Where the craft alcohol market is headed (from a cider innovator)

Kyle Sherrer is the owner of Backpack Brands of Newburgh, NY, which puts out three craft brands:

• Graft Cider, a craft cider that innovates on flavors. Think cutting edge craft beer, but for cider.
• Hudson North Cider, a hazy dry cider brand that's lower in sugar than their competitors (like Austin Eastciders, for example).
• Ritual Hard Kombucha, a west-coast style hard kombucha made in NY.

We recently sat down and spoke with Kyle about a range of topics:

• How each of his brands came to be
• The swings and misses he's faced along the way
• Where he sees the non-beer craft market—and really the entire craft market—headed in the next few years as preferences change.

The biggest takehome on the last point: In the current alcohol market, producers will need to keep on innovating in order to stand out. That different-SKU-each-week treadmill needs to keep on turning, and maybe even accelerate.

This was a very interesting conversation with someone who's found success in a broad range of markets, so it's well worth a watch or listen. His experience won't apply directly to most readers here (who own/manage bars and restaurants), but learning how innovative, cutting-edge producers strategically map out their next steps is interesting in it's own right. And there are definitely some broader lessons that can be applied to any alcohol-related business.

Check out the full interview here:

According to the Distilled Spirits Council of the United States (DISCUS), 2022 was the first time spirits outpaced beer for alcohol marketshare. Here are the numbers:

• $37.58 billion: US sales for spirits.
• $37.46 billion: US sales for beer.
• 42.1% and 41.9%: Spirits' and beer's respective marketshares.
• > 60%: amount of spirit sector's total US revenue that came from high-end and super premium spirits.
• 35.8%: the amount that sales for premixed/ready-to-drink beverages increased in 2022, bringing total sales to $2.2 billion. This is by far the fastest growing spirit category.

DISCUS and others cited a few reasons for spirits' marketshare growth:

• Spirits can sort of "run up the score," with their super premium bottles. Think about it—prices for even the rarest, most expensive bourbon barrel stout don't come close to prices for the very rare bottles of bourbon or tequila.
• Ready-to-drink cocktails are in the middle of a not-so-slow-motion explosion.
• Spirit Tourism is having a significant impact.
• The younger generation isn't necessarily as into craft beer as previous generations.

The million—or I guess billion—dollar question is whether current trends will continue. Will spirits continue to outperform going forward? Is beer destined for a wintery period? Something else?

We'll have to look to the data this time next year to find out.

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