1、Margie LehrmanCEOAmerican Craft Spirits AssociationGina HolmanACSA PresidentFounder,J.Carver Distillery Emily PenningtonHead of ContentPark Street University PRESENTERS 2023Table of ContentsExecutive SummaryKey Findings Craft Spirits Research DefinitionUS Craft Distiller CountCraft Spirits Category

2、OverviewLarge Craft Producer TrendsMedium Craft Producer TrendsSmall Craft Producer TrendsCraft Growth ForecastEmployment TrendsAppendix334678182124272836 2023Executive Summary 4In 2022,the craft spirits category experienced a normalizing of volume and value growth post-pandemic.The craft spirits ca

3、tegory reached over 14 million cases and$7.9 billion in sales.At a value growth rate of 5.3%and volume growth of 6.1%,craft continues to outperform the larger spirits category in the US market.As a whole,craft spirits sales remain evenly split between the home state(47.4%)and other states(52.6%)in 2

4、022.However,post-pandemic,craft spirits sales in the home state have slightly increased share of total craft spirit sales(+1.4 pp)while sales outside the home state have slightly decreased as a percentage of total craft sales(-1.3%pp).Large craft producers shifted resources to focus on sales in thei

5、r respective home states as well as exports.Medium-sized craft producers lead growth on nearly all fronts as this segment is the fastest growing within craft spirits.Small craft producers focused primarily on increasing home state sales,with this channel gaining share of sales accordingly.Despite ec

6、onomic headwinds,craft producers have consistently found value in reinvesting in their businesses.The total amount invested in the U.S.craft spirits segment increased by 6.5%year-over-year to$880 million.2023Key FindingsThe number of active craft distillers in the U.S.grew by 2.4%to reach a total of

7、 2,753.The U.S.craft spirits category volume reached over 14 million 9L cases in retail sales in 2022,growing at an annual growth rate of 6.1%.In value terms,the market reached$7.9 billion in sales growing at an annual growth rate of 5.3%.5*Active craft distillers:licensed US distilled spirits produ

8、cers,removed 750k proof gallons(or 394,317 9L cases)or less from bond,market themselves as craft,are not openly controlled by a large supplier,and have no proven violation of the ACSA Code of Ethics.Employment numbers within the U.S.craft market continued to increase post-pandemic,reaching 27,368 fu

9、ll-time domestic employees.Exports of U.S.craft spirits increased,reaching 171,000 9L cases.U.S.craft spirits market share of total U.S.spirits maintained a 4.9%share in volume and increased value share to 7.7%in 2022,up from 7.5%in 2021.Craft Spirits Market DataNew picture Craft Spirits Market Data

10、 2023ACSA CODE OF ETHICS DEFINITIONU.S.Craft spirits are distilled spirits that are produced in the U.S.by licensed producers that have not more than 750,000 proof gallons(or 394,317 9L cases)removed from bond,market themselves as craft,are not openly controlled by a large supplier,and have no prove

11、n violation of the ACSA Code of EthicsCraft Defined for Purposes of the Research7SIZE REQUIREMENTSNot more than 750,000 proof gallons(or 394,317 9L cases)removed from bond by licensed producer(DSP)OWNERSHIP STRUCTURENo more than 50%of the DSP is owned(directly or indirectly)by a producer of distille

12、dspirits whose combined annual production ofdistilled spirits from all sources exceeds750,000 proof gallons removed from bond.We operate in an honest,transparent and non-deceptive fashion.We inform consumers truthfully and accurately about the sources and methods used to make our spirits through our

13、 labels,materials and communications.We expect fair dealing and respect amongst members.We obey all federal,state,and local laws.20238Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesDSPs by Segment as of August 202300Not operational or non-craftResearch universeIn planningBottlers/indust

14、rialLeading suppliersDuplicates/multiple locations of any supplierAll licensed DSPsActive craft distillersIdentifying Active Craft DistillersThe total number of active craft distillers is determined by removing all inactive businesses and distillers that fall outside the definitions of craft from th

