This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
News
US spirits volumes fall 3% as Tequila softens
Spirits volumes in the US dropped by 3% in the first seven months of 2024, led by declines for Tequila and American whiskey.
Using its US Navigator – which tracks monthly alcohol consumption by price tier across all US states, going back to 2019 – IWSR found that spirits volumes were down by 3% from January to July 2024, while beer fell by 3.5% and wine dropped by 4%.
Of all of the major alcohol categories, ready-to-drink (RTD) was the only segment to grow with a volume rise of 2%.
For US total beverage alcohol (TBA) volumes for the first seven months of 2024, IWSR had originally forecasted a drop of 1.9%, however the registered decline was instead 2.8%.
Noting that the declines were slightly worse than what was predicted at the start of the year, Marten Lodewijks, president of IWSR’s US division, said: “The slight recovery that was expected [from the 2.6% decline in US TBA volumes recorded in 2023] has failed to materialise, indicating that the difficult trading environment has not eased, and that consumers are still feeling the pinch of higher prices.
“Nonetheless, a successful second half of the year could still undo some of these losses – but it does make the job that much more difficult.”
IWSR pointed to drops for Tequila and American whiskey, the third and fourth-biggest categories for spirits by volume in the US last year.
Tequila volumes were down by 1%, which saw the ultra-premium and standard price segments fall by 8% and 3% respectively. In contrast, super-premium (up by 4%), premium (up by 6%) and prestige-and-above Tequila priced over US$100 (up by 6%) all grew.
Speaking on Tequila, which has been on the up over the past few years, Lodewijks said the category’s “glow may have faded somewhat as consumers trade down to more affordable options”.
He added, however, that “the price mix change is an indicator that some premiumisation persists in the category and the continued strength of prestige highlights how insulated these high price tiers are”.
Meanwhile American whiskey volumes declined by 2%, which was mostly in its core markets: California, Florida, Michigan and Texas. States such as New York, Pennsylvania, Tennessee, Kentucky and Colorado were ‘effectively flat’.
On the category’s performance, Lodewijks noted that the decline in the core states is due to their reliance on “larger premium price tiers”.
He continued: “Consumers seem less willing to trade up into this price tier, in contrast to states like New York and Colorado where premium growth is still robust.”
Looking at figures across states, IWSR observed that the outlook presented a more ‘nuanced picture’. In New York for example, where there is a strong cocktail culture and a more affluent urban base, spirit volumes fell by 1.5%.
For Tequila, California and New York saw resilience in premiumisation with growth in super-premium volumes, which Lodewijks said was driven by “high levels of disposable income” in those states, and also that the category is still more “novel” in contrast to southern states closer to Mexico.
Florida and Texas saw ‘small gains’ for super-premium Tequila, but double-digit growth for premium brands.
Spirit-based RTDs ascend
Bucking the declines were spirit-based RTDs, which IWSR said account for over 16% of category volumes in the US. RTDs were up by 2% but separately, spirit-based variants soared by 11% while malt-based RTDs were flat.
Lodewijks said: “It is clear that the majority of the energy in the RTD category is coming from spirit-based variants now. However, there are still pockets of strong malt-based RTD growth, including Texas, Minnesota, Georgia and Pennsylvania.”
The trends reflect IWSR’s Bevtrac consumer data, which despite improved financial confidence within Millennials, overall consumption and spend hasn’t yet increased, as consumers on lower incomes ‘remain constrained’.
IWSR has labelled 2023 as a ‘reset year’ for the industry with normalisation for spirits in the US not expected to show until at least 2025-26.
Related news
IWSR: spirits and RTDs take share from wine