Business development · 26 September 2017

Gin distillery numbers leap 19 per cent in one year

Brewers have taken advantage of the fast production times of gin in comparison to the maturing process of whisky

The number of gin distillery sites in Britain has increased by almost a fifth in the last 12 months, according to new research that suggests entrepreneurs are capitalising on the growing demand for artisan gin.

Data from UHY Hacker Young put the total number of gin distilleries in the UK at 131, up from 110 in 2015. In contrast, just five gin distillery sites existed in Britain in 2009.

The accountancy firm claimed 53 new distilleries were founded in 2016, while over the last five years an increase of 107 per cent has been registered.

Escalating public demand for artisan gin offers an explanation. In 2016, the value of gin sales hit £1.07bn, and market analyst firm Euromonitor predicts this figure will reach £1.37bn by 2020.

Alongside a stronger taste for artisan products among the British public, a landmark legal case in 2009 also sparked the rapid rise in small-scale gin distilleries, when a court ruled that micro brewers could produce their own gin in smaller batches.

Curiously, the popularity of gin has arrived amidst falling interest in Scotch whisky, traditionally the UK’s most lucrative export. Hacker Young suggested whisky sales could drop to £1.17bn by 2020, down from £1.28bn in 2016.

Gin has a significantly faster production time to whisky, meaning distillers can produce limited edition lines more frequently and at higher margins.

Commenting on the burgeoning sector’s rise, James Simmonds, head of Hacker Young’s drinks industry group, said thegin-naissance shows no signs of abating, with the industry going from strength to strength”.

“Premium gins often retail at around £30 a bottle making it a high margin industry,” Simmonds added.

Gin_distilleries

Although the sector has proved fruitful for micro brewers, bigger players such as Scottish craft beer firm Brewdog have begun releasing their own gins into supermarkets. However, Simmonds suggested the wide variety of artisan gin allowed room for entrepreneurs to get creative.

“Gin can be very versatile – with many companies adding new and unusual flavourings to their products. This means that new producers can differentiate themselves relatively easily in comparison to other spirit producers such as whisky,” he added.

“However, not all gin distillers that start up will have the same success. They need to ensure they have tight business plans, funding in place and they robustly test their assumptions in their marketing and sales strategy.

“Those looking to get into the market must be sure not to take for granted the popularity of the spirit and ensure they have tight business plans in place when starting out.”

Previous Google trends data had already inidicated that the sector had been spotted as a lucrative startup idea for entrepreneurs. Online searches for craft gin grew by 285 per cent in 2016 than the previous year – with 182,000 searches in October alone.

Meanwhile, over Christmas 2016 Marks & Spencer sold a quarter of a million bottles of locally-produced gin. Commenting on the strong sales, the store’s spirits buyer, Michael Wallis, said: “These are British gins with a sense of integrity, place and provenance – which is exactly what the newer generation of gin drinkers is looking for.”

Find out how SEVEN BRO7HERS brought the craft beer scene to Manchester

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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