North American Whiskey Industry

Part
01
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Part
01

North American Whiskey Industry - Future

With an increasing demand for companies across industries to practice and preach sustainable production methods, the idea of making molecular whiskey is attracting investors, industry professionals, and consumers for the near future. The future of whiskey among North American consumers provide a substantial spectrum of price range and taste profiles where local producers and renowned brands are contributing equally to the future trend. The Whiskey market has always been a growing space mainly due to the augmenting demand for premium whiskey worldwide.

The North America Whiskey Industry — Near Future

Growth Opportunities

  • Increasing demand and import of whiskey in North America, the region holds the 2nd largest share in the global whiskey market, and an increasing number of whiskey consumers in the region are driving the growth of the North American whiskey market.
  • The growing market for premium spirits in the North American region is also a key driving force behind the market growth in the region.
  • Experts hint that the “future looks bright for the American Whiskey market”, and will be full of knowledge sharing and new brands with innovation as a growth driver.
  • During the last decade, there was an acceleration in small-scale American distilling which is likely to be continued in the near future as well.
  • With an increasing demand for companies across industries to practice and preach sustainable production methods, the process of making molecular whiskey is attracting investors, industry professionals, and consumers.
  • The lab-made whiskey doesn’t work for all current whiskey consumers and has scope for improvement in the near future.
  • Canada has been an exciting land of opportunity for whiskey. Canada expects more privatization and less state control in the near future.
  • A rise in the cost of raw materials can limit product adoption in North America. Also, a change in geopolitical conditions is likely to lead to a rise in import duties, thereby restraining the global trade levels.
  • A higher income per capita, an increase in house parties, and an established distribution network for distilled beverages in North America support product penetration.

Distilleries in the Near Future

  • Many new distilleries are creating a space for themselves in the whiskey market, and this segment has lots of room for fresh ideas and enterprising thinking.
  • The whiskey market in the U.S. is evolving, therefore, every part of the whiskey-making journey is up for movement and experimentation. Along with new distilleries, new flavors and styles are also on the rise.
  • The future of whiskey lies with the customers who want to know everything about what they’re buying. They want to be invested in the story and know where the ingredients are from.
  • Major brands and new micro distillers in Canada are releasing more connoisseur-quality whiskeys.

Whiskey Tourism in the Near Future

  • During the last decade, there was an acceleration in small-scale American distilling. This trend is likely to continue in the near future.
  • Whiskey tourism is on the rise amongst consumers who visit Kentucky Bourbon Trail, a program that is organized to promote the Bourbon whiskey industry in Kentucky every year.

The North America Whiskey Industry — Far Future

  • Established markets in North America strengthen exportation that helps in driving productivity at home and underpinning investment in communities.
  • Increasing free trade globally has benefited the industry enormously in the last 30 years and it is highly critical for them that it does not change over the next 30 years.
  • The future of whiskey (in the next 25 to 30 years) amongst consumers in the North American market provides a substantial spectrum of price range and taste profiles where local producers and renowned brands are contributing equally to the trend.
Part
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Part
02

North American Whiskey Industry - US Consumers

US consumers like Canadian Whiskey, particularly flavored Crown Royal, the most of all imported whiskeys. Scotch imports were half that of Canadian whiskey, but millennials are expressing growing interest in Scotch. Twitter sentiment regarding Irish whiskey and its rise in popularity in cocktails show that US consumers really enjoy it, particularly Jameson. General sentiments and information regarding US consumers feelings towards imported whiskey and specific sentiments for Canadian Whiskey and Irish Whiskey are provided below. Some Twitter sentiments can be viewed here.

