THE SENSISTIVE SUBJECT OF CRAFT SPIRITS AND CONTRACT DISTILLING

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The Spirits Business talks about a very sensitive subject, they are brave!!

Distilling under contract is a mysterious, but vital, part of the spirits industry. The Spirits Business lifts the lid on the operations and strategies of leading third-party producers, and explains why many so-called craft brands wouldn't be without them.

The production stories behind hundreds - perhaps thousands - of small, independent spirit brands are often left untold. As the craft renaissance grips the industry, romantic narratives of heritage and provenance are positioned front and centre on spirit labels, while the large-scale companies that actually distil or source the liquid in the bottle stay in the shadows.

Industry members and consumers are now becoming more aware of third-party producers, but their emergence into the public consciousness hasn't exactly been smooth. In recent years, some brands that use contract distillers have come under fire for what has been seen as a lack of transparency. The criticism has stretched from gin to American whiskey and beyond, but whiskey producers from the US have borne the brunt of the backlash.

Undoubtedly, third-party producers and suppliers enable fledgling spirits to hasten their launch date and dedicate valuable resources to their brand and market strategies. But it's not only 'craft' brands that benefit from the service; international drinks groups will often purchase sourced spirits to increase and accelerate their production.
Third-party production is even more pervasive when one considers that it also includes neutral grain spirit (NGS), which is used as the base for countless brand leaders in the white spirits world.

The Spirits Business offers 5 examples of bulk suppliers.

1) MGP Ingredients(USA)
One of the most prominent third -party spirits manufacturers in the world is MGP Ingredients. The company was formed in 1941 as an industrial distiller for the war effort, before moving into beverage alcohol some years later. It now owns two distilleries: one that creates vodka, gin and industrial alcohol, which is based in Atchison, Kansas; and another that distils whiskey, based in Lawrenceburg, Indiana.

2) Sasma (Netherlands)
Sasma is a supplier of base spirits and ready- to- bottle products such as Scotch, Bourbon, cachaça and Tequila for the beverage- alcohol industry. Representing a further aspect of third -party spirits, Sasma does not distil, but instead acts solely as a supplier, sourcing liquid from distilleries, traders and agents.

3) Thames Distillery(UK)
Thames Distillery was founded 21 years ago, it is one of the best-known third -party distillers in the UK, and predominantly produces gin and vodka.

4) Creamy Creation(Netherlands & USA)
Established in 1979, Creamy Creation is the market leader in emulsified beverages, supplying mixable and ready made dairy, soy and coconut -based beverages to the international drinks industry.

5) Alcohols Limited(UK)
Alcohols Limited is the owner of Langley Distillery, a prominent UK gin manufacturer that has more than 300 partners around the world. It produces about 70m bottles for the global gin market annually. The business was established in 1805, while the distillery itself dates back more than 200 years, and has been distilling gin since the early 1900s.

There is even trade shows for this industry. For instance, IBWSS gives supermarkets, retailers, restaurants, wineries, distilleries and other buyers a premier international platform to source bulk wine and spirits and meet private label suppliers. The theme of the 2018 IBWSS San Francisco conferenceis “Bulk up your bottom line”. This is your opportunity to learn all about how you can unlock new opportunities in private label, bulk and contract manufacturing.

Things get more complicated when the bulk suppliers start making their own brands too, as one may wonder about the conflict of interests and competiting against your customers.

Source: The Spirits Business

COGNAC BUSINESS IS FORECASTED TO GROW IN EASTERN EUROPE

Eastern Europe is becoming increasingly a growth heaven for spirit brands as the vodka markets are loosening up to make room for other spirits. A new generation of drinkers and bartenders is opening up to western spirits and in particular but not only to whiskies from Scotland and Ireland.

The cognac sales are keeping upward sales trends with estimated sales going up +24% in the next 5 years according to a recent report from Euromonitor, says The Spirits Business.

Courvoisier in particular is working on the eastern border in Russia and Ukraine where they expect the fastest growing demands as these markets are following Russia's middle class path for success. The Czech Republic is also developing fast growing demand with other new frontiers coming up such as Bulgaria where Diageo is making quick headway with Bushmills Irish whiskey and Johnnie Walker .

Once consumers start to gain economic success their import spirit tastings is growing.

With affluent markets growth in eastern Europe Russia is expected to grow +20% its cognac consumption by 2016, and Poland is said to be the next best hit with +17% growth expected for the cognac in the next 3 years.

Russian Dolls - Matryoshka - Babushka

Source: The Spirits Business

How Is Cognac Camus Keeping a Steady Growing Family Business Since 1863?

Cognac Camus

Cyril Camus, the CEO of Cognac Camus, has much merit in having been a visionary when he moved to China in 1994. Already at this time China was promising but this was the hey day of cognac launch in China. Although nowadays cognac sales are still growing at a fast pace in China, much of the market is dominated by Martell and Hennessy which control over 50% of the market share. Cyril Camus lives now in China with his family, because it is the company's biggest and fastest growing market for Camus. Camus is considered the 5 largest cognac company with about $80 million following Hennessy, Martell, Remy Martin, and Courvoisier with triple digits hundreds of millions and more.

Camus seems to have made a number of critical business decisions for the past 100 years which have ensured it would continue to strive.

1)   Only 1 family ownership of shares. Father to son, not always the oldest son, just the most competent and motivated. Although cognac is glamourous it is not always very appealing to high-yeald investors because of  the inherent limitations for growth due to the time necessary to grow the business and the overload of regulations coming with making cognac. A great deal of successful cognac family businesses have over extended the sharing of management. It is kind of like the European Union syndrome: 2 countries are OK, 10 countries is possible, 14 is max, 28 it is twice too much!

2)  Focus only on super premium cognac. No mass marketing of Camus Cognac. Cognac is and should only be super premium. Cheap cognac does not make sense.

3)  Adapt, pioneer and differentiate: it takes risk taking and vision to make ends meet.

---> 1900s: supplier of the Tsar.

---> 1960s: Duty Free and travel shopping.

---> 2000s: China and consumerism.

4)  Be hands-on. Just do it attitude from the family's management. Too many families who have succeed to grow their cognac business have kept the 3rd generations away from the vineyards and distilleries. These people quickly forgot where they were from and the hard working labor of love to keep the good things coming.

Camus owns several other brands of cognac (such as Pionneau) and brandy (such as Ascot). I am particularly interested in the Camus XO "Ile-de-Re"  which is a very original product with unique terroir elements. I also like their "Maison Camus" concept started in 2010 in Beijing where they indulge their clients and members to taste the best liquors from France in a lounge club supported by Camus Cognac. Very Clever!

See: www.maisoncamus.cn