The number of would-be distillers applying for a licence in the UK has risen threefold in the past 12 months, according to research published on Monday, as start-ups hope to mirror the success of craft beer by capitalising on growing consumer thirst for boutique alcohol brands.
Applications for distillers licences increased to 20 in the fiscal year from April 2013 to April 2014, from seven the previous year, according to UHY Hacker Young. In the beer market, registrations for beer duty have trebled in five years from 101 in 2009-10 to 291 in the last fiscal year.
Roy Maugham, head of tax at UHY Hacker Young, said: “The increasing number of new start-up brewers and distillers demonstrate just how dynamic the drinks market has now become.”
Niche brands, such as Sipsmith, which became the first copper-pot distillery to open in London for 200 years in 2009, and Hoxton Gin, a brand that mixes coconut and grapefruit into gin, have helped spark a gin renaissance in the UK.
While mass market gins, such as Diageo’s Gordon’s and Pernod Ricard’s Beefeater have suffered stagnant or falling sales, artisan alcohol brands are among a fast growing segment of the food and drinks market, notes UHY Hacker Young.
The popularity of craft beer is reflected in growing demand, 23 per cent of adults in the UK have drunk a craft beer in the past six months and in London the figure is 38 per cent, according to Mintel, the market research group.
Some independent brewers, such as BrewDog, have expanded overseas, selling to Japan, Brazil and Sweden and the craft phenomenon has also extended to cider.
“There’s definitely a return to craft, to heritage, to taste complexity,” acknowledged Ivan Menezes, chief executive of Diageo, which makes mass-market spirits that include Johnnie Walker scotch, Smirnoff vodka and Gordon’s gin.
In gin, it is focusing its efforts on Tanqueray, a smaller, niche brand compared with Gordon’s. “We lost share in gin but [we are] building on the craft trend in gin with our unique and authentic recipes in the Charles Tanqueray Recipe Book,” said Mr Menezes.
The large distillers face a big challenge in the US where some 200 start-up vodka makers have turned into upstart challengers to Diageo’s Smirnoff vodka and Pernod’s Absolut.
Pierre Pringuet, Pernod’s chief executive, said last month: “The reality is that there are several hundred new entrants into the market. Basically, 99 per cent if not more of these brands do not survive, but the problem is, they do take market share.”