Feelings Toward Non-US Whiskeys

  • Although first exposed to whiskeys through a "red-hot bourbon movement", millennials are stated to be "flavor-curious and brand-disloyal" and their taste preferences have driven the growth for foreign, imported brands.
  • Millennials are seeing past the stigma of scotch as grandpa's dusty bottles to actively seeking it out due to savvy cross-marketing that created a Diageo limited edition line with the popular show Game of Thrones. Fans of the show quickly purchased the bottles and created social media buzz that spurred more growth. Sophie Kelly notes that millennials require value and experiences with brands that demonstrate cultural awareness of global issues.
  • Consumers are interested in Japanese whiskey, however, it's very trendy and not readily available to be purchased.
  • US consumers like Scotch whiskey and the US is the biggest importer of Scotch in the world. Twitter sentiment regarding Scotch was majority neutral, 54%.

Canadian Whiskey

  • US consumers love Canadian whiskey the most of all the imported whiskeys as evidenced by its doubling of Scotch imports and quadruples Irish imports. They like the Crown Royal brand the most, followed by Diageo which triples the third favorite, which is a US-bottled brand.
  • US consumers really like flavored Crown Royal and the CEO also notes that the introduction of flavors also brought new consumers to the whiskey. This is demonstrated by the 75% increase in cases of Crown Royal Vanilla and the apple flavor became the fastest spirits to reach one million cases.
  • Millennials, women and multicultural consumers really like the flavored Crown Royal expressions.
  • Twitter sentiments regarding Crown Royal were predominantly good and a screenshot can be found here.

Irish Whiskey

  • Irish Whiskey sales in the US grew 9.4% in 2018, and total market revenue was about $1 billion. Over the last five years, US sales grew by 61%, demonstrating the popularity of the drink among US consumers, especially among millennials.
  • US consumers consider Irish whiskey to be a higher quality alcohol and are willing to spend more money for it, as a result brands are willing to spend more money on marketing.
  • US consumers prefer Jameson over other scotches, however, Jameson is responsible for 70% of the world's scotch sales.
  • Consumers enjoy cocktails featuring Irish Whiskey. Its popularity led to The Dead Rabbit, World's Best Bar in 2016, devoting half of its menu to Irish Whiskey cocktails and training the staff to further educate customers about it.
  • Consumers really like premium Irish Whiskey and are paying for top-notch quality.
  • Twitter sentiment for Irish whiskey are predominately great and good, 38% and 18% respectively and a screenshot of recent Twitter activity can be found here.


Part
03
of six
Part
03

North American Whiskey Industry - Sources of Growth

The future growth of the North American whiskey industry is expected to be driven due to the increase in product innovations, a large rise in the popularity of whiskey, a growing market for premium spirits, and increasing consumers who have just reached the Legal Drinking Age (LDA). The past growth of the whiskey industry in North America was primarily driven by its popularity among millennial consumers, especially with its fastest-growing segment — Irish whiskey.

Future Growth of the Whiskey Industry

  • According to an industry report published by MarketWatch, the whiskey market in North America is expected to reach $17 billion by 2025.
  • Canadian and American distilled drinks made from rye and corn dominate the demand in North America. Over the past few years, the Canadian and Irish distilled drinks imports have significantly increased making the United States the world's largest importer of Irish beverages.
  • The whiskey market's expansion is driven mainly by growing regional production, increased product innovations, and a steady rise in the number of craft distilleries in North America. The increase in consumer spending on spirits for enhanced experience and taste is propelling the whiskey market.
  • The United States has been seeing more and more craft distilleries popping up across the country due to the continued popularity of the whiskey market. According to the head distiller at Balcones Distilling, Jared Himstedt, every part of the production journey has room for experimentation and movement. From ingredients to maturation styles, distilleries are innovating fresh approaches to change how consumers look and appreciate whiskey in the region.
  • North America currently has the second-largest share in the global whiskey market and the growing sector for premium spirits is a primary driver of the market's growth in this region.
  • Consumers who have just reached the legal drinking age play a vital role in propelling the whiskey industry forward in North America.

