Introduction

Sustainability is about acquirability and maintainability. Is the craft distilling industry able to carve out a market for itself and is it able to maintain and defend that market share? Without competitive advantages, no market share can be acquired or defended. In this iStill Blog post, I want to dive into the future of craft distilling and investigate how a sustainable position can be found.

Catering to three basic needs

Alcohol in general is part of many of the world's cultures. There is, in other words, a market for alcoholic beverages. Alcohol plays a major role in celebrations and socializing events. As there is a market for socializing and celebrating, consuming alcoholic beverages is further enhanced. And there is a need for authenticity. In a globalizing world, more and more people want to focus on what's unique in their neck of the woods. As such the craft distilling industry caters to basic needs, in an environment that is not predisposed against it becoming successful.

In three basic bullet-points, here's what the craft distilling industry should provide in order to exist:

1. Alcohol;
2. Socializing events that are fueled by alcohol;
3. Authenticity in a globalizing environment.

Competition

It's always good to cater to specific, existing needs. If you don't believe me, ask the guy that invented a bicycle that rode backwards. No need for bicycles to do that, so it didn't really become a success, and you'll probably have a hard time - outside of the asylum - to find anyone willing to invest their time and money in bikes that ride backwards. Get my point?

But there is a consequence also, and that is that others have identified these needs as well. Distilleries that basically beat craft distilling to it, when - about a century ago - the invention of continuous distillation, prohibition, and the first world war allowed for huge, centralized, alcohol producing companies to be established. Big Alcohol. A few big, global companies that serve the world's needs. How? By providing alcohol, by creating socializing events (think: bars), and by selling an authentic image of their products to the consumers.

So, Big Alcohol - the craft distilling industry's main competitor - caters to the same needs as you do. It does so in a specific and peculiar manner, that is worth investigating, summarizing, and framing:

1. The alcohol they make is cheap, with production centering around economies of scale;
2. Socializing events mostly take place in the bars that Big Alcohol supports or has contracts with;
3. Branding is done via marketing, where huge amounts of money are spent to convince as many as possible via generic messages.

Competitive advantages

Big Alcohol has the advantage of producing cheaper alcohol, having more outlets for socializing, and by being able to spent huge amounts of money on marketing. You can try to match them, but will fail. The way to beat them is in realizing that every coin has a flip-side. If the craft distilling industry is able to bring that into the light, we have a winner. Shall we explore further?

If Big Alcohol chooses to have the monopoly on cheap alcohol, craft distillers must choose to go for high-quality flavors. The higher price-point of craft distilled spirits now serves to highlight it's higher quality.

Big Alcohol has an amazing number of outlets, but - as a downside - it does not very well control the bars, how these are set up, and what they communicate or what image they have. You, as a craft distiller, have the opportunity to choose the outlets that really support your message of quality. And if you turn your distillery into a bar, this gives you a perfect way to control that message even more. Your reach may be smaller, but your niche will be more valuable.

Where Big Alcohol messages to the masses, you need to tailor to the individual. Craft distilled spirits are by definition authentic (right?), which appeals on a personal level. Forget marketing, invest in selling your drink one experience, one glass, one bottle at a time. It is your customers that will do your marketing for you, when you provide them with high-quality spirits, socializing events that fit their profile, and a genuine and authentic experience when they visit your distillery.

Quality spirits, controlled distribution, authentic experience ...