the craft distillery market 2018media.mycrowdwisdom.com.s3.amazonaws.com/adi/... · 9. red cedar...
TRANSCRIPT
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TheCraftDistilleryMarket2018
©MichaelKinstlickandCopperseaDistilling,LLC
MichaelKinstlickCEO,CopperseaDistillingADIResearchEconomist
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DistilleryNamesWordCloud
Data:MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
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DistilleryNamesGame:RealorImaginary?
Data:MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
1. SevenBearsSpirits2. WesternLibertySpirits3. GoldenEagleCraftDistillery4. SouthHollowDistilling5. HorseOakDistilling6. TwoBirdsArtisanSpirits7. GoldenHillDistillery8. Ironfish Distilling9. RedCedarSpirits10. BearCreekDistillery
A. SilverOwlDistillingB. CopperRidgeDistilleryC. IronBaySpiritsD. NorthernRanchCraftWhiskyE. BigWhiteCreekDistilleryF. BlackBearDistilleryG. HighRockDistillingH. BlackRockDistillingI. PineBluffsDistillingJ. FireOakDistillery
Thetopfivenamesinbothcolumnsareimaginary
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CraftDistilleryMarketSnapshot2019• Databaseof3600UniqueSpiritsProducers2006-2018• 2900ListingsinTTBDSPpermitholdersfile(Dec2018).
• Plus370DroppedDSPs• And300No-DSPADIListings
• Approximately1700CraftProducersatyear-end2017.
• 1250Identified OperatingCraftDistilleriesasofyear-end2018• 250Estimated CraftDistillers(“HiddenEntrants”)• 200KnownandestimatedNon-distillerProducers
• Infusers,Rectifiers,Blenders
©MichaelKinstlickandCopperseaDistilling,LLC
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Industriesfollow“Density-DependentProcess”
Data:TTB,MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
• Density=NumberofIndustryParticipants
• Legitimation– Processofsocialacceptance– Obscurityto“taken-for-grantedness.”– Legalchanges– State/locallicensing,FET– Increaseswithmoreentrants
• Competition– Accesstoresources(inputs,labor,customers)– Alsoincreaseswithmoreentrants
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“Density-DependentProcesses”
Data:TTB,MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
• FoundingRateofNewEntrants– RiseswithincreasingLegitimation– FallswithIncreasingCompetition
• Death/ExitRateofExistingEntrants– FallswithincreasingLegitimation– RiseswithIncreasingCompetition
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VitalRatesvsPopulationDensityFoundings Deaths
Density
Rate
Notbasedonactualdata
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TotalActiveDSPs(2945on3/12/19)
Data:TTB,MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
0
500
1000
1500
2000
2500
3000
Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19
DSPTotal 2884
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NewAddRatestillRobust.DropRateSteady.
Data:TTB,MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19
DSPMonthlyAdd/DropRate
adds drops
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Add/DropRateas%ofExistingBase
Data:TTB,MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
9/1/11 3/1/12 9/1/12 3/1/13 9/1/13 3/1/14 9/1/14 3/1/15 9/1/15 3/1/16 9/1/16 3/1/17 9/1/17 3/1/18 9/1/18 3/1/19
MonthlyAdd/DropRateas%
AddRate DropRate
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SupplyUp!
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
2010 2011 2012 2013 2014 2015 2016 2017
VolumeWithdrawn(PGs,millions)
0-10k 10k-100k 100k-750k 750k+
Growthinreleasevolumes750k+=TOTALreleasesof<750k
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U.S.DistilleriesReleasesbySize(2017)
Data:TTB,ADI,MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Count WithdrawnSpirit
<10kPGs 10k-100kPGs 100k-750kPGs 750k+PGs
42
96%
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SupplyComing…
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Count WithdrawnSpirit
AdditionalDiageo/BulleitVolume
<10kPGs 10k-100kPGs 100k-750kPGs 750k+PGs Diageo
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Supply…andDemand• USProducersrevenue5.2%5-yearCAGR– Per-CaseRevenue2.8%CAGR– CaseVolumes2.3%CAGR
• SpiritsAdultBevSharenow37% (33%06-10)
• FromDISCUS2018EconomicReport…– “GrowthofCraftDistillersacrosscountryhelptomodernizelaws,buildexcitement,andincreasespiritsconsumerbase”
Source:DISCUS
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U.S.ProductionCraftDistilleries,1982-2018
Data:TTB,ADI,MichaelKinstlick ©MichaelKinstlickandCopperseaDistilling,LLC
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1982
1983
1984
1985
1986
1987
1988
1989
1990 1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
In-Production Craft Distilleries
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CraftDistilleriesvs.CraftBreweries
©MichaelKinstlickandCopperseaDistilling,LLC
Data:TTB,ADI,MichaelKinstlick,GlennCarroll,AnandSwaminathan,BartWatson/Brewer’sAssociation
0
1000
2000
3000
4000
5000
6000
7000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57
Craft Distilleries vs Microbrews by Industry Age (Microbrew start = 1961, Craft Distilleries = 1982)
MicroBreweries Craft Distilleries
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Conclusion• AsCraftDistillersfollowtheBrewpubmodel,the
numberofpotentialentrantsbecomesverylarge.
• CraftDistillerieshavepassedthroughthelegitimationprocessandrevitalizedoneoftheoriginalAmericanindustries.
• CraftDistillersaretheleadingedgeofinnovation…buttheBigBoysstilldominatethelandscape.
©MichaelKinstlickandCopperseaDistilling,LLC
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Data&Methods• WhatisaCraft-Distillery?
1. IndependentFirm• Belowacertainproductionvolume.(40-50k9Lcases,generally)
2. Distillingspiritsthemselves3. Bottling&Marketingthemdirectly
• OtherCraftProducersinclude…• Barrelers &Bottlers• Importers• Rectifiers• Infusers• ContractDistillers
• Data• ADIDirectories,2006-2019• TTBDSPpermitholdersfoia file(online,2010-2018)• StateGuildwebsites• DISCUSreports
©MichaelKinstlickandCopperseaDistilling,LLC
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AbouttheAuthorMichaelKinstlick comestothespiritsindustryfroma20yearcareerinfinance,technology,andinsurance.Heco-foundedCoppersea Distillingin2011.Coppersea iscurrentlyproducingdistinctivewhiskiesusingitsheritage-methodsdistillingpractices.MichaelhasaBAinEconomicsfromColumbiaUniversity,aMSinIndustrialEngineeringfromNorthwestern,andaMBAfromtheHaasSchoolofBusinessatU.C.Berkeley.
©MichaelKinstlickandCopperseaDistilling,LLC