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Normalisation not expected until 2025/26 for spirits in US
By Ted SimmonsHigh inventory levels, tighter disposable incomes, and increased moderation have hit the US beverage alcohol market across the board.

According to new data from IWSR Drinks Market Analysis, spirits declined by 2% in volume in the US in 2023, the first dip in the category in almost 30 years.
Forecasts show slow growth in the years ahead, with a predicted compound annual growth rate (CAGR) of 1% between 2023 and 2028.
“High inventory levels are expected to persist into 2024 and potentially beyond, with normalisation now not expected until 2025 or early 2026,” says Marten Lodewijks, president of the US Division at IWSR. “Consumer demand will have to increase in order to facilitate the movement of stock through the distribution chain.”
Tequila will drive value gains over that period, primarily through premium-and-above expressions. Agave spirits grew by 4% in volume during 2023, and are expected to continue to grow at a CAGR of 6% until 2028.
American whiskey, meanwhile, registered a 1% volume decline in 2023, but growth is expected to return, with a CAGR of 2% to 2028, with Bourbon and rye continuing to show strong demand. While the US remains a key market for malt Scotch, the category declined by 12% in 2023, and is expected to deliver relatively flat growth until 2028.
Cognac also struggled in 2023, with volumes dropping by 17% as the segment projects to remain flat over the next several years after feeling the effects of overstocking.
“The latest US Cognac shipment data indicates that inventories are starting to unwind,” Richard Halstead, COO consumer research, IWSR, said. “Meanwhile, IWSR’s most recent Bevtrac consumer data shows that the US Cognac consumer profile is reverting to its pre-pandemic state, rebalancing towards higher-income individuals.”
2023 was ‘reset year’
The entire US beverage alcohol market dipped by 3% in 2023 in what IWSR is calling a reset year for the industry. The total beverage alcohol value (TBA) increased by 1%, however, and the US is expected to drive value growth among alcohol markets adding more than US$7.5 billion in incremental gains to 2028.
Imbalanced inventories, economic pressures on consumers and an increased focus on health and moderation impacted all beverage alcohol markets. Between December 2019 and December 2023, TBA inventory levels surged, driven initially by heightened pandemic-related demand, and then by supply chain disruptions and stock planning challenges.
In turn, wholesalers and retailers focused their efforts on stock cycling in order to reduce inventories. That inventory overstocking coincided with the end of pandemic stimulus measures and rising inflation and interest rates, which resulted in reduced consumers’ disposable income.
“Ongoing economic challenges are likely to maintain pressure on consumer spending and market dynamics,” Halstead said. “As economic constraints have taken effect, IWSR’s Bevtrac consumer research shows that consumers have diverted spending from alcohol to household essentials – fuelling a marked decline in per capita alcohol consumption, which fell below pre-pandemic levels.”
Due to these economic constraints consumers are trading up less and searching for more affordable choices. At the same time, younger legal-drinking-age adults are prioritising wellness, moderating or eliminating their alcohol consumption.
One area that has shown growth is ready-to-drink cocktails, particularly hard teas, with columns up 1% – but IWSR forecasts show gains of 3% to 2028.
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