Glasses Raised For Irish Gin Group

30 Aug 2017 | 04.14 pm

Glasses Raised For Irish Gin Group

Call for Irish Gin legal standard

30 Aug 2017 | 04.14 pm

The increasing popularity of gin, in its home-grown craft form, has led to the creation of a new group within the Irish Spirits Association to represent this growing sector. Recent figures suggest that gin sales have grown by a third year-on-year, with its on-trade value reaching €74m.

The group’s inaugural meeting elected Pat Rigney, managing director of The Shed Distillery, as chair and agreed that its number one priority was to support the creation of a legally-recognised standard for Irish gin.

ISA’s William Lavelle said: “Recent years have seen a resurgence in the market for gin as consumer seek to try out different brands. Consumers are looking at new combinations for which this age-old product can complement modern tastes. In Ireland, this resurgence in interest has been matched by an explosion in the number of Irish gin producers, with over 30 Irish brands now on the market.

“While the domestic market has been key for to this growth, competition and innovation in the sector is also leading to export growth opportunities. Many Irish gin producers are working with Bord Bia to enter new markets and increase their exports. The Irish Spirits Association is working to support the continued growth of Irish spirits exports in line with the FoodWise 2025 strategy.”

In terms of market surges, craft gin is the new craft beer. In the UK, tax revenues from spirits sales have overtaken those from beer. There are now more than 200 gin producers dotted across the UK, half of which only opened in the last couple of years. Ireland is also in on the gin shindig. Up to 2010, Irish craft gin distilleries were virtually non-existent and now there are more than 30. 

Fuelling the gin sector growth is an effervescent cocktail of consumer demand and entrepreneurial zeal. It also matters that barriers to entry are low. In fact, you can have your own branded gin on shelves a few days after starting the process. As long as what you produce is an alcoholic drink that tastes predominantly of juniper, you can market your blend as gin and off you go. 

How Gin Is Made

Gin production begins with a neutral grain alcohol that has no flavour (think vodka). Craft producers rarely distil their own alcohol and buy it in bulk from other distilleries. The better the source distillery, the stronger, purer and unflavoured is the initial alcohol. 

The gin producer then adds juniper flavouring from berries. Coriander seeds are often used for extra flavour and other commonly used flavours come from cucumber, citrus fruits and spices such as cardamom.

What sets the various gin blends apart from each other are the flavours added to the alcohol, infused by fruit, vegetables, herbs, spices and other natural sources, collectively termed botanicals. 

There are two main methods of infusing the raw alcohol gin with botanical flavours. The cheaper method is to add flavour extracts to the distilled base alcohol.  The more common method is to redistill the alcohol with the botanicals, adding the flavours through vapour infusion or by heating the alcohol in a container filled with the botanical ingredients. 

Once watered down to reduce the alcohol by volume content, what comes out at the end of the process is a gin that can make you retch or reach for more, depending on how successful your botanical tinkering has been. Therein lies the element of ‘craft’ in craft gin production, though much like the definition of gin itself, what constitutes a ‘craft’ gin producer is open to question.

Defining ‘Craft’ Gin

According to Peter Mulryan, co-founder of Blackwater Distillery in Waterford: “Apart from badly knitted tea-cosies, I have no idea what constitutes ‘craft’. Even putting the word in inverted commas doesn’t help.” Mulryan suggests that the only point in defining ‘craft’ would be if there was a tax break for gin producers, which has so far not been forthcoming.

Some entrepreneurs produce gin while waiting for their whiskies to mature, as a means of improving cashflow or establishing the brand. Among the whisky distilleries that have gone down this route are Glendalough, Blackwater and Dingle, though the gins crafted by these distilleries are far from stopgaps, and have been picking up awards worldwide. 

Dalcassian Wines & Spirits distributes scores of wine and spirit brands to restaurants, bars and the off-trade, and managing director John Dillon notes that premium gin was a clear winner last Christmas. He identifies the wave of high-end craft gins and the availability of premium international gin brands as key factors in the drink’s growing popularity. Although gin sales were still less than 25% of vodka sales in bars and restaurants in 2016, Dillon says the situation is rapidly changing, with some pubs now reporting gin equalling vodka sales. 

Father & Son Startup

One craft gin young gun is Gavin Clifford (26), who founded Bonac Spirits with his father Michael Clifford in 2015. With a degree in commerce, Clifford lived in the US for a couple of years after graduating, where he worked in bars and restaurants in the Hamptons. After returning home, Clifford worked with O’Briens off-licences and in his dad’s tax firm while his gin idea took root. “When I was in college, John Teeling came in and spoke to us about working in the whiskey industry. The seed was planted then,” says Clifford. 

