This article appears in the April issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
Bourbon and premium brands lead American whiskey sales in the US as the number of craft distilleries has increased from just 76 to almost 2,300 in less than two decades. Roger Morris reports.
The CEO of Louisville-based Michter’s Distillery, Joseph Magliocco, recalls a day in the 1980s, when he was a young employee in the spirits industry. “I was working for Charlie Wells, and we were driving into Louisville when there was this funeral procession coming toward us on the other side of the highway. ‘Joey,’ Charlie says, ‘there goes another one of our drinkers.’”
At the time, American whiskey seemed to be a dying category. Fast forward to last month and a bottle of Michter’s Celebration Sour Mash Whiskey Release No.1 was auctioned on the secondary market for US$15,600.
Not only are Bourbon’s consumers not dying off, but a new generation has fallen in love with their grandfather’s spirit of choice – American whiskey.
Last year, according to the Distilled Spirits Council of the United States (Discus), the American whiskey category grew by an impressive 10.5%, a jump in sales of almost $500m to $5.1bn. Irish whiskey also made major gains, rising 6.9% to $1.4bn, while blended whiskey/whisky grew 6.8% to $940m.
Looking at the changes in market share within that $5.1bn figure, SipSource analysts report that, based on depletions:
- Premiumisation remains a key trend, as American whiskey priced at $25+ per bottle increased in value by 6.2% in 2022, following strong growth in 2021
- Bourbon and rye make up 80% of the premium American whiskey market, with Bourbon growing 8.7% in market share and rye by 6.5%
- Although base sales are smaller, flavoured whiskey priced at $25+ increased 18.8%
- American whiskey now makes up almost 50% of all whiskey/whisky sales in the US, more than a half-point gain. Bourbon alone controls 26.7% of total whiskey/whisky sales, a 3.6% gain
- Tennessee whiskey slumped in market share, losing 8.3% to stand at 8.7% of total sales, while blended whisky suffered an almost 2% drop to 6.9% in spite of recording a sales lift
The slight decrease in US market share for foreign producers is a bit misleading, according to Wine & Spirits Wholesalers of America executive VP Michael Bilello. “It’s important to consider the two-year trends for imported whiskies, as there was significant disruption from tariffs and supply chain issues over the last three years,” he says.
“While imported whiskey/whisky was down by 1.8% [in market share] in 2022, that's against growth in 2021 of 13.6%, as retailers and on-premise establishments restocked. Irish whiskey is leading volume growth, up 4.7% in 2022 against an increase of 13.3% in 2021.”
Traditional and emerging categories on the rise
American whiskey is being paced by two traditional categories that have come back to life since the turn of the century. “When we restarted Michter’s in the 1990s, rye was dead,” Magliocco says. “Now, there’s lots of growth in the category. Bourbon demand also keeps growing - from abroad and at home. As the Bourbon category expands, there's a proliferation of new brands, which keeps everyone on their toes.”
Indeed, regional craft distillers have driven consumer interest in whiskies of all sorts. In 2006, there were only 76 scattered across the country. According to the American Distilling Institute, there are now 2,283.
Just as the proliferation of American wine in the last century created rabid ‘wine geeks’, there are now many ‘whiskey geeks’. “Consumers are increasingly looking for whiskies to collect and for experimentation across the category,” says Susan Wahl, VP for American whiskies at Heaven Hill Brands, a large Kentucky-based producer.
Mitcher’s Magliocco agrees: “I never thought that consumers would be asking about whiskey mash bills and char levels, but they are.”
The proliferation of single barrels, exotic finishes, single malts and flavoured whiskey has resulted in producers greatly expanding their portfolios to tempt consumer curiosity. “I’m a traditionalist in the whiskey I like to drink,” says Monique Huston, VP for spirits for the importer and distributor Winebow. “But, what can you say when you love the taste of a flavoured whiskey? And, peanut butter-flavoured whiskey might bring someone into the category.”
"Exotic cask finishes have become as important as blends,” says Luis Gonzalez, CEO of Old Elk Distillery in Colorado. Single barrels, meanwhile, appeal to both consumers and retailers because of their exclusivity as well as taste. “A single barrel is a personification,” Gonzalez says, “because it's like a fingerprint - no two are alike.”
Fletcher Buchman, VP of marketing for Luxco, whose whiskey brands include Ezra Brooks and Rebel, adds: “There's a lot of buzz around single malt, although that category still isn’t well-defined. People like it that they are often barrel-strength, such as our Yellowstone at 105 proof.”
The last word goes to Kate Jerkens, chief business officer for Uncle Nearest: “There’s a lot of innovation with different finishes and different ages, as well as straight whiskey that's ready to serve."
This article was initially published in the April issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