Past Growth of the Whiskey Industry

  • In North America, the fastest-growing segment of the whiskey industry during the period 2012 – 2017 was Irish Whiskey which recorded a CAGR of 17.33%.
  • In 2015, the whiskey market in the United States observed a consumption volume of over 830.3 million liters. The region saw steady growth in the industry as it continued to gain popularity among its consumers, especially with millennials. The market was found to be primarily driven by the growing demand for new whiskey flavors by the millennial population.
  • While American youngsters are found to be consuming less alcohol overall, a shift has been observed in their tastes which has helped the largest spirits company in the world, DGE, cross its half-year sales and earnings forecasts.
  • Bulleit whiskey received a boost in its sales mainly from American millennials, according to the maker, Diageo. There has been an overall boost in whiskey and tequila sales across the United States due to the shifting tastes of millennials.
  • In the past year, whiskey sales in the United States observed a 4% growth and a large part of this increase belongs to the higher-end whiskey brands such as Jameson Irish Whiskey, Wild Turkey Bourbon, Woodford Reserve Bourbon, and Bulleit Bourbon. According to information from IRI, all these brands recorded double-digit growth in sales last year.
Part
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Part
04

North American Whiskey Industry - Emerging Trends

Five of the major trends in the whiskey industry at this time include the increased demand by millennials and their high purchasing power, industry expansion as a whole, the resurgence of craft distilleries for new and interesting flavors, 'white whale' whiskeys that are getting harder to find as demand for premium products increases, and the demand for flavored whiskeys.

Overview

The profile of whiskey drinkers and the whiskey market as a whole has changed in recent years, with millennials being the hands-down driver of growth. Their willingness to experiment with different tastes, along with their high disposable income, has brought the whiskey industry back from the brink. The following are five current trends in the whiskey industry:

1. Millennials

Research has found that one of the leading trends in the North American whiskey industry is the influx of millennials into the whiskey-drinking segment.

2. Industry Expansion

The whiskey industry is expected to expand further, as demand for premium products continues to increase.
  • Michter’s master distiller and executive vice president of production, Pam Heilmann, said that whiskey is still a growing category with a lot more room for growth" both in the United States and overseas.
  • Growth is being driven by innovation and what is called “premiumization,” the growth of the “cocktail culture” and a focus on artisanal and craft products.
  • Millennials alone are not driving the industry expansion. Hispanics, who easily move back and forth between Hispanic and the United States culture, are triggering the growth as well.
  • North America is projected to remain the second-largest market after Europe.

3. Craft Distilleries

There is a heavy expansion in the number of craft distilleries in the United States. Many of which have figured out how to produce quality whiskey on a quicker timetable.
  • Typically, whiskey products are kept in store for several years. This is changing, as newer distilleries are being used to experiment with the production techniques to achieve good-tasting, smooth whiskeys in the few years to come.
  • After experimenting with several production variables, Kentucky-based company Rabbit Hole released a series of whiskey that was less than four years old.
  • Reservoir Distillery in Richmond, Virginia uses small barrels to shorten the aging period due to increased wood contact.
  • Blends that rely on flavors and branding rather than age will turn out to be more artisanal in nature.

4. ‘White Whale’ Whiskeys

With consumers’ desire to experience different tastes, nothing is off the table when it comes to satisfying curiosity.
  • The result has been that many top-shelf and even less-expensive but trendy brands are becoming hard to come by.
  • Some of these ‘white whale’ brands can be found in the secondary market but they are expensive.
  • Companies such as Michter’s want their products to be available to consumers and price their products accordingly.
  • Michter’s clarifies that it has no control over products that are sold on the secondary market and does not promote such sales.