His gin’s name, Bonac 24, reflects the local nickname for the Hamptons and the fact that it took Gavin 24 attempts to find the right botanical balance. Among the 12 ingredients used to flavour Bonac 24 are the unusual combination of cucumber, mint and pear. 

Clifford sources his grain-neutral alcohol from the Cognac region of France and estimated that the capex for Bonac Spirits was north of €300,000. The Wicklow-based distillery uses stills and other equipment manufactured in Ireland; it also has its own mini-bottling and labelling line in its Newtownmountkennedy distillery. 

Clifford has nationwide distribution for Bonac 24 through off-licen chain O’Briens. “Up to ten years ago, the demographic for gin was more than likely a woman over the age of 40,” Clifford explains. “Now the demographic is male or female between the ages of 24 and 35. 

“Hands-on marketing has been our most effective  approach,” he adds. “We do tastings as often as we can and during the summer the focus is on festivals. People respond when they talk to you and realise you’re the person making the product and selling it.” 

With the new slew of craft gins crowding the market, finding elbow room on shop shelves is tough. Craft producers can detail their gin’s flavour in the most florid of descriptions but it counts for nothing if the customer can’t find it. The newbies attempt to stand out form the crowd with product aesthetic, from the type of bottle to the label design. 

Pricing Strategies

Price point is a key battleground for craft gin producers. “Generally, your premium Irish gins are starting at around €45 for a 70cl bottle, working their way up to €50 or €55. That’s where you have to be,” says Clifford, whose gin retails for €47 in the Celtic Whiskey Shop on Dawson Street in Dublin. “The risk is that if you price too low you’re giving the impression that you can’t compete on taste with the premium product.” 

Ask a gin producer about pricing and it won’t take long before you’ll hear about excise duty. Thanks to departed finance minister Michael Noonan, Ireland has the second highest excise duty on beer, the highest wine excise, and the third highest spirits excise in the European Union. 

Gavin Clifford bemoans the tax burden, arguing that it feels like “salt in the wounds” when he considers the 50% excise duty rebate that benefits brewers of craft beer. “Cashflow is a huge challenge in this business because it is so capital intensive,” Clifford maintains. “You can buy Jameson Irish Whiskey in the US cheaper than you can buy it here, despite the fact that it’s made in Ireland. That situation is down to our VAT and excise duty system.” 

Investors have been warming to craft distillers. Last year The Shed Distillery in Drumshanbo, which makes Gunpowder Irish Gin, raised €250,000 in EIIS funding, following on from €275,000 Enterprise Ireland funding it received in 2014. Other craft gin producers who tapped investors last year include Blackwater Distillery (€160,000) and Glendalough Distillery (€3.5m). 

Leitrim’s very own Gunpowder Gin is a brand that has created more buzz than most of its Irish craft gin peers. That’s not surprising, given that founder Pat Rigney (56) is a seasoned drinks industry professional who helped develop Sheridan’s liqueur for Baileys and co-founded Boru Vodka. 

Rigney began distilling in Drumshanbo in 2014 and the enterprise now employs 14 people. Four stills operate in The Shed, three of which are used for whiskey and one — a medieval copper still — for gin production. Rigney says that he travelled the world to find the 12 botanicals for his gin, including Gunpowder tea from China, star anise and fresh citrus fruit. Gunpowder launched in May 2016 and was recently selected for the premium drinks collection aboard the MS Queen Victoria Cunard luxury liner. 

Rigney’s industry experience lends him a good vantage point from which to assess the craft gin craze. “Consumers are moving away from ‘main street’ drinks producers,” he observes. “They want brands that are more interesting and authentic, with a real story behind them. They’re questioning the big brands now on how they do things, asking questions of them and looking under the bonnet.” 

Funding Challenges

In Rigney’s view, many of the emerging craft gin producers will struggle to source outside investment: “Generally, investors like to see someone involved who has a track record in the drinks business. They also want to see a structured business plan and route to market. Without these, investing in craft gin producers might be exciting but it’s a risky investment.” 

Rigney suggests that the most important ingredient in a craft gin’s viability as a business is the export dimension. “You need to succeed in Ireland but it’s a small market. The international market is where you need to be. I predict that new entrants in the Irish gin market will keep coming but there will also be an inevitable shake-out at some point. 

“The profile of gin might be high in Ireland right now but the market is still relatively modest — you’re talking annual sales of around 180,000 cases. How many craft gin producers can that level of volume maintain? That is the key question.”

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