As craft spirits continue their growth, the question of how to define and assess craft spirits becomes increasingly important. Theo Ligthart, Founder & CEO of Freimeisterkollektiv, revealed how his team grades craft spirits by considering the distillers, the ingredients, and the terroir. Ligthart also discusses the proliferation of gin brands in Europe and how the evolution of laws in Germany has opened up opportunities for craft producers.
Craft spirits have increased their share of the total spirits market in the U.S. over the last decade. In this presentation from Bar Convent Berlin, Jeff Cioletti, Editor in Chief of Craft Spirits Magazine, breaks down the top categories driving craft spirits growth across the country. Cioletti also discusses how ACSA defines craft spirits and touches on the growing amount of active craft distilleries.
Active craft distilleries in the United Kingdom grew by 15% in 2021, representing a four-fold increase from 2015. Ronan Gillespie, Business Development Consultant and Executive Coach at Next Step International, spoke to the crowd at Bar Convent Berlin about the progress of craft spirits in the United Kingdom. Gillespie reveals how craft spirits growth in the UK is driven by new gin brands and breaks down the price tier for craft brands.
Three Key Aspects of Craft Spirits
Theo Ligthart (00:11)
Thank you for inviting me to talk about craft spirits here in Berlin. Based here in Germany, I will provide a broad overview of the European craft spirits market, focusing specifically on the German market landscape. Across Germany, Austria, and Switzerland, there are currently around 1,000 active gin brands. This is a remarkably recent phenomenon—a decade ago, there were fewer than 10 gin brands in the region. Although gin’s overall spirit market share in Germany remains modest at 4.1% (up from 1% a decade ago), gin served as a primary catalyst for the German craft distilling movement.
Theo Ligthart (01:52)
Gin’s rapid emergence in Germany is rooted in historical liquor taxation and distillation laws. Germany has a long-standing legal framework called Abfindungsbrennerei—a compensatory tax framework for small-scale agricultural distillers. Historically concentrated in southern Germany, these small producers were primarily fruit eau-de-vie (Obstler) distillers permitted to produce a maximum of 300 liters of pure alcohol per year (roughly 1,500 500 mL bottles at 40% ABV) using small pot stills limited to 150 liters of mash capacity. When the global gin trend took off a decade ago, these small eau-de-vie producers recognized a major legal opportunity: purchased neutral grain spirit (Neutralalkohol) used to rectify gin did not count against their strict 300-liter annual Abfindungsbrennerei production cap. Consequently, thousands of small fruit distillers launched their own gin brands. Today, Germany maintains roughly 18,000 small active distillers—a micro-distillery density unique in Europe.
Theo Ligthart (04:06)
Historically, European and American regulations restricted small farmers from distilling grain. For context, the US had roughly 70 total distilleries 30 years ago and 24 craft distilleries in the year 2000, compared to Germany’s thousands of licensed micro-distillers who qualified for distilling rights by owning small fruit orchards. When German distillation laws were updated to permit small Abfindungsbrennerei producers to distill starches (Stärke) and grain, many began distilling German grain spirits and whiskey. Today, Germany boasts more individual whiskey producers than Scotland—though the total volume produced by all German whiskey distillers combined roughly equals the output of a single large Scottish malt distillery. Having worked for years with traditional northern German Kornbrand grain spirits, I co-founded Craft Spirits Berlin (Europe’s largest craft spirits festival) a decade ago, followed by the Freimeister Kollektiv in 2016—a collaborative network that partners with independent distillers to craft, bottle, market, and distribute unique craft spirits.
Theo Ligthart (07:02)
Establishing clear criteria for craft spirits competitions and trade fairs is challenging. Rather than defining “craft” purely by production volume, we evaluate raw ingredients and corporate independence—whether a distillery is an independent family-owned operation or owned by a multinational corporation whose financial controllers prioritize profit optimization over liquid craftsmanship. Furthermore, groups like the European Natural Spirits Manifesto advocate for stricter craft standards, rejecting spirits crafted from industrial Neutral Grain Spirit (NGS). Because most craft gins and vodkas utilize industrially produced NGS as a base canvas, this debate remains central to defining authentic craft distilling. Influenced by the natural wine movement, these producers advocate for raw agricultural transparency across spirits categories.
Theo Ligthart (10:06)
While lifestyle marketing, premiumization, and celebrity-backed brands continue dominating mainstream spirits exhibitions, independent craft producers draw inspiration from adjacent agricultural movements:
- Natural Wine: Prioritizing minimal intervention, spontaneous fermentation, and additive-free liquid.
- Craft Beer: Embracing small-batch “David vs. Goliath” independent narratives.
- Bean-to-Bar Chocolate & Specialty Coffee: Emphasizing single-origin micro-lots, radical supply chain traceability, and terroir.
At Freimeister Kollektiv, we evaluate craft spirits through a three-part framework:
- Author (Distiller): The individual artisan, their personal style, and distillation philosophy.
