Ready-to-Drink Spirits Surge 27% as Americans Shift to Cheaper Alcohol Options

Recent data from Jefferies for the four weeks ending November 1 shows that the trend of de-premiumization in the U.S. spirits market is continuing, but the details reveal a more complex situation than the headline numbers suggest. The ready-to-drink (RTD) segment is expanding rapidly, with a year-over-year market share increase of 383 basis points. This growth is having a significant impact on the overall price and mix performance of traditional distilled spirits.

Jefferies highlights that ABI’s Cutwater brand was the single largest contributor to growth not only within RTDs but across the entire spirits sector. This surge in RTDs reflects a broader shift in American drinking habits, which Jefferies has been monitoring as part of its ongoing “Future of Alcohol” research.

Distilled spirits as a whole are growing at a rate below their historical average. According to Jefferies, industry value dropped by about 4% in Nielsen’s latest data, which is slower than the pace reported by the Distilled Spirits Council of the United States (DISCUS) for 2024. Consumers are increasingly choosing lower-priced options in categories like vodka and rum, while gin and whiskey still show some strength at higher price points. Tequila remains in between, with consumers now favoring “affordable premium” brands over luxury bottlings.

Jefferies has identified 27 factors influencing the current de-premiumization cycle in U.S. spirits. Among these, macroeconomic pressures stand out. Alcohol is one of the most discretionary items in consumer spending, and ongoing inflation is pushing many Americans toward less expensive choices.

Health concerns and changing attitudes since COVID-19 are also playing a role. Increased health messaging, new regulations, and the popularity of GLP-1 medications are all affecting how people view alcohol consumption. Jefferies notes that these factors add uncertainty to the category’s future.

Cultural shifts are another influence. Younger consumers are exploring alternatives to alcohol, including marijuana and non-alcoholic beverages, raising questions about whether alcohol’s role in society is changing.

The industry’s response to these challenges has been mixed. Jefferies suggests that brands may need to be more agile with innovation and marketing strategies to remain relevant during this downturn.

Despite these headwinds, some spirit categories are showing resilience in terms of price and mix. Gin saw a 2.1% increase, up from 1.9% previously. Bourbon posted a modest gain of 0.2%, while Scotch improved by 1.8%. Vodka and rum have flattened out, and Cognac along with Canadian whisky continue to face pressure.

Tequila is experiencing a slowdown after years of rapid growth. The category declined by 3.7% in November, matching October’s performance. Major brands like Don Julio fell by 3.7%, while Casamigos and Patrón saw double-digit declines. Although volumes are down, tequila’s overall trajectory still points upward, but now toward more accessible premium products rather than high-end labels.

Whiskey remains an exception to the broader trend. Scotch volumes dropped by 11%, but premiumization continued with a 1.8% lift in price/mix. Irish whiskey appears more stable; Jameson’s sales have only dipped slightly recently. In American whiskey, premium brands such as Colonel Taylor are driving growth, while mainstream names like Jack Daniel’s and Jim Beam have seen declines of 4.6% and 6.3%, respectively.

Canadian whisky is also feeling the effects of this reset, with Crown Royal down by 8.7% in November. Jefferies expects volatility in this segment as brands introduce new products.

Vodka’s price/mix has stabilized, with growth led by Tito’s and value-oriented competitors rather than premium brands.

RTDs continue to be the fastest-growing segment in U.S. spirits, posting a 26.9% increase according to Jefferies’ data. Cutwater alone grew by over 90% year over year, while other brands like Surfside, Sun Cruiser, and Buzzballz also contributed significantly to category expansion. The popularity of RTDs is drawing consumers toward products that offer convenience, flavor variety, and lower prices—key drivers behind the broader de-premiumization trend.

Major global spirits companies have significant exposure to these shifts in consumer behavior within the U.S., which remains their largest profit center: Diageo derives about half its profits from this market; Rémy Cointreau about 40%; Campari and Pernod Ricard around 25% each.

These figures highlight why changes in American drinking habits—and especially the move away from higher-priced spirits—are closely watched by industry leaders worldwide as they adjust their strategies for an evolving marketplace.