Distilleries are holding back on their Laphroaig productions because of limited supply of White oak. While competition for distillery space is fierce, there are some things that you can do to ensure continued revenue flow. In this article, we will look at three trends that are affecting the whiskey supply industry today. First, new product launches increase revenue for distilleries. Second, distilleries are launching new brands to gain market share. Finally, the whiskey supply industry is seeing an increase in savvy millennials' interest.
White oak shortages are a major concern for American distilleries
The shortage of white oak is one of the major concerns facing American distilleries today. This wood is used for casks in both Bourbon and whisky. But despite its widespread use, the American white oak is struggling to regenerate across the eastern United States. Shifting land management practices have hampered the growth of seedlings. Climate change and invasive insects are also slowing down the regeneration of oak plantations. Without urgent action, the supply of white oak will decline significantly over the next decade.
A lack of white oak is affecting bourbon production in a variety of ways. The shortage of barrels has led to higher prices for both barrels and whiskey. As craft distilleries continue to expand across the U.S., the demand for barrels has exceeded supply. To meet demand, stave companies have purchased a significant portion of the white oak harvest. In fact, they are willing to pay up to three times the price of barrels produced by sawmills. In the last few years, the price of barrels has risen significantly. A typical oak barrel sells for approximately $250 today.
In addition to shortages of barrels, a decline in the number of trees growing in American forests is another major issue. Increasing numbers of mature trees are causing a shortage of new white oaks. This reduces the supply of barrels for future batches of bourbon. To ensure a steady supply, American distilleries should support the White Oak Initiative. The industry leaders, including Brown-Forman and Beam Suntory, have committed to sourcing 50% of their wood from sustainable forests by the end of the decade.
Luckily, a nationwide initiative called the White Oak Initiative has been aimed at addressing the issue. This initiative has a clear goal: to increase the supply of white oak in the United States. This initiative includes several state forestry departments and businesses that rely on white oak for barrels. Although it may not be a cure-all, it will at least help ensure that barrels are available for distilleries in the future.
Distilleries are holding back spirit due to limited amounts
The global shortage of spirits has slowed down the growth of bourbon and other spirit-based drinks. The problem is caused by the shortage of glass bottles for packaging spirits. The shortage affects not only distilleries but also SMEs. Smaller companies lack the capital needed to compete with larger corporations. However, the new free-trade agreement with Australia will help boost exports.
This has had a devastating effect on the craft whiskey industry. According to the American Craft Spirits Association, a recent survey found that nearly two-thirds of distilleries will close within three months. Many have already closed their tasting rooms and axed staff. While most are still running their stills, they're only doing so to keep their operations going and avoid the problems caused by limited supplies of hand sanitizer.
The problem is larger than lack of demand. The growth of whiskey sales is pushing some distilleries to their breaking point. While demand for super-premium whiskey is at an all-time high, distilleries are finding it difficult to keep up. The production process is long, with whiskey barrels being made over several years. That means that a whiskey produced now might have been conceived when demand was much lower.
While craft distilleries are booming, the larger NAW market is dominated by large corporations. Companies such as Diageo own Crown Royal, Brown Furman, and Sazerac. In 1794, whiskey distilleries revolted against an excise tax that was implemented in the United States. Prohibition made it impossible for them to compete, forcing them to go underground.
Many investors are turning to whiskey as an investment. Rare whiskey has topped the Knight Frank luxury investment index. The value of whiskey climbed 564% over the past decade. With limited amounts, investors are buying individual whiskey casks, which is one way of boosting the stock price. IWSR, a global benchmark for wine and spirit data, estimates that investors are interested in purchasing individual casks.
New product launches increase revenue flow for distilleries
Distilleries often face unique challenges. Most of the products are flavored, so they need to develop new recipes and increase production to capture the market share of competitors. Distilleries should research their target market to learn more about what they want and what they are not willing to buy. It's also helpful to learn about the history and culture of the distillery's industry to determine what kind of customers it should target.
Before launching a new gin, distilleries should model the cost of a bottle and determine what price point will drive revenue. It's important to consider the various costs involved, including the cost of botanicals, neutral spirit, time, wear and tear, and wastage, as well as overheads, services, bottle, closure, labels, and alcohol duty (ex VAT).
One solution for tackling this problem is to create an online retail platform. This can help distilleries test the waters of the market before they seek distributors. But online retail platforms require a lot more than licensing. Consider order tracking, customer service, and marketing. Also, ensure that your offering doesn't undermine the market share of other retailers. Rather, it should add value to the consumer. You can do this by selling direct to consumers.
As the number of distilleries has grown over the past two decades, competition amongst them has increased. The three-tier system was created for a small number of distilleries that sold a limited number of products. As distilleries became more competitive, the pressure to get their products through the three-tier system increased. The three-tier system was designed to promote a select number of products.
Another method for increasing revenue is through crowdfunding. This option is a great option for small distilleries, as it allows distilleries to increase their fan base without committing equity. The downside to this approach, however, is that many distilleries have failed to launch, and most of the successful ones were actually expanding rather than opening a new distillery. In short, crowdfunding allows distilleries to expand and build a loyal customer base.
Competition in the whiskey supply industry
With increasing consumer demand and a diverse portfolio, competition in the whiskey supply industry is fierce. Companies are investing in online distribution channels, marketing and branding, and expanding geographical reach and customer base. One of the largest players in the whiskey supply industry, Pernod Ricard SA, recently launched a new brand called Chuan Whiskey. The company says that whiskey is deeply embedded in Chinese culture and philosophy. Therefore, they are targeting consumers in the region with a new line of products.
The study also covers the major players in the industry. The report features detailed company profiles, financial information, and a SWOT analysis. The analysis also details regional and global market trends, as well as key company strategies. The report provides comprehensive analysis of the Scotch Whisky industry and the key factors that influence its growth. The report covers key players by region, including their revenue and capacity. Detailed company profiles highlight their products and services.
The global whiskey supply industry is highly competitive. Companies are competing to attract consumers and maximize profit. However, competition can also result in lower prices and fewer choices, as companies are more likely to purchase rivals if their prices are lower. In this environment, price transparency is critical. Further, the whiskey supply industry should be able to offer competitive pricing without compromising quality. The industry is growing rapidly as consumers increase their awareness of its benefits.
The international whiskey market emerged from a multi-decade depression around 15 years ago, and leading distilling nations like the United States and Scotland are investing heavily in infrastructure and marketing. These upgrades have coincided with an increase in popular culinary tourism. With a growing demand for Scotch whiskey globally, the industry is also expanding its tourism offering. As a result, the number of visitors to Scotland's distilleries continues to grow.
There are also new distilleries opening up in the world. These new producers will not affect the overall quality of the whiskey category. However, they will create new markets for collectors and drinkers looking for new styles. The demand for whiskey will increase, especially if the whiskey is of good quality and is made in limited quantities. A limited supply will drive up prices and make whiskey more collectable. And, the whiskey industry will continue to grow as long as it remains focused on its quality.