- Ingredients: Raw agricultural substrates, heritage grains, or specific botanical varieties.
- Terroir: The microclimate, soil, and regional environment shaping the raw agricultural materials.
Theo Ligthart (13:31)
Innovations in radical supply chain transparency demonstrate how terroir storytelling can elevate spirits. For example, Grenada’s Renegade Rum assigns a unique “Cane Code” to every bottle; consumers input the code online to access the exact farm origin, harvest date, sugar cane strain, and detailed soil composition data for that batch. Similarly, when formulating Freimeister Kollektiv releases—such as a specialized Oaxaca mezcal—we explicitly detail the exact agave varieties and percentage mash bills on the label. Highlighting the author, raw ingredients, and regional origin creates true category differentiation. On our collaborative releases, we credit every contributor directly on the label—such as featuring the winemaker, distiller, and bartender who developed the recipe together. Thank you!
The Top Categories Driving Craft Spirits Growth
Jeff Cioletti (00:15)
According to the Craft Spirits Data Project—a joint collaboration between Park Street and the American Craft Spirits Association (ACSA)—as of August 2021, there were nearly 2,300 active craft distilleries operating in the United States. Today, that number is likely closer to 2,500 distilleries based on conservative estimates.To define “craft,” ACSA establishes specific criteria:
- Production Size: Producers removing no more than 750,000 proof gallons from bond annually.
- Independence: U.S. producers that are not majority-controlled by a larger beverage conglomerate (though minority investments from major corporations are permitted).
- Governance: Adherence to ACSA’s code of ethics regarding transparency.
In the last fully measured year, U.S. craft spirits volume grew over 7%, while revenue grew nearly 10%. This slight deceleration from prior double-digit growth rates was primarily driven by COVID-19 pandemic impacts, as bar closures and distillery tasting room shutdowns temporarily depressed key craft sales channels.
Jeff Cioletti (02:30)
Whiskey remains the most popular craft category. While Kentucky produces the vast majority of domestic volume, craft distillers have successfully proven that high-quality bourbon can be produced anywhere in the United States. Concurrently, American Rye volume continues steady double-digit annual growth—expanding over 15-fold since 2010—though its overall market volume remains a small fraction of bourbon.To differentiate in an increasingly crowded market, craft whiskey producers are innovating within traditional category bounds:
- Alternative Cask Finishing: Finishing aged bourbons in previously used Sherry casks.
- Heirloom Corn Varieties: Replacing commodity feed corn with flavorful heirloom grains like Bloody Butcher, Boone County White, Missouri Shoepeg, and Hopi Blue.
- Heritage Rye Grains: Reviving historical regional grains like Pennsylvania Rosen rye, Indiana Balboa rye, and Upstate New York Horton rye.
- State Regional Standards: Establishing geographic designations like “Empire Rye” in New York, which requires a minimum 75% state-grown rye mash bill alongside 100% in-state mashing, fermentation, distillation, and aging.
Jeff Cioletti (07:35)
American Single Malt whiskey is currently the fastest-growing segment within U.S. whiskey. Six years ago, distillers formed the American Single Malt Whiskey Commission—which now boasts over 100 member distilleries—to establish unified category standards.The U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) published a notice of proposed rulemaking to formalize “American Single Malt” within the federal Standards of Identity. The proposed TTB standard mandates that the whiskey must be:
- Distilled entirely at a single U.S. distillery.
- Mashed, distilled, and aged within the United States.
- Produced from a 100% malted barley mash bill.
- Distilled to a maximum of 160 proof (80% ABV) and aged in oak barrels no larger than 700 liters.
The TTB is currently reviewing public and industry feedback before issuing a final execution timeline.
Jeff Cioletti (09:55)
While the overall U.S. gin category trends flat to slightly down year-over-year, premium-and-above segments are expanding by double digits, with super-premium craft gins growing by triple digits. American craft distillers are innovating with non-traditional regional botanicals—such as specialty tea leaves, local honey, ocean kelp, basil, and natural color-changing botanicals like butterfly pea flowers. Barrel-aged gins are also gaining traction, with resting times extending beyond 2 to 3 months to upwards of 6 months or even 1 to 2 years. While craft cocktail bartenders embrace gin’s regional terroir, off-premise growth faces headwinds: retail shelf space often favors tequila and agave spirits, while consumer education is still needed to overcome historical misconceptions regarding piney “gin-sickness” flavor profiles.
Jeff Cioletti (14:50)
Vodka remains the largest U.S. spirits category by overall volume, while whiskey leads by revenue value. Historically defined by the TTB as a neutral spirit distilled to be “without distinctive character, aroma, taste, or color,” the TTB updated its regulations to eliminate the strict “without character” clause. As long as vodka comes off the still at 190 proof (95% ABV), the remaining 5% volume can retain the subtle character of its base substrate. U.S. craft producers are crafting distinct, substrate-driven vodkas utilizing raw materials like upcycled wine grapes, rye, wheat, or honey. Rather than distilling 10 to 20 times for absolute purity, many craft distillers distill their vodka only twice to intentionally preserve the natural character of the base agricultural ingredient.
