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Tuesday, Dec 6, 2022
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Three Trends Driving Growth in Craft Spirits

San Diego’s Cutwater Spirits and You & Yours Distilling Co. are just the latest among a wave of craft distillers now offering their own take on gins, vodkas, rums and other alcoholic spirits — a roster now numbering more than a dozen in San Diego County alone.

The American Craft Spirits Association reports that there are now nearly 1,400 active craft distillers in the U.S. — compared with just 204 in 2010. The segment’s U.S. retail sales grew nearly 28 percent between 2010 and 2015, hitting $2.4 billion.

Here are three key trends spurring national and local growth in the craft spirits business:

Changing laws — California, which leads the nation with 118 craft distillers as of August 2016, in recent years has removed Prohibition-era laws that prohibited distillers from selling bottled products on their premises, directly to consumers. State changes have also opened opportunities for distillers to operate tasting rooms and host private events, which had already been allowed for decades at wineries and beer breweries.

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The youth factor — As with other business sectors, the Millennial generation — those legal drinkers age 21 to 34 — are credited with driving big changes in alcohol sales. Those younger buyers don’t have entrenched allegiances to the old-guard spirits makers that have long dominated the industry. A recent survey report by research firm Nielsen said millennials now account for nearly one-third of all U.S. spirits consumption, and a large percentage of that group won’t “spend their money on mass-market alcoholic beverages.”

Preference for locally made goods — Similar to the “foodie” movement driving changes in the restaurant scene, craft spirits are benefiting from consumers’ need to know what’s in their food and drinks, and where they came from. Locally produced items are deemed more friendly for sustainability, especially when served up in unique settings, cocktail recipes or packaging.

Check back later in the month for more coverage of this burgeoning industry in San Diego Business Journal.

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