Close Menu
News

Inflation hits US spirits sales in Q1

Spirits sales in the US dropped by 5.1% during the first quarter of 2023, according to data from the Wine & Spirits Wholesalers of America (WSWA).

The WSWA’s 2023 Q1 SipSource Report covers wine and spirits distributor sales for hundreds of thousands of on-trade and off-trade accounts in the US.

The report looked at ‘commercial and consumer behaviours that are driving negative growth in both categories for the first time in recent memory’.

For the first three months of 2023, spirits sales fell by 5.1% and wine dropped by 7.4%.

For the 12 months to March 2023, total spirits and wine depletions were down by 0.3% and 6.7%, respectively.

SipSource attributed the decline to ‘soft comparables’ in 2022 and the impact of inflation on consumer spending habits, particularly in the on-trade.

“We expect market conditions to remain challenging for the on-premise based on higher commodity costs, increasing labour costs and the continued squeeze on disposable income for consumers — one of the first ways consumers look to save money is by cutting back on food away from home,” said SipSource analyst Dale Stratton.

“The Consumer Price Index (CPI) increase for spirits away from home is 6.7%. This represents a 5.2% gap compared to at home, which is up only 1.5%. The away-from-home gap for wine is at 7.0%, a 4.5% gap compared to at home, which is up only 2.5%.”

At the macro level, premiumisation has ‘slowed significantly’ for spirits, party due to high comparison rates from 2022, as well as the current economic climate, Sip Source said.

The US$25-plus price segments for spirits fell by 3.5%. The only categories to record growth were premium Tequila/agave spirits (up 5.1%), US whiskey (up 3.8%) and gin (up 0.6%).

SipSource predicts on-trade trends will drop significantly in the second quarter compared to the same period last year when the channel was at the ‘height of its post-pandemic renaissance’.

On-trade sales were up by 12.2% for spirits and by 8.6% for wine in the second quarter of 2022. Neither category is expected to come close to last year’s rates, the analyst said.

Related news

How do you create an award-winning spirit?

Spirits to outpace beer and wine

Are drinkers turning towards ‘high and dry’ socialising?

It looks like you're in Asia, would you like to be redirected to the Drinks Business Asia edition?

Yes, take me to the Asia edition No