Jeff Cioletti (17:00)
Ready-To-Drink (RTD) cocktails represent the fastest-growing segment in the spirits landscape. According to the IWSR, spirit-based RTDs grew 53% in volume last year, expanding from simple vodka-sodas into complex craft cocktails like canned Old Fashioneds, Gin Basil Slashes, and Tiki drinks.However, spirit-based RTDs face distinct commercial barriers:
- Tax Parity: Most U.S. states tax spirit-based RTDs at significantly higher excise rates than malt-based RTDs or hard seltzers, even when both products contain identical ABV levels.
- Retail Access: In many states, spirit-based RTDs are legally restricted from beer and wine retail channels, limiting grocery and convenience store placement.
- Shelf Stability: Formulating real-spirit cocktails with fresh juices requires ongoing shelf-stabilization engineering.
Legislatively, progress is occurring: states like Michigan and Nebraska recently lowered excise taxes on low-ABV spirit-based RTDs, while control states like Idaho, Mississippi, and Virginia now permit low-ABV spirit RTDs to be sold in grocery stores.Thank you very much! Feel free to reach out if you have any questions.
The Progress of Craft Spirits in the UK
Ronan Gillespie (00:10)
I’m an independent business development consultant in the spirits sector. Extending our conversation beyond Germany and the US, let’s examine craft spirits trends in the United Kingdom. Spirits in the UK is a vibrant category worth approximately £5 billion Sterling (just under €6 billion). Although it took a dip in 2020 due to COVID-related on-trade closures, it bounced back strongly in 2021 as consumers adapted to purchasing online, via grocery stores, and through off-licenses. The UK spirits market is broadly dominated by three core categories: vodka, gin, and whiskey. Across the total alcohol category (beer, wine, and spirits), value sales split roughly 55% off-trade to 45% on-trade. However, looking strictly at spirits volume, the off-trade accounts for approximately 80% of consumption versus 20% in the on-trade.
Ronan Gillespie (01:24)
The UK craft movement has seen a massive surge in the total number of operating distilleries. According to the British Office for National Statistics (as reported by The Independent), there are now 820 active distilleries in the United Kingdom. That represents a 15% increase year-over-year despite the pandemic, and a four-fold increase since 2015. Remarkably, 9 out of 10 of these UK distilleries employ fewer than 10 people, operating as true micro-enterprises.
Ronan Gillespie (02:17)
Regarding production, the global “Gin-aissance” largely traces its roots to Britain. About a decade ago, brands like Hendrick’s and Sipsmith transformed consumer habits by serving gin in large balloon glasses rather than traditional highballs. Data from William Grant & Sons shows that over 530 new gin brands have launched in recent years. Flavored gin has emerged as a massive subcategory in its own right; combined with unflavored gin, total gin sales now rival or equal the size of the UK vodka market.
Ronan Gillespie (03:13)
While Scotland is the historic home of Scotch whisky, a fascinating development in British craft spirits is the rapid emergence of English whisky. The English Whisky Guild reports approximately 40 active whisky distillers across England. According to the Guild, English whisky is experiencing unprecedented global growth, with drinkers discovering spirits produced to the highest standards with diverse flavor profiles. English whisky producers are projected to sell roughly 500,000 bottles (approximately 40,000 nine-liter cases) this year alone while securing international critical acclaim.
Ronan Gillespie (04:15)
Two notable English distilleries illustrate this regional innovation:
- Filey Bay (Spirit of Yorkshire Distillery): A true “field-to-bottle” farm distillery. The founders grow their own barley, originally founded a craft brewery, and subsequently distilled their grain mash into a line of award-winning single malt whiskies.
- The Oxford Artisan Distillery: Focused on sustainable farming while selecting rye as their principal grain. While British and Irish distillers historically rely on malted barley to drive flavor, Oxford’s focus on English-grown rye represents significant category innovation alongside their craft gin and vodka lines.
Ronan Gillespie (05:35)
In the British retail market, spirits priced above £23 Sterling (including excise duty and 20% VAT) are classified as premium. UK excise tax is among the highest in Europe at £8.05 per 700 mL bottle at 40% ABV (roughly €9 per bottle).Major craft categories average well above that premium threshold:
- Craft Vodka: £31 average price per bottle
- Craft Rum: £33 average price per bottle
- Craft Gin: £34 average price per bottle
- Craft Whisky: £56 average price per bottle
Industry analyst Tagore Ramoutar notes that craft producers will likely need to increase shelf prices further in the near future, as small-scale distilleries cannot absorb rising supply chain costs in the way multinational corporations can. While gin remains a dominant force, the rise of English whisky is a key trend to watch. Thank you very much!