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US spirits sales drop 2.7%
Spirits sales in the US fell by 2.7% in the 12 months to March 2024 as rising prices impacted consumer spending.
The Wine & Spirits Wholesalers of America (WSWA)’s SipSource tool covers wine and spirits distributor sales for hundreds of thousands of on-trade and off-trade accounts in the US.
The latest quarterly report noted the spirits sales fell by 5.2% from January to March 2024, while wine slipped further by 10.9%. For the year to March 2024, wine suffered more than spirits with a drop of 8.3%.
“Wine and spirits categories are currently underperforming expectations and have started the year in a slump,” said SipSource analyst Dale Stratton.
“Most categories and channels will likely break out of their slumps and significantly improve their performance, while others will continue to struggle the entire year.”
In the on-trade, spirits sales were stagnant (down by 0.1%) for the first quarter (Q1) of 2024, while wine struggled with a decline of 6.5%.
Despite a return to pre-pandemic levels for spirits in the on-trade, SipSource noted that data for the 12 months to March 2024 showed a combined wine and spirits decline of 8% in the channel.
“The cost of going out to dinner may have finally caught up with the average consumer,” Stratton explained. “While the Consumer Price Index (CPI) in March was up 3.5% compared to 6.5% in December, continued inflationary pressures, raising gas prices, as well as the gap between the cost of food and beverage at home vs away from home is impacting consumer spending.”
Despite the price of spirits away from home rising by 5% in March compared to at-home prices rising only by 1.4%, SipSource said the category’s sales in the on-trade have continued to show resilience.
The analyst said spirits growth is being led by pre-mixed cocktails, which soared by nearly a quarter (up 24.6%).
SipSource expects spirits sales to improve in 2024 but are unlikely to get back to the growth rates seen in 2022. Wine is also predicted to stabilise and show a moderate increase in the second half of the year.
“The month-to-month data is going to be bumpy going forward, mostly based on variations in the number of delivery days each month,” Stratton added. “It’s also important to note that wholesaler inventory levels remain at an all-time high which could impact shipments from suppliers.”
In February, a SipSource report stated that the premiumisation trend was ‘dead’, with year-end losses for both wine and spirits.