The Rise of the Australian Craft Spirit

Shaking it up with Australian Craft Spirit

THE CRAFT SPIRITS CATEGORY IS FAST EVOLVING JUST AS THE CRAFT BEER CATEGORY DID BEFORE IT. THE AUSTRALIAN CRAFT SPIRITS CATEGORY HAS ALMOST TREBLED IN THE LAST 2 YEARS, FROM $6M IN 2016 TO $17M IN 2018. THIS YEAR THE CATEGORY IS SET TO BREAK NEW GROUND AS IT NOW HAS A FIRM FOOTHOLD IN THE MARKET. RETAILERS WHO ARE NOT ALREADY, SHOULD BE PAYING ATTENTION.

WHY ARE THEY SO HOT? ONE REASON IS THEY TAP INTO THE ‘SUPPORT LOCAL’ ETHOS. STILL, IT’S MORE THAN THAT - CRAFT SPIRITS ARE REDEFINING TRADITIONAL CATEGORIES WITH CREATIVITY AND UNIQUE APPROACHES TO MARKETING AND PRODUCT DEVELOPMENT. IT IS INTERESTING AND EXCITING, AND CONSUMERS ARE ON BOARD. FOUR AUSTRALIAN CRAFT SPIRITS FROM THE SOUTHTRADE INTERNATIONAL PORTFOLIO ARE LEADING THE CHARGE.

STARWARD AND THE ART OF MODERN DISTILLING

Instead of ageing whisky in ex-bourbon barrels like everyone else, Melbourne’s Starward taps into the readily available resources from nearby wine-producing region, the Yarra Valley and ages its whisky in recently used and still wet red wine barrels creating a truly unique taste.

David Vitale from Starward Whisky said: “For a long time producers would openly promote they produce their product using other peoples’ traditions. I think it is important we continue to make our own style and by doing that we want to captivate people’s imaginations.

“It is not by doing something that other people are doing well but rather doing something that only we can do well. I think what has really ignited the category is this modern approach to distilling.”

Starward also promotes its new serves as necessary for the brand’s marketing to a broad consumer base and to even bust open the myth of whisky being only suitable for mixing with traditional bases of cola and dry. While they still acknowledge that purists will always drink whisky neat, they are mixing things up and making Starward accessible to all with new tastes and concepts. Mix up their Two Fold double grain whisky with Fever Tree tonic and a grapefruit for garnish. Use it in a cocktail like Starward’s New World Sour for an exciting palate teaser.

Whatever they are doing, it is working. While Australian craft whisky is growing 3.5 times faster than Single Malt Scotch (2016 – 2018) Starward continues to strengthen its leadership position in the category and is now holding a 46% value share, double that of the #2 brand with a 23% share. It has doubled in value since 2016 (+99%), growing twice as fast as the total Australian craft whisky category and while Starward continues to grow, the leading premium and super-premium whisky brands are both in decline: Johnnie Walker Black -1% & Glenfiddich -3%

Now that is something worth drinking a local Starward and Tonic to.

Starward continues to strengthen its leadership position in the category and is now holding a 46% value share.

IN THE BE-GIN-ING THERE WAS GREEN ANT

Sacha La Forgia of Adelaide Hills starting making spirits when he was 18-years-old in his laundry at a time when the independent local spirits category didn’t exist.

“When I started there was just one or two distilleries and now there are 15 in Adelaide alone.

“It’s an exciting time. I think there are brands out there that people want to be a part of. Brands with stories that are unique and have a point of difference.”

The most sustainable distillery in Australia only sources botanicals locally and gives back to the community. The distillery’s Green Ant Gin is of such a high standard it is losing count of the global awards and accolades.

Just a year after it was launched Green Ant Gin won gold at the San Francisco World Spirits Competition, setting the standard for its peers. Green ants have traditionally been used by Indigenous Australians as medicine, but in this case are harvested by Indigenous-owned supplier, Something Wild, who also supply other native ingredients for the gin, such as: strawberry gum, finger-lime, lemon myrtle, pepper berry and boobialla.

“We’ve got so much incredible produce here in Australia, beautiful and unique flavours so it just makes sense for us to use them,” tells the distillery’s founder, Sacha La Forgia.

Australian craft gin is stealing share from premium and super-premium gin with local provenance and flavour out-trumping luxury packaging. Australian craft gin is now 4.8% value share of total gin. Gin is hot but Australian craft gin is on fire. Australian craft gin is growing 3.7 times faster than total gin (+85% vs. +23%) and has more than tripled in value in the last two years, from $3.3M in 2016 to $12.2M in 2018.

