Reinventing 'mother's ruin': As big players get in on the act, what does the future hold for craft gin?

The ‘gin craze’ of the 1700s was marked by widespread drunkenness and moral panic as cheap, low-grade spirits flooded the streets of London. The latest lust for the liquor has been a more measured affair, with micro-distilleries and their artisanal produce leading the way. But as big name drinks brands look to get in on the act – highlighted by Pernod Ricard's acquisition of Monkey 47 – what does the future hold for gin?

As independent distilleries continue to pop up across the country, the gin market now contributes £1.76bn to the UK economy. To give a sense of the category’s growth, there were 65 distillery license applications in the UK between 2014 and 2015. In 2010 there were just five.

It makes sense then that drink conglomerates such as Pernod Ricard and Diageo are taking notice, particularly as mainstream gin brands aren’t seeing the same growth (Diageo’s Tanqueray grew just one per cent in the US in 2015). In January Pernod Ricard acquired a majority stake in Monkey 47, a premium priced artisanal gin produced in Germany’s Black Forest, as it looks to gain a foothold in this exciting market.

“The trend started several years ago and an end is hardly in sight, especially as it still remains a small percentage of the spirits market,” says David Howarth, managing director of Pernod Ricard Deutschland, who attributes the growth to gin´s taste profile and diverse range of combinations. “What attracted us is not just the category, but the brand – Monkey 47 is unique in many ways and has authentic craft credentials. It’s a perfect example of a brand with an authentic story and local roots.”

Given the small scale production capabilities of local distilleries, provenance and authenticity are at the heart of craft brands such as Butler’s, Sipsmith and Tarquin’s, proving an attractive quality for gin drinkers willing to pay the higher price these brands operate at.

Cornwall’s Southwestern Distillery, which produces Tarquin’s Gin, opened its doors just three years ago to produce gin using traditional techniques and old-fashioned equipment such as copper pots. In its first year sales increased 100 per cent, rising 60 per cent year-on-year since.

“Three or four companies controlled around 90 per cent of the market, but what’s happening now is that lots of small regional players are starting up as well,” says founder and head distiller Tarquin Leadbetter. “We’re very much smaller, expensive, premium brands, but people who are buying local products are more interested in the provenance of the brand, so it’s growing.”

Lack of definition around the term ‘craft’ has prompted much discussion on where such a label is appropriate. Is it about size, production, marketing or history? It’s an argument currently raging in the beer sector, where Scottish brewer Brewdog advocates the term ‘independent’ instead in the wake of conglomerate takeovers.

However, Charlie Downing, Diageo’s global marketing manager for gin, disagrees. “I reject the notion that craft needs to be small, because every single batch produced by our brands is what I would consider crafted. To me, craft equals care; care in distillation, botanical selection, all areas of production and packaging, and in where and how your brand is executed.”

Takeovers in the burgeoning craft beer industry may have divided brewers, but their counterparts in gin seem less critical of large conglomerates snapping up individual distilleries.

“Personally, as an owner of a small brand, if I’m in a bar or a shop I buy a local brand, not a multinational owned brand or a contract brand,” says Leadbetter. “I think some consumers will buy the same way as me, but the vast majority wouldn’t even know they were owned by those companies. They can definitely get away with it and I’m sure Monkey 47 will be massive in the next few years.”

Ross Wiliam Butler, founder of artisanal Hackney Wick-based gin Butler’s, agrees, adding that, given the level of popularity Monkey 47 has already achieved, it would be difficult for the brand to capacitate this before introducing investors. “At the end of the day Monkey 47 was someone’s baby that has now grown legs and gone off on its own way.”

That doesn’t mean the thought of bringing in the “big guns” for Butler’s doesn’t fill him with dread. “I have been involved with offers from Diageo in the past; it makes my legs weak at the thought”.

While difficult to make a comparison between gin and craft beer as the spirit is only at the beginning of its new journey, it’s quite possible the industry will see a similar ripple of takeovers, says Mintel’s senior drinks analyst Chris Wisson.

“I wouldn't expect to see a craft spirit takeover until the market has developed a bit more, but never say never. The big players will certainly have an eye on this trend and may have already tested the waters to see whether a distiller could be tempted in the near future.”

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