Sales of rye whiskey are soaring at a pace that far exceeds the growth of the broader spirits industry, as the revival of classic cocktails inspire a resurgence of the drink across U.S. bars.
Since 2009, Rye whiskey's volume has increased 536%, reaching over half a million cases in 2014, according to new data from the Distilled Spirits Council of the United States (Discus), an industry group. Annual retail sales total about $300 million.
"The growth of rye whiskey has been phenomenal, given that as late as 2000, rye volumes were virtually nonexistent with only a handful of brands in the U.S. market,"says David Ozgo, chief economist at Discus.
The whiskey market has been dominant in the U.S. for the past several years, with volume for the overall category jumping 7.3% in 2014. Sales of whiskey bested the performance of tequila, vodka, gin and all other key spirits categories. Revenue growth has been strong for both flavored and traditional products. But rye, a small subcategory, is wildly outpacing the industry's overall performance.
There are a lot of theories as to why rye fell out of favor, though ultimately it is linked to the end of Prohibition, when whiskeys from Ireland, Canada and Scotland came into the U.S. market. Those beverages are generally milder and softer than rye, so American palettes began to shift, says Chuck Cowdery, author of Bourbon, Strange: Surprising Stories of American Whiskey. Bourbon producers caught on and toned down their recipes to match the trend at the time, but rye – with its stronger bite and spice flavors – failed to respond as quickly and fell out of favor.
The bolder taste of rye is what is helping the drink become more popular today, especially at cocktail bars where bartenders experiment with more flavorful drinks.
Under U.S. laws and regulations, the beverage needs to be at least 51% rye to be called rye. To be called a "straight rye," the government requires certain labeling requirements, similar to restrictions placed on bourbon. Rye whiskey was the original grain in the East Coast, even manufactured by President George Washington at his Virginia estate.
The rising popularity of rye has caught the attention of major alcohol producers. Big brands like Jack Daniel's and Jim Beam have launched rye variations under those brand names, as have Diageo's Bulleit and Campari's Wild Turkey. Some of those brands have made rye since Prohibition, but they are more vocal about their rye variations today.
At times, demand has caught those producers off guard. Wild Turkey, for example, essentially ran out of one of its rye whiskey at one point because it didn't have enough stock on hand. Because whiskey takes time to age, it isn't always easy for producers to meet rising demand for a subcategory that wasn't popular until just a few years ago.