15、e federal database of DSPs.2023Active Craft Distillers by State as of August 2023Active Craft Distilleries by State9Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesThe top ten states with the most active craft distilleries represent 51%of the U.S.craft spirits category TotalNext 55.WAAll

16、 other1.CA4.PA3.TX2.NYThe remaining states represent 49.1%The top 5 states make up 32.4%of craft distillersThe next 5 states make up 18.5%Top 10 States with the Most Craft Distilleries1.California2.New york3.Texas4.Pennsylvania5.Washington6.Colorado7.Michigan8.North Carolina9.Florida 10.Oregon 2023T

17、op 5 States by Active Craft Distiller Count August 2022 to August 2023%GrowthNumber of Active Craft Distillers August 2022 to August 20232.4%The Number of Craft Distillers Continues to Climb Despite Challenging Environment 10Sources:TTB,ACSA State ABC Boards,State Guilds,Team Analyses2,6872,7530%0%5

18、.2%-6.1%8.2%In 2023,there were 2,753 craft distillers active in the US,a 2.4%increase from 2,687 active distillers in August 2022.202331141611786232451234221142223610171468462860114825772163171331630915741778172156210293131462057442522104Active Craft Distillers by State and Region as of August 2022A

19、ctive Craft Distillers by State and Region11Sources:TTB,ACSA,State ABC Boards,State Guilds,Team Analyses9WESTSOUTHMIDWESTNORTHEAST20.2%31.5%27.5%20.8%2,753 Craft Distillers 2023Number of Active Distillers Still Growing But at a Slower Rate in Early 202312Number of Craft Spirits Producers 2017 to 202

20、2Sources:TTB,IWSR,Team AnalysesNumber of Craft Spirits Producers,December 2022 to August 2023CAGR9.7%Annualized Growth 1.6%2023Craft Spirits Sales by Volume 2017 20229L Cases(000)Craft Spirits Category Still Grew Despite Challenging Year13Sources:TTB,ACSA,IWSR,State ABC Boards,State Guilds,Team Anal

21、ysesCraft Spirits Sales by Value 2017 2022$Billions+6.1%+5.3%2023Craft Spirits Value Growth Has Significantly Outpaced Volume Growth U.S.craft spirits has an estimated market share of 4.9%in volume and 7.7%in value,up from 3.2%and 4.6%in 2017.14Craft Distiller Sales as a Share of Total U.S.Spirits V

22、olume and ValueSources:TTB,ACSA,IWSR,State ABC Boards,State Guilds,Team Analyses%Share Value%Share Volume 2023In 2022,the average number of cases produced declined to 5,191 9L cases,down-4.1%from 2021.Average Volume of U.S.Craft Distillers Declinedin 2022 15Sources:TTB,ACSA,IWSR,State ABC Boards,Sta

23、te Guilds,Team AnalysesNumber of Cases of Average U.S.Craft Distiller 2017 20229L CasesNumber of Cases 2023Sources of Case Sales Total U.S.Craft Spirits IndustryDomestic and Export 2022The Majority of Total U.S.Craft Business Takes Place Outside the Home State16Sources:TTB,ACSA,State ABC Boards,Stat

24、e Guilds,Team Analyses47.4%of the total U.S.craft business took place in the home state of the craft distiller in 2022.Craft spirits exports saw a 4.3%increase over 2021,reaching 171,000 9L cases.9L Cases(000)Home state,but outside premisesExportSales at DSPTotal U.S.businessTotal businessOther U.S.

25、states25.1%22.3%52.6%100%1.2%101.2%2023Total Craft Spirits Industry,Sources of Case Sales,2020 20229L Cases(000)Share of Sales in Craft Distillers Home State is Increasing 17Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesSales at DSPHome StateOther StatesExport8.5%CAGR 10.7%CAGR6.5%CAGR

26、28.2%CAGR21.2%of total U.S.business%of total U.S.business22.1%22.3%24.8%24.6%25.1%0.9%1.2%1.2%53.9%53.3%52.6%+/-0.3%+/-1.1%+/-0.3%+/-1.3%2023Craft Distillers and Case Volumes by Producer Size,2022Craft Spirits Market Remains Concentrated 18Sources:TTB,Distiller Surveys,Team Analyses*Small:0-5,258 9L

