Drivers of the craft spirit industry

Nip of Courage Founder Kathleen Davies talks to us about Australian spirits, their distillers, and category predictions for 2020.

Bars&Clubs: Last year you launched the Aussie Spirit Podcast, tell me how that’s gone so far and why it’s important.

Kathleen Davies: The Aussie Spirit Podcast is a collaboration between Nip of Courage and Podcastone Australia.  The first season was very well received and came in at number four on the Apple podcast ratings over summer.

The Aussie Spirit series follows the journey of some of the 200 Australian distillers embracing local botanicals, crops and climates in order to craft some uniquely Australian Spirits. From award winning whisky, to gin, to vodka and rum, we hear from the farmers, the pioneers and the passionate distillers, all around Australia, who are putting the craft back into distilling. 

B&C: How are smaller Australian distillers going in the fight for attention against bigger international brands?

KD: The Australian craft spirits industry is still in its infancy.  There are several factors effecting the growth of local craft spirit producer’s market share:

  • Distillery scale of production challenges (mainly for dark spirits like whisky and rum)
  • Start-up distilleries lack of industry experience and poor business acumen
  • Lack of distributor and wholesaler options to cope with the needs of start-up distilleries
  • Distillery locations – approximately 90 per cent of craft distilleries are based in isolated locations where the economies are fragile and the job opportunities are limited.

Meanwhile, the larger craft distilleries that are succeeding in the market place don’t have these barriers, and have a strong focus and understanding of distribution, branding, marketing and channel management.

B&C: The spirits category is booming in Australia. What do you think is driving this growth?

KD: ‘Premiumisation’ and ‘craft’ trends are the prominent drivers for the emerging craft spirits industry, and ‘drink less but drink better’ continues to dominate drinking occasions across Australia.

Increases in gourmet or experience-related consumption at smaller specialist venues based around specific and often locally made and owned products is on the rise too.

B&C: What are your predictions for the spirits category in 2020?

KD: Brandy will become a spirit of discovery with generational groups like the millennials and older age boomers. For those wanting to dip their toe in the water with brandy I highly recommend tasting Sullivan’s Cove’s Brandy releases – they are amazing.

Is the Australian industry flooded with gin? The answer is no. The surface has merely been scratched in Australia. Gin is forecast to be the second fastest growing international category by 2021 behind whisky.

The emerging craft spirits industry will continue its double digit growth and obtain more market share. All eyes are on strong craft spirit producers like Four Pillars, Starward and Archie Rose leading the way in branding, marketing and increased production levels with gin and whisky supply.

This interview was originally conducted for National Liquor News’ 2020 Annual Industry Leaders Forum issue, out in February.

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