Business Model Analysis in the American Craft Distilling Industry

This research project examines the American Craft Distilling Industry. In particular, I provide an overview of the most important aspects of the product market and cost structure in the industry and an assessment of the viability of several modes of entry. Because the industry is relatively new, at least in its modern incarnation, industry knowledge is concentrated among a relatively small group of industry veterans. Thus, the majority of my research has been through interviews with industry experts and through my attendance of the American Distilling Institute (ADI) 2014 Conference in Seattle. My data and analysis indicate that the industry is promising and poised to grow, as demand for craft or differentiated spirits is strong. Nonetheless, significant risks include extensive regulatory hurdles that vary across jurisdictions and significant entrenched competitors. This paper will explore those constraints and business models that may be able to overcome (or profit because of) them. The business models analyzed focus on production, distribution, and retail of craft spirits operating in specific niches identified through the course of my research of the industry at large.