WSWA SipSource report: premiumisation ‘is dead’

The trend of consumers upgrading their home bars during pandemic lockdowns is ‘all but gone’, according to the Wine & Spirits Wholesalers of America’s (WSWA) SipSource report.

SipSource covers verified wine and spirits distributor depletion data in the US, including hundreds of thousands of retailers across the US.

The Q4 2023 SipSource Report shared year-end losses for both wine and spirits.

The full report focuses on data from January to December 2023. It said the US$25-plus price tier of spirits, which saw a spike during the Covid-19 pandemic, is outperforming the below-US$25 price tier by only 100 basis points.

The US$50-plus price tier ended the year on -6.8% compared with -5.0% for the below-US$50 price tier. The report suggested ‘spirits premiumisation is dead’.

Dale Stratton, SipSource analyst, said: “While there seems to be clear consensus on how difficult 2023 was for the beverage alcohol industry, there is no single agreed-upon view of what this means for the future.

“Many have called 2023 a ‘blip’ with the assumption that the market will return to its natural or pre-pandemic growth trajectory… [we are using] the term ‘reset the base’ to mean we are at a new starting point in the trend cycle.

“Any noise in the data from past disruptions is no longer relevant and growth is anything but certain.”

WSWA noted 90.1% of all volume over US$50 is in the Tequila/agave spirits, Cognac, Bourbon and single malt Scotch segments – with Tequila/agave accounting for 55% of that.

Reposado Tequila priced at US$50 and above was up by 10% in 2023, but añejo Tequila was down by 12%. Bourbon priced at US$50 and above grew by 3.4%.

The report also cited the ready-to-drink (RTD) category as a ‘bright spot’ for both wine and spirits.

Pre-mixed spirits cocktails grew by 6.3% last year. Almost 10% of all spirits-based RTDs were sold in the high-touch convenience channel, compared with 6% of traditional spirits.

Furthermore, 82% of all spirits-based pre-mixed cocktails were sold in the two lowest price segments, contributing to the overall de-premiumisation of the marketplace.

Looking ahead to 2024, SipSource analysts do not anticipate a continued downward trend, but they do see a ‘significant turnaround’ towards growth this year.

However, they warned there are indications towards a battle for market share across categories (beer, wine and spirits).