27、 Cases,Medium:5,258-52,576 9L Cases,Large:52,576-394,317 9L Cases#of Producers,9L Cases(000)Less than 2%of craft spirits producers are responsible for over 54%of the cases produced while 89%of producers are classified as small and are responsible for approximately 11%of cases produced.Number of case

28、sNumber of producers54.5%34.2%14,06511.3%Large producersSmall producersMedium producers9.2%1.6%2,71089.2%2023Average Volume of Large Craft Producers Experienced Growth in 202219#of Large ProducersExact Number#of Cases of Large Producers9L Cases(000)Average#of Cases of Large Producers9L Cases(000)The

29、 number of large craft distillers has increased from 28 in 2017 to 43 in 2022,a 53.6%increaseThe number of cases of large craft distillers has grown from 4.1 million 9L cases in 2017 to over 7.6 million 9L cases in 2022The average number of cases produced by large craft distillers has increased from

30、 146,000 9L cases in 2017 to 178,000 9L cases in 2022,a slight decrease from 181,000 9L cases in 2021Sources:TTB,Distiller Surveys,Team Analyses9.0%CAGR13.4%CAGR2.5%CAGR 2023Sources of Case Sales Large U.S.Craft Spirits Producers Domestic 2022Large Craft Producers Do Vast Majority of Business Outsid

31、e the Home State20Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesLarge craft producers are more likely to drive growth outside of their home state and saw the greatest increase in export rates in 2022.9L Cases(000)17.4%13.5%69.1%100%2.1%102.1%Home state,but outside premisesExportSales a

32、t DSPTotal U.S.businessTotal businessOther U.S.states 2023Large Craft Spirits Producers,Sources of Case Sales,2020 2022 9L Cases(000)Large Craft Producer Sales Continue to Increase Beyond the Home Market21Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesSales at DSPHome StateOther StatesE

33、xport4.7%CAGR16.5%CAGR4.8%CAGR30.2%CAGR11.2%of total U.S.business%of total U.S.business12.9%13.5%17.9%17.6%17.4%1.4%2.0%2.1%70.9%69.5%69.1%+/-0.5%+/-2.3%+/-0.7%+/-1.8%2023Medium-Sized Craft Producers Drive Growth for Craft Spirits22#of Medium-Size ProducersExact Number#of Cases of Medium-Size Produc

34、ers9L Cases(000)Average#of Cases of Medium-Size Producers9L Cases(000)Sources:TTB,Distiller Surveys,Team Analyses18.6%CAGR The number of medium craft producers has more than doubled,from 106 in 2017 to 249 in 2022 The number of cases of medium craft distillers has grown from 2.1 million 9L cases in

35、2017 to over 4.8 million 9L cases in 2022 The average number of cases produced by medium craft distillers has remained consistent from 2017 to 2021 but declined in 2022.17.7%CAGR-1.0%CAGR 2023Sources of Case Sales Medium U.S.Craft Spirits Producers 2022Medium Craft Producers Do the Majority of Busin

36、ess in the Home State23Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesHome state,but outside premisesExportSales at DSPTotal U.S.businessTotal businessOther U.S.States29.1%30.4%40.5%100%0.2%100.2%59.5%of the total U.S.business of medium U.S.craft producers takes place in the home state

37、of the craft distiller9L Cases(000)2023Medium Craft Spirits Producers,Sources of Case Sales,2020 20229L Cases(000)Medium Craft Producer Sales Have Grown Strongly Across All Sources,Excluding Exports24Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesSales at DSPHome StateOther StatesExport

38、10.1%CAGR10.0%CAGR10.3%CAGR11.%CAGR30.5%of total U.S.business%of total U.S.business30.1%30.4%29.1%29.0%29.1%0.2%0.3%0.2%40.4%40.9%40.5%+/-0.0%+/-0.1%+/-0.0%+/-0.1%2023The number of small craft producers has increased from 1,614 to 2,418.The number of cases of small craft distillers has grown from 93

