WILLIAMSPORT, PENNSYLVANIA, UNITED STATES – 2024/08/10: An exterior view of a Fine Wine and Good … [+]
Liquor makers posted a rare annual decline in revenue in 2024, as high inflation dampened demand for pricier top shelf bottles.
On Tuesday, the Distilled Spirits Council of the United States, a trade association that represents liquor producers and marketers, reported that total spirits revenue dropped 1.1% in 2024 from the prior year, due to weak sales for the “super premium” liquors. It was the first annual revenue decline that DISCUS reported since the organization began hosting economic briefings in 2004.
“Broadly speaking, the increase in expenses on essentials such as housing and healthcare grew more than the expenses on non-durables,” said Christine LoCascio, chief of policy, strategy and membership at DISCUS, during a virtual presentation hosted by the group. “While inflation has been coming down from its high a few years ago, consumers are still facing higher prices. They have less discretionary spending on items like beverage alcohol and luxury items like spirits.”
Demand was especially weak for Scotch whisky, which saw a double-digit drop, along with more modest declines for blended and American whiskey. Beyond the challenges for Scotch and American whiskey, revenue also decreased for the rum, gin and brandy categories. Those drops were offset by a flat performance for vodka and some modest gains for Irish whiskey, Canadian whisky, tequila and mezcal.
Alcoholic Beverage Industry’s Compounding Challenges
Of the three major alcoholic beverage categories, spirits makers had been most resilient to the challenges facing the alcohol industry, which includes the rise of nonalcoholic products, demographic challenges (as Gen Z is drinking less than prior generations) and increased concerns about the health impacts of alcoholic beverages. The U.S. surgeon general, as an example, warned earlier this year that alcoholic beverages should carry cancer warnings.
DISCUS reported that the spirits sector maintained its market share lead over wine and beer in 2024, at 42.2%. The spirits industry has gained more than 13 points of market share since 2000.
Also encouragingly, DISCUS reported total volume grew by 1.1% from a year ago.
What’s Growing And What’s Slowing
Pre-mixed cocktails and spirits-based ready-to-drink cocktails were a bright spot, with revenue growing by $468 million over the last year. LoCascio says consumers are increasingly preferring spirits-based RTDs, which account for 18% of the total market, versus just 8% of the marketplace three years ago. While the vast majority of RTDs sold in the U.S. are malt based, spirits makers are gaining share.
The data from DISCUS also showed that the “premiumization” trend in the liquor industry is “on hold,” according to LoCascio. For decades, liquor brands have promoted a premiumization strategy that’s nudged consumers toward higher-priced liquors that are marketed to taste better and be made with higher-quality ingredients. That’s been financially advantageous for liquor makers, which generate more revenue and profits from higher-priced products.
NEW YORK, NEW YORK – JANUARY 03: In this photo illustration a martini is held at a bar at a Brooklyn … [+]
LoCascio explains that consumers aren’t necessarily trading down to the cheap stuff. The high-end and super-premium categories accounted for 41.5% of volume last year, close to 2023’s 40.9% total.
“We do see some evidence that for super premium, there is a slight shift to less expensive products within the super premium category,” adds LoCascio.
Liquor Industry Faces Tariffs Concerns
Tariffs have become a top concern for the industry as it heads into 2025 and beyond, as the Trump administration sees tariffs as a method to extract concessions from foreign trading partners. On Monday, as an example, President Donald Trump imposed a 25% tariff on all steel and aluminum imports into the U.S.
The uncertainty could have a big impact on the liquor industry, where so many products have a regional home that’s unique to different countries: bourbon in America, tequila from Mexico, cognac from France and Scotch from Scotland. When tariff talks escalated between the U.S. and Canada, Prime Minister Justin Trudeau warned that American whiskey would be among the products subjected to retaliatory tariffs.
“Once you are off the shelf, it is a thousand times more difficult to get back on,” says Sonat Birnecker, president of Chicago-based Koval Distillery. “What we hope is that governments will find common ground. But what we worry about is that we’re going to be caught in these crossfires. Because our industry, we’re as American as apple pie.”
“We’re committed to working closely with the Trump administration to help them understand the great American success story and that the exports of our great products is key ,” says DISCUS President and CEO Chris Swonger.
