The U.S. alcohol market has been going through some major shifts, and one of the biggest shifts is the increase in demand for spirits, above beer and wines.
According to a 2024 article by CNBC, Spirit sales outpaced beer and wines for the past 2 consecutive years and maintained market share strength in 2023. Even though growth was slow in the alcohol market, spirits still outpaced beer and wine sales by 0.4% and 26.1% respectively. Whiskey took the lead in 2022 in terms of volume sales, but in 2023, the vodka market emerged as the top-selling spirit. According to Statista: “In 2023, vodka sales volume in the United States amounted to 74.9 million 9 liter cases. Vodka accounted for about a quarter of the entire spirits industry volume that year.”
So what could be driving this trend? In this article, we will take a look at the key drivers of this trend, as well as how spirits are beginning to outpace the beer and wine categories and reshape consumer dynamics.
The Decline of Wine & Beers
According to Statista, Spirit sales have now surpassed beers in the US as more Americans begin to shift their alcoholic preferences. This trend has been growing for decades but 2022 was the year in which beers were finally surpassed. The data shows that for the first time in the US, spirit sales have surpassed the demand for beer and this is one of the key trends in the alcohol market.
The wine category has been experiencing a decline in the US over the past few years. This decline can also be seen in France, Germany, and Italy. There was a boost in sales growth for premium US wineries during the pandemic but after 2021 it began to trend downwards again. In fact, 2023 marks the 3rd consecutive year of volume decline for wines as younger consumers emerge and shift towards alternative drinks and substances. One of the alternatives that are preferred by these younger consumers is spirits.
“As a signpost of shifting industry dynamics, 2023 will mark the first time in 45 years that the volume of spirits sold will surpass the volume of wine sold, according to Shanken News Daily.”
– R. Mcmillan, EVP & Founder, SVB Wine Division
What is Driving The Increase In Demand For Spirits?
1.) Premiumization
One key driver of this trend is premiumization as a growing number of consumers prefer higher quality and higher priced spirits. The more premium spirits saw the largest growth in terms of sales value in 2022, according to Statista. This data shows that quality over quantity has led to higher revenue growth and consumers are willing to pay more for high-quality, premium spirits. In response, brands are now exploring more upscale and creative solutions with sophisticated branding to enhance the perceived quality, both online and in retail.
2.) The Resurgence of Cocktail Culture
This can also be seen in the resurgence of cocktail culture as consumers seek more premium experiences rather than traditional bars. Craft cocktails have captured the imagination of today’s consumers. Cocktails have been emerging in sales volume since 2021, and the ready-to-drink segment is the fastest growing category. According to the Distilled Spirits Council of the United States, this category has grown by 26.8%, year over year. This emergence of ready to drink cocktails have attracted new entrants to the market. For example, even Coca Cola launched its own ready-to-drink cocktail in 2022 to capitalize off this trend.
3.) The Rise of Gen-Z
The younger generations tend to drink less overall. But Gen-Z consumers are transforming the alcohol market as they shift towards more premium and unique drinking experiences. Nearly one-third of Gen-Z does not drink, but the ones who do tend to opt for spirits over traditional beer and wine because of the diverse flavors and unique experiences that are associated with these drinks.
Final Thoughts
The dominance of spirits and decline of wine and beers in the alcohol market reflects a broader shift in consumer behavior and demographics. This transition is driven by a variety of factors, including the allure of premiumization, the resurgence of cocktail culture and the rise of younger consumers, especially gen z who are looking for alternative drinking experiences. This presents both challenges and opportunities for manufacturers and retailers in the alcohol industry who will need to explore new, alternative and innovative drinking experiences to appeal to these emerging demographics with premium branding and dynamic retail strategies. This leads to new pathways to growth, differentiation, and deeper customer connections in the evolving market.
We hope you found this article informative. Please don’t forget to share, or comment below and let us know your thoughts or questions.. At MJE Creative, we have decades worth of experience in helping beer, wine and spirit brands gain a stronger retail presence and we will be glad to offer you a free consultation. Feel free to click here to view some of our work.
SOURCES
www.nbc.com/2024/02/07/spirits-sales-top-beer-and-wine-in-2023.html
www.statista.com/statistics/233527/sales-volume-of-the-us-spirits-industry-by-category/
www.statista.com/topics/1550/spirits-market/#topicOverview
www.svb.com/trends-insights/reports/wine-report/
www.fooddrive.com/news/gen-z-alcohol-consumers-nonalcoholic-damp-drinking-less-mocktails-RTD-coors/696996/
www.cnbc.com/2023/06/16-liquor-industry-trends-as-spirits-take-market-share-from-beer.html#
www.yahoo.com/news/u-beer-sales-decline-2023-110400614.html#