39、8,000 9L cases to almost 1.6 million 9L cases in 2022.The average number of cases produced by small craft distillers has increased from 581 9L cases in 2017 to 657 cases in 2022.Small Craft Producers Have Been Growing Well25#of Small ProducersCases of Small Producers9L Cases(000)Average#of Cases of

40、Small Producers9L CasesSources:TTB,Distiller Surveys,Team Analyses8.4%CAGR11.1%CAGR2.5%CAGR 2023Sources of Case Sales Small U.S.Craft Spirits Producers,Domestic and Export 202293.1%of the Business of Small Craft Producers Takes Place in the Home States26Sources:TTB,ACSA,State ABC Boards,State Guilds

41、,Team AnalysesHome state,but outside premisesExportSales at DSPTotal U.S.businessTotal businessOther U.S.States47.7%45.4%6.9%100%0.1%100.1%Over 47%of the total business of small craft producers comes from sales at the DSP.Only 7%of the total business comes from sales outside the home state,including

42、 exports.9L Cases(000)2023Small Craft Spirits Producers,Sources of Case Sales,2020 20229L Cases(000)Small Craft Producer Sales Are Slowly Growing Outside of Their Home States27Sources:TTB,ACSA,State ABC Boards,State Guilds,Team AnalysesSales at DSPHome StateOther StatesExport10.0%CAGR10.6%CAGR5.4%CA

43、GR0.0%CAGR44.8%of total U.S.business%of total U.S.business45.0%45.4%47.7%47.3%47.7%0.1%0.1%0.1%7.5%7.7%6.9%+/-0.0%+/-0.6%+/-0.0%+/-0.6%2023Craft is Still Small but Could Contribute Much More Towards Fragmentation in Future Years28U.S.Market Size Scenarios for 2027Scenarios 2022 2027 CAGRsSources:IWS

44、R,Team Analyses202220172027 EIf craft grew CAGR of previous 5 years reaching 6.4%market share14.4%If craft maintained current 4.9%market share0.3%14.5%9L Cases(millions)If craft maintained CAGR of previous 5 yearsreaching 8.4%market share7.3%Craft beer market share today,13.3%22.4%2023Employment in

45、the U.S.Craft Industry has Showed Initial Signs of a Rebound Post-Covid29Full-Time Domestic Employees of U.S.Craft Spirits ProducersSources:Distiller Surveys,TTB,Team AnalysesAverage Full-Time Domestic Employees of U.S.Craft Spirits ProducersThe pandemic resulted in a nearly 50%decrease in full-time

46、 domestic employees in the craft segment,the average number of employees and total number of employees working in the segment have increased but have yet to return to pre-pandemic levels.16.8%CAGR27.4%CAGR 2023Investment in the U.S.Craft Industry Has Been on the Rise30Total Investment of U.S.Craft S

47、pirits Producers$MillionsSources:Distiller Surveys,TTB,Team Analyses.*Investments for expansions.Average Investment of U.S.Craft Spirits Producers$ThousandsAlthough the average amount invested by individual craft distillers decreased in 2022,the total investment in craft spirits producers increased

48、increased by 6.5%to$880 million in 2022.-2.8%CAGR7.7%CAGR 2023Contact Information31For more information on the data and analysis included in this presentation,please contact Emily PenningtonPark Street C305 967 7440Alexandra S.CloughGATHER PR516 428 7210 2023Appendix32Project Background and Craft Sp

49、irits Definition 2023Project Background and Research MethodologyTHE PROJECT SERVES TO:Quantify the number,size,and impact of craft spirits producers in the U.S.Create a deeper understanding of the U.S.craft spirits landscape among four key groups:DSPs,wholesalers,retailers,and consumers Provide find

50、ings on craft supplier best practices and success factorsTHE FOLLOWING INFORMATION WAS COLLECTED(all information was collected with the assurances of full confidentiality):Data on craft distiller production size and patterns,sources of revenue,and the categorys overall economic impact within the spi

