Australian Gin is Kicking Off
There’s no denying it – the Australian Gin scene has up and come and brought with it dozens, if not hundreds, of excellent spirits. We’re delving into it with several pieces of insight, and right here we take a look at an overview of the market in 2018 and the broader state of gin in Australia.
We’d like to say that Gin is having a moment, but given that it’s been the talk of the globe for over five years, we’re going to need a bigger unit of measurement. Gin is having a decade, perhaps? It has positively exploded across the UK, Spain, South Africa and America, with a craft distillery seeming to pop up in every county and a Gin bar in every town. Gin is the most in its ever been, in fact, and – our tastebuds say thank you – is finally properly hitting its stride in the land down under.
There is no such thing as an overnight success, though, and while it may look to some as though the Australian Gin boom has just burst to life, it’s been a long time coming. For any market to suddenly emerge, there has to have been a catalyst, be it one singular messiah or a confluence of factors that even those who subscribe to the idea of freakonomics would struggle to explain…
Just a decade ago, there were only a handful of Gin distilleries in the country. By our count, Kangaroo Island Spirits was the first gin only distillery to kick open its doors back in 2006, with West Winds following in 2010 and Four Pillars in 2013. Hobbyists (of which there are many) aside, there are now a good 30 or so mainstream competitors, with their widely recognised brands keeping pace with these pioneers, holding their gins up as a benchmark and striving constantly to better the country’s offerings. There are dozens more in their infancy too and growing rapidly.
When you look at the Australian market by volume, however, the numbers are almost puny when compared to those being hit in the UK and the US. This is due, in part, to the fact that there are only 25 million people living on the spider-infested rock. We’ve got a 65 million strong populace here in the UK, 25 million of whom have answered yes to drinking spirits (according to a WSAT stat). That, when you think about it, is quite mad: Britain has as many booze drinkers who’ve responded to a survey as Australia does people.
And yet despite that, there are well over 50 distilleries making Gin across the country, and making a whole lot of noise as they do so. Gin is still one of the fastest growing spirits in the country too, increasing in value by 16.9% and volume by 13.5% in 2016/17 (according to IRI MarketEdge).
The question then, is how much is too much? With a lot of makers and a limited audience, is there a risk of an early overdose? Caroline Childerley, the British face behind Aussie blog The Gin Queen, doesn’t think we’re quite there yet. “Dan Murphy’s are still extending their range and opening up ‘Connections’ as a way of trialling newer artisanal products before committing shelf space,” she explains. “However, in both on and off trade, space is limited and it’s mostly a case of ‘one in, one out’ in terms of ranging”.
The one in one out policy should be of huge concern to makers; 14.5bn AUD was spent on booze in the off trade in 2016, a number that climbed even higher in 2017. An astonishing 72.3% of these sales took place in stores and supermarkets controlled by two powerful conglomerates: Woolworths and Coles Group.
Those really are numbers worth chewing over: almost three quarters of the booze Australian’s are able to buy off the rack, so to speak, is controlled by just two companies. While the one in/one out policy leaves little room for diversity, the limited distribution leaves little room for mistakes. What we’re saying to you Australian distillers is simple enough: there’s no room to make enemies.
As you’d expect, competition within the country doesn’t just come from local makers either. Global giants like Beefeater, Gordon’s and Hendrick’s are thriving in the country, and there are many, many small international brands looking at the Australian market as a huge area of opportunity. Few have cracked it yet, most probably because shipping and taxation tends to push the price point way up past $100, which puts them at around $30 higher than the local equivalent and almost $50 past the general sweet spot for most consumers.
Childerley echoes this, somewhat, when she discusses the thirst going on within the Aussie scene. “I think there’s a misconception that we are a big market,” she said. “And while Gin consumption is on the rise, Whisky, Rum and Vodka still dominate. Outside the major cities, it’s Bundy and coke! $100 is the top end, and that’s only really for over proof offerings.” That makes Australian gin a small player in a small market, and international craft gin being served… well, there’s an uphill struggle ahead unless there’s some savvy economics, that’s for sure.
Where did it all begin?
Concerns out of the way, it’s time to explore what triggered the boom in the first place. How did the Gin thing begin? Inoka Ho, founder of Sydney Cocktail Club, says it’s impossible to point to any one thing: “I don’t think there was any one particular catalyst, but a perfect storm of factors. Our catching up with the Gin resurgence in the UK, combined with Australian distillers such as Four Pillars and West Winds Gin starting to win international awards started to make Gin newsworthy in our mainstream media, which in turn fuelled public interest in the category.”
