Spirits 12-month rolling volume trends are down 3.5% from October 2022 to September 2023, and down 5.1% for year-to-date ending in September, according to Wine & Spirits Wholesalers of America (WSWA)’s SipSource. Meanwhile, a report from the IWSR Drinks Market Analysis examines how the de-premiumization trends in the U.S. compare to other major global markets.
The new reports come as analysts examine year-end trends and share 2024 forecasts, here are our three takeaways.
Spirits Dip Further Down Without RTDs
When the premixed cocktails segment is removed the picture for spirits is noticeably worse with 12-month trends of -5.2% and year-to-date dropping to -6.7%. Premixed cocktails are up 8.6%. But there may be some good news for the holiday season.
“There is a compelling case to be made that we may have hit a trendline low point with the September-ending data,” said SipSource analyst Danny Brager.
The basis of that thinking is largely driven by the forward-looking comparative depletion trends over the next six months: for spirits, depletions were up only +0.7% in Q4 of 2022 and were -4.3% in Q1 of 2023.
De-premiumization Now Across Categories
Tequila and agave spirits, up 2.8%, remain bright spots in the latest 12-month ending data. However, the growth profile for agave spirits has reversed in the last year with products over $50 down 2.7% and those under $10 up 5.9%.
That trend is seen across the board: spirits over $25 are outperforming those under $25 by only 90 basis-points in trend compared to last year at this time, when the gap was 500 basis points.
Across 20 key markets (that make up over 75% of total global volumes), the IWSR reports total beverage alcohol premium-plus volume consumption in the first half of 2023 was 11% higher than for the same period in 2019, however this growth rate is slowing, with volumes only increasing by 1% between H1 2022 and 2023.
Still, during the financial crash of 2008, consumers traded down to value-priced products but premium-plus products proved to be resilient, according to the IWSR, adding that the premiumization trend is likely to withstand shorter-term economic and geopolitical turbulence.
Spirits Winning On-Premise
While not quite back to their pre-COVID level, spirits continue to perform well in the on-premise channel in the U.S. with a growth rate of +4.4% compared to wine which is down 2.2%. In a previous report, the SipSource analysts outlined expectations for growth in unexpected on-premise channels for spirits and for RTDs.