5. Flavored Whiskeys

The flavored whiskey trend is expected to continue, due to consumers’ willingness to experiment.
  • Since creativity is expected from distillers, they are meeting the demands by providing more options.
  • One way companies are coming up with more diverse flavors is via barrel finishing.
  • Another way to provide unique flavors is by mixing up mash bills with unique grains.
  • Beam Suntory created the Signature Craft series which featured rare oats and wheat.
Part
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of six
Part
05

North American Whiskey Industry - Young Audiences

Young Americans have developed a strong attraction to whiskey but in different ways than the preceding generations. Young people in their 20s and 30s use whiskey in blended concoctions as part of a cocktail culture, with recipes and dishes, and generally enjoy it in more experiential ways than their predecessors. They have shifted away from a stress on "aged" labels to those they can personally connect with and enjoy in social settings. Information regarding their attitudes and feelings towards whiskey are described below, and social media sentiments can be accessed here.

Taste

  • Younger Americans are consuming less alcohol as a whole, but trends show that their tastes are moving away from beer and wine to spirits such as whiskey. Millennial consumers care more about the taste and the origin of the whiskey instead of judging them by the traditional age statements that can appear old-fashioned and out-of-date to the younger consumers. This caused brands to focus on flavors and branding to capture the new audience.
  • Traditionally prized for being "aged", millennials look more for taste and blending is now a popular practice that would have been looked down upon by traditional older consumers.
  • Companies like Diageo have noted decreasing sales in their beer brands while younger Americans were purchasing a bigger share in their whiskey sales. The President of Michter’s Distillery, Joseph Magliocco, cites the growing appreciation for whiskey among millennials and provides comfort for the demand of their products even with the threat of trade wars.

Cocktail Culture and Social Media

  • Magliocco credits millennials and a cocktail culture with bolstering the spirit's popularity, citing that people in their 20s and 30s are "really into cocktails and mixology". Social media is spreading it around the world.
  • Industry analyst reports reveal the demographics of whiskey drinkers have drastically changed and that more women are buying whiskey. Marketwatch reveals that the bourbon whiskey market is booming due to "torrid demand" from consumers under 40 years old in every income bracket.
  • Recent tweets with the #whiskey exemplify the cocktail culture showing recipes of an Irish pumpkin pie, and others such as "Salted Caramel Crown and some Apple Cider with the baby Vanilla Crown ... About to makes some fall festive fun hahahaha". A screenshot can be accessed here. They pair it with steaks, pies, drinks, and fine arts amongst other things.

Experiences

  • The WhiskyX is a nationwide event aimed to make whiskey discovery easier for a younger, hipper audience and combines great whiskey with music, style, and chefs. A firsthand attempt to see the changing demographics was made at this event and they put that it is no longer the grandfatherly demographics but a new breed of sipper, "and she likes her Wild Turkey with a side of kombucha". He puts the new face of whiskey to be "young, pierced and full of wonder".
  • North, the creative director for a whiskey founded by Metallica, notes that whiskey drinkers in their 20s and 30s are deeply engaged with the brands they interact with, and their interested in the maker, the process, and the story. They attend festivals, tastings, visit distilleries, and take part in educational programs, actions their parents and grandparents did not do.
  • One grandmother was noted to be at the festival haven been a whiskey fan with her husband for many years, and she was quoted as stating the events were a lot more fun now with the younger generations' involvement and enthusiasm.


Part
06
of six
Part
06

North American Whiskey Industry - Market Size Change

Research, calculations, and estimations show that the size of the North American whiskey market significantly grew from 2012 to 2017 at a CAGR of 4.68%. However, the market appears to be declining from 2018, as reports show that the market will be worth $17 billion by 2025, at an estimated CAGR of 2.93%.

North American Whiskey Market Size: Historical Changes

  • In 2012, the size of the whiskey market in North America was deduced to be $21.015 billion.
  • In 2013, it was deduced as $22.820 billion after it rose by 8.59% year-over-year. This was the strongest performance the market experienced between 2012 and 2017.
  • Based on the CAGR between 2014 and 2017, the market was projected/estimated to be about $23.028 billion in 2014.
  • In 2015, the market saw its weakest performance, when it increased to an estimated $23.426 billion, by a CAGR of 1.73% from 2014.
  • In 2016, the North American whiskey market experienced year-over-year growth of 6.20%, from $24.777 billion to $26.415 billion in 2017.
  • According to a report published by MENAFN, the size of the North American Whiskey market was $26.415 billion in 2017.
  • Based on the share of the requested market against the global market size in 2018, calculations show that in 2018, this market was valued at $20.93 billion. When compared to the figure in 2017 ($26.415 billion), this is a significant decline in market value.