51、rits industry Data on craft spirits business size,patterns,and outlook on the wholesaler and retail levels(both on-and off-premise)Input on craft spirits brand perceptionsTHINGS TO REMEMBER:When estimating the number of producers behind the U.S.craft spirits production,the Project team relied on a c

52、ombination of official data released by regulatory authorities,survey data,other industry data sources both national(e.g.,NABCA,ACSA)and regional(e.g.,guilds),as well as interviews and team assessments using the craft distiller definition In the accompanying data sets,the team assumes independent ow

53、nership as having equal or more than a 75%equity stake and/or operational control of the DSP.The team has set up a process that asks industry members to notify the ACSA of all ownership or strategy changes away from craft so the changes can be reflected accordingly in the database34 2023The American

54、 Craft Spirits Association(ACSA)is the only registered non-profit trade association representing the U.S.craft spirits industry.Its mission is to elevate and advocate for the community of craft spirits producers.Membership in ACSA is open to anyone.ACSA is governed by a Board of Directors elected by

55、 the eligible voting members of the Association.Voting members must be independent,licensed distillers(DSPs)annually removing fewer than 750,000 proof gallons from bond(the amount on which a federal excise tax is paid.)ACSA was founded in 2013 by 23 founding craft distillers.Project Organizer:Americ

56、an Craft Spirits Association(ACSA)35 2023Project Partner:Park Street 36Park Street delivers productivity-enhancing and cost-saving back-office solutions,advisory services,and working capital to more than 18,000 alcoholic beverage brands from the U.S.and around the world.Established in 2003,the compa

57、ny provides a fast and reliable conduit to the U.S.and EU markets and a cost-effective operating platform.Park Street works with suppliers at all stages of growth and its clients range from entrepreneurial craft distillers to multi-brand global portfolios 2023Project Supporters:Broad Industry Collab

58、oration37TTB:Provided Beverage Spirits Producers and Bottlers by Average Taxable Removals;agreed to change annual reporting moving forward to enable consistent fact basis NABCA:Provided in-depth view of craft distillers using control state data 2023What Constitutes a Craft Spirit?There is no univers

59、ally accepted definition of craft spirits in the industry,and the expression“craft spirit”is not protected in any wayGiven the positive trends for craft spirits from a consumer perspective(e.g.,premium to other spirits,rising demand),there is a natural incentive for brands to utilize craft spirits c

60、ues and position themselves as a craft spiritThe industry has responded with different definition attempts based on criteria for the producer of the craft spirit including production steps at the location,ownership and operational control of the distillery,subscription to an ethics code based on hon

61、esty and transparency,production methodology,and size of productionMany of the criteria used or suggested by industry members would require a formal certification or peer approval process in order to be used as a universal base for quantification purposes As long as a universally accepted craft spir

62、its certification or approval that could be used as an industry wide criteria remains unavailable,the quantification has to rely on certain verifiable quantitative metrics which are complemented by estimates to bridge gaps Looking at the manufacturer,size of production,ownership/control,and producti

63、on specifics are criteria that could possibly be measurable and verifiable.However,the consistent collection of the data is not without barriers and could be very cumbersome,which suggests the potential use of a pragmatic approachU.S.craft spirits,as defined pragmatically for the purposes of the res

64、earch,are distilled spirits that are produced in the U.S.by licensed producers that have not more than 750,000 proof gallons(or 394,317 9L cases)removed from bond,market themselves as craft,are not openly controlled by a large supplier,and have no proven violation of the ACSA Code of Ethics38 202339

65、Large craft distillerMedium-size craft distillerSmall craft distillerRange of gallons removed from bond annually*Range of 9L cases removed from bonds annually*CharacteristicsOften only locally distributedIf no on-premise business,typically cash flow negativeOften nationally distributedIf negative ca

66、sh flow,then by choice in favor of investmentOften regionally distributedOften still cash flow negative100,001 750,00052,577-394,317 5,259 52,57610,001-100,0001-10,0001-5,258Sources:TTB,Team Analyses*Assuming on average 80 proof alcohol content;for purposes of the analysis removed from bond equals salesCraft Distillers by Size Classification Definition