Stuart McCallum

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Stuart McCallum

Partner, Head of Food and Drink

Craft Spirits – what are they and why are they so popular?

Scotland – Land of Food and Drink …with an emphasis on drink!  This 'cultural' stereotype has a range of connotations. My take on it is that the range of world class spirits from gin through rum to whisky – is what has made Scotland’s spirits market a world player. The multitude of globally recognised premium brands include Johnnie Walker, Ballantines, and the Famous Grouse.

With consumer tastes changing and proven ‘craft’ success seen in the beer market, a huge number of smaller ‘disruptor’ distilleries have popped up across the country. These businesses have focussed on trying alternative approaches to creating spirits which deliver more varied, and in some cases, accessible flavours. With the traditional perceptions being challenged and a renewed interest from around the world these ‘craft’ spirits have been created and branded for the modern consumer.

For the love of craft

The rise in popularity in 'craft spirits' is incredibly exciting for the Scottish drink scene.

Single malt is produced in smaller volumes than blended whiskies which have historically driven sales in the global market. Whilst blended whiskies are quality products, consumer perception lends single malt a higher sales value. For me it is all about the taste and I like both, but tend to lean towards blends, which are perhaps more accessible as a first step into the world of whisky!

What does ‘craft’ mean?

There is no formal definition for 'craft'. This term is used to describe smaller producers / new entrants into the drinks market opposed to the brands produced and owned by the large multinational businesses or corporate sized entities such as the Diageo’s of this world.

The craft spirit movement is epitomised by new innovations and product types. Craft products are viewed as more creative, nimble and niche by the consumer. This is a trend we’ve seen take off in the beer market, where the producers have used new techniques, quirky branding and clever pricing to capitalise on the consumers love of all things ‘craft’. For example, some new whisky products use different raw materials (rye whisky), ageing processes and distilling techniques.

There are many reasons these new styles (craft spirits) are growing in popularity, but for me, it’s the increasing appreciation that consumers hold for premium products with provenance at the heart of the brand. For many these drink categories are a little bit staid, slightly old fashioned and viewed predominantly as a male drink.

Craft spirits going global

The global market for spirits is increasing. The Asian market in particular provides a new opportunity for craft spirits with a growing number of consumers looking to try new brands. For producers entering the market, branding is key to capturing the attention of these new spirit drinkers.

Across Scotland there has been an explosion of new (or existing players) entering the market or developing new products which is fantastic to see. The ones that stand out are Eden Mill which has led with the triple play of first beer, then gin and now whisky, Arbikie, Isle of Harris, and Kingsbarns Distillery are amongst many new whisky producers and the list of gin distilleries is even longer, with some highlights being Verdant Spirits and Daffy's.

One of the key limiting factors in getting some of these projects off the ground to be able to grow into a future global brand is CASH. Some producers i.e. Isle of Harris are "laying" whisky down (it takes three years to mature and before it can be designated as a whisky) and in the interim period leading with a gin which positions the brand and more importantly generates cash.

Many artisan producers are creating brand stories and experiences around their whisky and gin offerings by using their distilleries as attractions to generate cash and brand loyalty. Many of the new entrants are located in some of the most stunning parts of Scotland which tend to be outside of the main cities. Having an attraction brings footfall, builds brand recognition and helps the wider Scottish hospitality and tourism market attract visitors from the UK and internationally.

In summary I guess what is happening now has already happened in the late 19th / early 20th Century. At that time many new distilleries were developed producing small amounts of spirits – to meet consumer demand and then we saw the consolidation happen to result in what we have today. 

I expect this cycle to continue with some of the 'craft' guys growing to a size where the multinationals buy them and around it goes again. This is all great for anyone who likes spirits and trying new variations – it is a great time for 'Scotland Food and Drink' and for sampling it as well!!

Slàinte mhath!

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