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Demand for premium spirits helps industry

AAP logoAAP 16/08/2016 Megan Neil

Australia boasts a booming sector of small boutique distilleries producing their own spirits from start to finish.

The recent success of new Australian-made spirits is expected to prompt an increasing number of producers to start manufacturing dark and white spirits and liqueurs, according to industry analysts IBISWorld.

"We've seen whisky distilleries be a big thing over the past five years and now we're starting to move into and see quite a few white spirits producers including vodka and gin coming into the market," IBISWorld analyst Andrew Ledovskikh told AAP.

"There is potential for spirits to see the sort of opportunities that we've seen in beer manufacturing and with cider manufacturing, where there is this culture of unique products, crafted products, non-massed produced."

He said some of the most successful and increasingly popular boutique distilleries were basing themselves around whisky production in Tasmania, home to 11 of Australia's 29 whisky distilleries.

Sales of Tasmanian-produced whisky are forecast to grow strongly as the state's reputation as a producer of premium single malts strengthens, an IBISWorld report said.

More recently, it said, white spirits had begun to be manufactured in Australia with great success, such as West Winds Gin and 666 Vodka.

Australia is a significant net importer of spirits although exports, comprising mainly rum, have demonstrated strong growth and now account for 13.7 per cent of industry revenue, IBISWorld said.

Domestic spirit producers have attempted to grow by exporting within the Asia-Pacific region, as trade liberalisation opens up access.

Mr Ledovskikh said Vietnam had been a real success story.

"They've got booming demand in the food and beverage sector. We've seen that lead to increased exports to Vietnam over the past five years."

Increased health consciousness has led to Australians drinking less alcohol, although they are tending to drink higher quality, more expensive products.

"Premium bottled spirits aren't necessarily associated with binge drinking or problem drinking so much as really socialising and sophistication, so there are opportunities for sales of premium spirits," Mr Ledovskikh said.

The introduction of the alcopop tax in 2008 had reduced demand for ready-to-drink (RTD) beverages but, IBISWorld noted, producers were introducing new ranges of premium spirit brands that target more mature drinkers and investing in light-spirit RTDs.

IBISWorld said ready-to-serve pre-mixed cocktail products had been a silver lining for the Australian spirit manufacturing industry over the past five years and were likely to become increasingly popular amid a rising cocktail culture.

"Although it might not be always incredibly fancy, it still allows you to serve a Mojito when you're having a night with friends or dinner party with your friends," Mr Ledovskikh said.

AUSTRALIA'S SPIRIT MANUFACTURING INDUSTRY:

* Total revenue $1.8b

* 3.8 pct annual growth over five years through 2015/16

* 1.5 pct annual growth expected over next five years to $1.9b, amid growing competition from cider, beer and wine

* RTDs account for more than half of industry revenue

* Most spirits consumed in Australia are imported, from UK, US, France and Ireland.

Source: IBISWorld.

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