It's Good to Be the... Small Batch Producer

Patrick Graney, President of International Beverage Holdings, USA, discusses upcoming trends in the spirits industry, and why it's a good time to go small batch
 It's Good to Be the... Small Batch Producer

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At the end of the year, our thoughts turn to what trends might emerge in the months ahead. Alcohol is one commodity that never (well, rarely) goes out of style. But the type of alcohol being sought after is always subject to change, and who could know better what direction the market will take than someone with a view from the top? This month, International Beverage Holdings, USA President Patrick Graney shared with us his thoughts on upcoming trends.

In 2011, there has been significant growth in the industry for beverage manufacturers. This is particularly true with small batch and craft producers. In the current economic climate, the value-brand category will likely continue to constitute a majority of volume growth in the spirits industry; however, more and more consumers desire interesting, quality entrees into the market, whether they are small batch spirits or craft beers.  This demand has resulted in positive trends coming back to the super premium category, which has outpaced the growth of others and it will likely continue into next year.

This consumer sentiment also presents a great opportunity. Small batch and craft brands can provide high quality products that carry unique processes, personalities and compelling stories for a consumer base that is willing to pay extra for this type of brand experience.  In 2011, brands in the super premium category became more active with regards to discounting the average price point, however, it remains above $30 and is growing. In fact, in some segments, such Single Malt Whiskeys, it is growing by double digits.

The industry is taking notice. The number of craft distillers in the U.S. has grown from just around a dozen ten years ago, to more than two hundred today, according to the Distilled Spirits Council of the United States. Not all of these new products will establish strong brands in the long-term, but there is a chance quality products will emerge. These present potential buying opportunities for larger small-batch producers to expand their businesses and still maintain the product’s craft identity. There was already significant movement in the industry this year and it will be interesting to follow this through 2012.

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