering as nuggets of gold waiting to be discovered. The industry's boom years have sown seeds of innovation and creativity that are just starting to sprout.

Share the Decision (About Whiskey of Course)

📰 Worthy Whiskey News (a.k.a. our favorite reads)

• Russia’s favorite whiskey, now from China? Japan dethroned.

• An interview with Ewan Morgan - the man with the world’s best job

• Twelve Days of Bourbon Bliss: Blue Run’s The Third Annual holiday release begins Friday, Dec. 1 at 3:00PM EST.

• 30 years, 3,195 bottles, and retailing for ~$1,400 Talisker 30. Our Venmo account…

📈 Top 5 Pour Decisions: The Priciest of Whiskeys 📈

Biggest five-year price surges among our featured whiskeys for 2023

1. Shenk’s Homestead Kentucky Sour Mash Bourbon +486%

2. Springbank 21 y/o Single Malt Scotch Whisky +397%

3. Stagg Jr Barrel Proof Bourbon +306%

4. Elijah Craig 23 y/o Bourbon +300%

5. Hancock’s President’s Reserve Single Barrel Bourbon +293%

🔥Hell’s Acre😈
 A Toast to the 90th Anniversary of Repeal Day

Inspired by the spirit of Prohibition and the defiance of its era, this cocktail blends the quintessential Prohibition liquor, gin, with the clandestinely transported favorites of the time – Canadian whisky and rum.

Ingredients:

• 1 1/2 oz Canadian Whisky (Suggested: Collingwood for its maple notes)

• 1/4 oz Floral Gin (Suggested: Spy Hop for its harmonious blend with whisky)

• 1/4 oz Dolin Rouge

• 1/4 oz Cointreau

• 1 dash Orange Bitters

• 1 dash Angostura Bitters

• 1/4 oz Aged Rum

• Brandied Cherries for garnish

Instructions:

Combine Ingredients: In a mixing glass, stir together the Canadian whisky, floral gin, Dolin Rouge, Cointreau, and both bitters with ice. Aim for a harmonious blend where each ingredient complements the others.

Strain: Once the mixture is well-chilled and diluted to your preference, strain it into a chilled glass.

Garnish: Add a few brandied cherries for a sweet and visually appealing touch.

Final Touch: Carefully float the aged rum on top of the drink for an added layer of complexity and sweetness.

What a ride it's been this week, huh? Thanks for joining us on this journey through the world of good spirits at great prices.

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Thanks again for being here. Let's raise a glass to the week ahead.