The U.S. spirits market is showing signs of a slowdown, after years of strong expansion.
According to NielsenIQ, the sector’s value fell by about 3% in August, a figure that aligns with data from the Distilled Spirits Council of the United States (DISCUS) for 2024, which reported -3.0% in volume and -2.6% in value (excluding ready-to-drink products and cocktails).
This shift marks a cooling in a market that had been steadily growing through premiumization, innovation, and rising per capita consumption. However, the fundamentals for long-term growth remain intact.
Changing Consumer Dynamics
Mark Brown, CEO of Sazerac, explained that the current weakness is shaped by two trends:
- Trade-down to lower-priced products, especially in vodka and rum.
- Shifts in consumption patterns, with younger consumers (particularly Generation Z) showing more moderate drinking habits.
At the same time, premiumization is alive and well in whiskey and gin, where consumers remain willing to pay more for higher-quality offerings. Brown stressed that while the market is under short-term pressure, small-format bottles and ready-to-drink products are attracting new drinkers, which could support premiumization in the longer term.
Category Performance
The August figures reflect mixed performances across key categories:
-
Tequila: -0.6%, slowing compared to July.
- Don Julio (+6.2% value, +8.2% volume) outperformed.
- Casamigos (-20%) and Altos (-11.7%) dragged the category.
- Gin: +1.6%, continuing its premium trajectory.
- Vodka: +0.5%, though heavily skewed toward lower-priced brands; SKYY and Absolut declined.
- Rum: -0.5%, pressured by consumer downtrading.
- American Whiskey: +1%, with Colonel Taylor leading premium demand, while Jack Daniel’s and Jim Beam declined.
- Canadian Whisky: +1.5%, showing recovery with Crown Royal (+0.8%), boosted by innovation such as Crown Royal Blackberry (+180.8%).
- Scotch Whisky: +0.6% overall, but total Scotch volume fell -6.4%. Premium labels like Johnnie Walker (+2.2%) and Chivas Regal (+0.9%) offset losses in mainstream brands.
- Cognac: -2.7%, pressured by weaker demand.
- Irish Whiskey: stable, with Jameson down only -1.1% over the past twelve weeks.
The RTD Surge
The most dynamic trend is the rise of ready-to-drink (RTD) products, which surged 26.7% in August, accelerating from 21.6% in July. Brands such as Surfside, Sun Cruiser, Buzzballz, Cutwater, and Nutrl drove this momentum.
RTDs are taking share from traditional spirits, but they are also serving as an entry point for younger consumers, reshaping drinking occasions and potentially expanding the base for spirits premiumization in the future.
Market Outlook
The U.S. remains the most critical market for global players:
- Diageo generates about 50% of its revenue there.
- Rémy Cointreau around 40%.
- Campari 25%.
- Pernod Ricard has meaningful exposure but on a smaller scale.
According to Brown, the current environment represents an adjustment phase rather than a structural decline. Inflation and soft consumer confidence are temporarily pressuring figures, but as price pressures ease and RTD demand stabilizes, the fundamentals of premiumization, innovation, and rising per capita spirits consumption should reassert themselves.
Source: Vinetur