Adelaide Hills is the fastest growing Australian craft gin, now commanding 14% share of the category, up from 6% in 2017 and 2% in 2016 and is the 3rd largest Australian craft gin in value. It is growing at 134.5% volume and 315 % value versus last year and has experienced 1,647,000 litres growth MAT Sept 2019.

David Vitale - Starward

Adelaide Hills is the fastest growing Australian craft gin, now commanding 14% share of the category

THE BEST COFFEE IN TOWN IS MR BLACK

The team at Mr Black looked at the Australian obsession with real coffee, not instant, and created a liqueur brand that spoke to this new coffee culture. It combined the bartender and barista and introduced craft coffee to the night occasion with their cold drip coffee liqueur. It has single-handedly redefined the coffee liqueur category and has become Australia’s No. 1 selling spirit in the US. Tom Baker, the founder of Mr Black Spirits predicts that the local revolution is about to take off beyond our shores with this local spirit’s most significant opportunity being overseas.

Of course one of the accelerators of the success of Mr Black has been the unprecedented rise of the espresso martini. It is one of the most googlesearched cocktails in Australia and has become a top-three cocktail in the last six years since Mr Black launched in 2013. Mr Black takes the everyday espresso martini and elevates it to new heights, particularly now with the launch of Mr Black limited-edition origins, the espresso martini will never be the same again.

“But it’s not just about the espresso martini, Australia has a reputation for quality coffee, and more and more people are looking for a boozy coffee in the evening,” explains Tom Baker.

Mr Black has grown seven-fold in the last two years and is growing at +173.9% year on year vs the #1 coffee liqueur brand in Australia growing at +3.3% (Kahlua). In value growth, it is increasing at 101.3 % or $580,000.

Of course one of the accelerators of the success of Mr Black has been the unprecedented rise of the espresso martini.

PURE VODKA FROM PRISTINE TASMANIA CAPE GRIM 666

Spirit brands with a strong reputation often start with a pristine water source. With vodka this is essential and what better place to find that than our very own emerald isle renowned the world-over for its pristine and pure environment. Tasmania’s Cape Grim 666 Vodka is produced by Dean Lucas who while working behind a bar started to wonder why Australian spirits were not better represented in the on-premise.

“We launched in 2008, and the Australian craft spirits makers didn’t really exist. It was tough to find an Australian spirit besides Bundaberg Rum, so when we launched people didn’t really understand what an Australian craft vodka was.”

Cape Grim 666’s first run was exactly 666 bottles hence the name. Today the brand sells over 40,000 bottles.

“Australians do very well in the wine and beer category so there is no reason we can’t do the same with spirits,” said Lucas.

‘Over the years we have evolved, and we have now gone back to calling ourselves a craft spirit as everyone understands it now, so we have ridden the wave.”

The Australian craft vodka category is dominated by Cape Grim 666 Vodka which continues to grow at +16.4% in value vs total vodka at +2.7% well ahead of more established international brands such as Belvedere -3.7%

Cape Grim 666’s first run was exactly 666 bottles hence the name. Today the brand sells over 40,000 bottles. The team at SouthTrade are incredibly proud of the strong representation of Australian craft spirits in their portfolio. They are committed to the local producers and their mission to shake up the category for future generations.

“This isn’t about simply supporting local producers – this is about getting behind people that are trying to redefine and improve well-established categories,” said said Fraser Lockwood, marketing director at SouthTrade International. “At SouthTrade we get to work with these pioneers every day, which not only means we get to drive future category leaders from the very beginning, but we also get to learn and work with real entrepreneurs who challenge our everyday thinking.”

AUSTRALIAN CRAFT SPIRIT CATEGORY SUPER STATS

• AUSTRALIAN CRAFT Value has almost trebled in the last two years, from $6M in 2016 to $17M in 2018 • AUSTRALIAN CRAFT Volume increased +71% vs LY – from 11,182 9L to 19,154 9L • October, November, December accounts for 40% of yearly sales for CRAFT

SPIRIT BRANDS. • ALL SOUTHTRADE AUSTRALIAN

CRAFT brands are in double-digit growth • SOUTHTRADE’S AUSTRALIAN

CRAFT portfolio makes up 30% of Total

AUSTRALIAN CRAFT in Value