The early craft brands certainly set off the first domino, and as with all other industries in all other markets, the growth of Gin has been down to one company building on the success of another. In this respect, Childerley can’t help but place Four Pillars on a pedestal. “The success of Four Pillars, without a doubt, was a key instigator [in the craft gin explosion], although many would say that without West Winds, FP wouldn’t exist. However, the Pillars team set out their intentions from the beginning; their PR and marketing expertise highlighted their ambitions and they are now in 15 markets globally.”
One of the reasons Australia has lagged so far behind other countries in the Gin stakes is that it has been shackled by steep taxes and interventionist regulations. Distilleries are places that work with great heat and explosive materials; to build one, one needs to consider fire, explosion proofing, water, access and environmental standards, which add time and costs onto construction. This is the same the world over, of course, but it’s the various councils across the country that add complications. The rules are tough, but they’re open to interpretation. Tasmania seems more structured (most likely due to its Whisky history), whereas some places in Queensland can, at times, feel like the Wild West.
And then onto that most unavoidable of fates: tax. It’s a huge talking point for Australian distilleries, with large duty margins to be met by both distillers and drinkers alike. You know how in England we discuss the weather non stop? Over there its tax. We’ve covered this in more detail HERE, but the basic point is that costs need to become fairer and less punitive within the distilling industry, but – somewhat unfortunately – there seems to be little governmental interest to act as a patron to the industry. In fact, as Childerley informs us, only one state (South Australia) is giving grants and business support to distillers, having awarded 900k AUD to Adelaide Hills and 400k to Never Never.
While the lack of government interest may seem like a small issue (after all, it is almost always spirit companies rather than state that fund the investment for a new distillery), having no support on one side calls for a break on the other.
It was deregulation and favourable economics that sparked the UK gin boom, turning it into a £1.5bn domestic industry. This showed how far a small chance can go, and how many opportunities can be created with a little government flexibility. Making some changes will allow cash within these burgeoning distilleries to be spent on growth and education, rather than mere survival.
Cameron MacKenzie, Master Distiller of Four Pillars, can’t help but circle back to it when he discusses the plight of the Australian distiller. “We don’t have a global reputation for spirits… yet. Despite having award winning gins, rums, whiskys etc, Australia is still not known for its spirits. Even within the domestic market we have a great deal of work to do. That takes time and investment, which is where the tax is killing us.”
Still, MacKenzie is optimistic (and keen to get stuck in). “I think (hope) it will continue to grow at the premium end. Gin didn’t really innovate for so many years that the door has been left open for some very interesting projects. The cocktail scene is also growing and we are seeing amazing creativity in small bars. This all helps with the momentum of the industry.”
One such brand growing rapidly and making huge waves in the industry is Never Never Spirits. They’re certainly on our ones to watch list, and whilst co-founder George Georgiadis shares some of MacKenzie’s positivity, he’s all too aware of the journey ahead. “The category will continue to grow as will the number of producers. In the next 18 months new producers may mainly focus on small, locally focused businesses in the gin space, but some substantial new whisky businesses are currently being developed. Consumer education and interest continues to grow and may have a way to run yet.”
Inoka Ho has been looking into a similar crystal ball. “The number of gin producers entering the market shows no signs of slowing down,” she says. “Expect more gin brands to enter the market, especially due to the rise in contract distilling.”
A taste of Australia? Where to next…
The main factor that will help Australian gin grow (internationally, anyway) is its sense of identity. There’s no denying that is already has character in spades (take a look at our botanical article HERE to see just how strange things can get down under), but it’s also very important that it doesn’t venture into folly. Every country marches to the beat of its own drum, and the trends that begin as tiny ripples in one corner become huge rumbles in others. They evolve, they distort, they become better or worse or something completely different, but they’re always a twist on a theme. Take fruit gin for example; the Spanish have embraced strawberries, the Brits rhubarbs and the Australians shiraz grapes.
Working with local ingredients is a huge USP in itself, but its important not to get carried away as subtlety is often lost when booze is involved. Think Boris Johnson zip-lining during the London Olympics level of caricature (or generally just being himself on a day to day basis) and you’re half way to seeing how silly a pure lemon myrtle gin would be.
Creativity is important, though, and the Aussies are particularly good at courting media attention with their, er, inventive natures. There’s the more ‘normal’ side of strange – novel distillation techniques, collaboration between bars and distillers, etc, and then there’s infusing animals and squid ink into your gin…
Outlandish, frivolous, shimmering gins almost seem inevitable for them when you look at the UK market and wonder if any of the trends will be reflected over there, though, perhaps we’re just old misers in this respect. Still, there’s one thing in Australia’s arsenal, at least when it comes to glitter-ridden gin: strict biodiversity laws. Perhaps, after all this time, Australia will be the saviour of the spirit’s sanity!
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