North American Whiskey Market Size: Future Changes

  • PR Newswire published that North America will be valued at $17 billion by 2025. If compared to the calculated market size for the region in 2018 ($20.93 billion), this would be a decline of 2.93%. This could be due to the increasing influence of the Indian market, as "it holds around half of the global consumption."
  • A report published by Market Watch corroborates this information, as "American and Canadian distilled beverages made from corn and rye dominate the regional demand.
  • Within the projected period from 2019 to 2025, "North America is projected to remain the second-largest market" — behind the European market, as "the market is majorly concentrated in Europe, owing to the sizable demand for premium products in U.K., France, and Spain."
  • However, the number of large distilleries is expected to increase in the region within the projected period.

Research Strategy

To address this request, we've pulled data from various market reports and news aggregators. Since these reports include a few growth rates of the requested market for previous years, we've used an online CAGR calculator to calculate the respective market sizes for each year. Note that during our research, not all historical market sizes were available; hence, we've assumed that for such years, the market sizes would be around or close to the projections provided by analysts within the projected or analyzed period. Hence, since a report published by MENAFN analyzed this data between 2012 and 2017 by highlighting the CAGR, we used this growth rate to project for any unknown market size for a specific year. This approach was specifically applied in obtaining the 2014 market size. For the year, 2018, this data was not directly available; however, we triangulated a close estimate based on available infographic data that suggests the market share of the region. Below, is an overview of our calculations.

2012

In 2012, the North American Market grew by a CAGR of 4.68% during the period 2012 to 2017, with a value of $26.415 billion in 2017." Therefore, using the CAGR calculator, with the growth rate as 4.68%, the number of periods from 2012 to 2017 as 5 years, and the final value in 2017 as $26.415 billion, the initial value or the market size in 2012 was $21.015 billion.

2013

Furthermore, within the analyzed period (2012-2017), the market saw its strongest performance in 2013, as it rose by a CAGR of 8.59% over its previous year, 2012. Therefore, the market size in 2013 was $28.684 billion {i.e., (8.59% * $21.015 billion) + $26.415 billion = $22.820 billion}.

2014

Since the market size in 2014 is not readily available, we used the CAGR calculator and applied the provided CAGR between 2012 to 2017 (4.68%) on the market size in 2012 to obtain a projection of the market size in 2014. Therefore, with the growth rate as 4.68%, the number of periods from 2012 to 2014 as 2 years, and the initial value or the 2012 market size as $21.015 billion, the final value/projected market size in 2014 is $23.028 billion.

2015

"The market saw its weakest performance in 2015 when it increased to 1.73% over 2014." Therefore, the market size in 2015 was $23.426 billion {i.e., (1.73% * $23.028 billion) + $23.028 billion = $23.426 billion}.

2016

The market size in 2016 grew by a CAGR of 6.20% to reach $26.415 billion in 2017. Therefore, the market size in 2016 was $24.777 billion {i.e., $26.415 billion — (6.20% * $26.415 billion) = $24.777 billion}.

2018

For this year, we found that an infographic data, published by Market Research Future, that provides the market share of the whiskey market in the North American region, however, the exact representation was hidden. Therefore, we used an online measuring tool to measure and obtain the percentage/share of this data. This shows that the region accounts for about 36.11% of the global market size {i.e. (130° / 360°) * 100 = 36.11%}. Since the global whiskey market size was valued at $57.96 billion in 2018, the share of North America is about $20.93 billion (i.e., 36.11% * $57.96 billion = $20.93 billion).
Sources
Sources