The Distilled Spirits Council of the United States (DISCUS) in its annual economic briefing on Tuesday warned that the declining U.S. spirits market will likely continue to face challenges for the foreseeable future.
The spirits sector held its slight share lead of total alcoholic beverage at 42.2%, but growth was flat compared to last year. Beer’s share on the other hand rose from 41.8% in 2023 to 42% in 2024, while wine saw a slight dip from 16.1% to 15.8%. The briefing, which highlighted industry data and legislative priorities for the advocacy organization, showed the impact of economic conditions on sales and warned that tariffs could further dampen growth.
Spirits supplier sales in the U.S. were down 1.1% in 2024 totaling $37.2 billion, while volumes rose 1.1% to 312.2 million 9-liter cases. Christine LoCascio, chief of policy, strategy and membership at DISCUS, blamed the downturn on higher prices.
“The story here is that consumers have less discretionary spending on items like beverage alcohol and luxury items like spirits,” she said.
LoCascio noted that at the retail level sales are outperforming shipments and depletions, suggesting that retailers and wholesalers are still pausing on reordering as they reduce inventory build-ups.
RTDs, Tequila Drive Growth; Premiumization On Hold
Despite the slowdown, agave spirits and ready-to-drink (RTD) continue to power the category.
While vodka maintained its lead in revenue and volume, RTDs and tequila/mezcal are coming for the top spirit. The gap between vodka and tequila on the revenue side continues to narrow: between 2019 and 2024 tequila and mezcal supplier revenues nearly doubled ($3.4 billion to $6.7 billion) while vodka supplier revenues increased by 10% ($6.6 billion to $7.2 billion). RTDs are also nipping at the heels of vodka on volume: vodka leads at 74.1 9-liter cases (-1.1%), with RTDs following at 73.1 (+17%).
Digging into the numbers, the top five spirits segments by revenue were:
- Vodka: flat to $7.2 billion
- Tequila/mezcal: +2.9% to $6.7 billion
- American whiskey: -1.8% to $5.2 billion
- Cordials: -3.6% to $2.8 billion
- Premixed cocktails including spirits RTDs: +16.5% to $3.3 billion
The fastest-growing spirits segments by revenue were:
- Premixed cocktails, including spirits RTDs: +16.5% (+$468M)
- Tequila/mezcal: +2.9% to (+$192 million)
- Canadian whiskey: +2% (+$45 million)
- Irish whiskey: +1.8% (+$21 million)
Together those categories amounted to $726 million in new revenue.
The top growing spirits by volume were RTDs (+17%) and tequila/mezcal (+2%). Spirits-based RTDs are still a small percentage of the total RTD market, but grew from 8% share of market volume in 2021 to 18% in 2024.
Premiumization appears to be on hold for now, according to the data. While high end categories account for about 59% of total spirits revenue, those categories have hit road bumps in volume and value in 2024:
- Super premium: -5.6% in value, -4.8% in volume
- High end premium: 0.2% in value, 0.3% in volume
- Premium: -0.9% in value, -0.2% in volume
- Value: +3.5% in value, +4.6% in volume
However, when excluding spirits-based RTDs, the data shows a decline across all price categories, with no evidence that value and premium took market share from the high-end and super premium categories.
Policy Priorities Center On Tariffs; Consumer Information
As tariffs loom DISCUS leaders are honed in on keeping spirits suppliers out of a trade battle.
The organization will also continue to “level the field” for spirits sales at home, and has made progress during its 20 years of advocacy, including repealing most prohibitions on Sunday sales and legalizing distillery tastings in many states.
Lately, the focus has shifted to creating more inroads for spirits-based RTDs. With wins on increasing access to spirits RTDs in three states in 2024, the organization said it is gearing up for campaigns specifically in Washington, Maryland, Arizona, Hawaii and Texas.
Other 2024 victories include third-party party delivery enacted in Delaware and Maryland, tastings laws expanded in Ohio and West Virginia, and cocktails to-go permanency or extension in several states.
Making sure the new Dietary Guidelines for Americans “are guided by the preponderance of scientific evidence” is also a priority. With alcohol’s health impacts increasingly in the headlines and the rise of adult non-alc, DISCUS leaders said their focus will be to remain on advocacy and consumers “having the information that they need in order to make informed decisions.”
“If history is our guide, what the industry is experiencing at this point is more cyclical,” said Swonger. “While the spirits industry is proven to be resilient, certainly during tough times it’s not immune to disruptive economic forces that happen and marketplace changes too.”