Bouldin Creek Distillery
Bouldin Creek Distillery is raising capital to open Austin’s first craft bourbon distillery.
The distilled spirits industry is a $22 billion market that is projected to grow by 27% over the next five years. The bourbon and whiskey markets represent about a third of the overall spirits market, and are leading the market growth, outpacing growth of vodka, gin, liqueurs, and most other spirits categories. The craft segment of the market, which includes distillers who produce 40,000 cases or less, represents less than 1% of the market today but is doubling in size every 3 years, following the same growth trend that began 20 years ago in the craft beer industry.
Recent changes in Texas law have created a tremendous new market opportunity. Starting in 2014, distillers are allowed to sell alcohol products directly to consumers: up to 3,500 gallons of packaged products and 3,000 gallons of samples per year. This regulatory change will provide start-up distilleries a new opportunity to quickly become profitable by selling products directly to consumers at higher margins than could historically be achieved in the long-established 3-tier alcohol sales system. The timing of this new law coincides perfectly with the opportunity to capture increased sales in the rapidly expanding craft distilled spirits industry.
One of the major drivers of growth of the craft spirits industry is the Millennial generation. Millennials have taken to spirits much in the same way that Baby Boomers took to wine 30 years ago. They are looking for is a unique product, with a local connection, that they enjoy sharing with their friends. Millennials have developed a love for whiskey and bourbon but some of the key values of Millennials, such as locally made products appealing to an younger drinkers in an urban lifestyle, are not being embraced by the main bourbon producers and marketers.
The rapid growth in demand for spirits has resulted in a global whiskey shortage as distillers struggle to keep up with growing demand. It is difficult for distilleries to add production capacity due to long equipment order lead times of a year or more, as well as high capital costs. This has forced some distilleries to augment their production by sub-contracting production to other distilleries with excess capacity. There is an opportunity for any distillery with excess production capacity to produce product under contract for other distillers.