After Years of Growth, American Whiskey Sees Market Decline in 2023 and 2024

The latest data from IWSR US Navigator shows that after years of strong growth, American whiskey is experiencing a slowdown in its domestic market due to economic pressures and changes in consumer behavior. Between 2019 and 2022, American whiskey grew at an annual rate of 5%, but this momentum began to falter in 2023, with a 1% volume decline, and further worsened to a 2% drop from January to August 2024. This trend has been driven primarily by significant declines in the lower-priced segments of the market, as consumers in the Standard-and-below price tiers, which accounted for 59% of the market in 2023, have cut back. Standard whiskey has seen a 4% decline in sales year-to-date, while the Value segment has dropped by 8%.

However, there has been growth in the Super-premium-and-above (SP+) segment, which includes bottles priced over $30.50 and has grown by 6% year-to-date. The Premium segment has remained flat, indicating that some consumers are trading down from higher price tiers, while others are leaving the category entirely. The market bifurcation is most evident in the top 10 largest states for American whiskey sales, including California, Texas, Florida, New York, and Kentucky. States like New York and Texas continue to see growth in higher-end products but have experienced sharp declines in lower-priced options. Meanwhile, California and Florida have seen declines in the Premium segment, while the Standard-and-below categories have flattened.

Several factors are driving this softening demand, including challenging comparisons to prior years, a reduction in new whiskey brands and innovations entering the market, and rising production levels as companies have heavily invested in whiskey production. Kentucky alone saw a record 12.6 million barrels of bourbon maturing in 2022, and production is expected to continue at high levels. As a result, distillers are facing pressure from increasingly cost-conscious consumers while contending with rising production costs, particularly smaller distillers who cannot benefit from the economies of scale that larger brands enjoy.

Looking ahead, the category may experience consolidation, and growth will likely be concentrated in the Super-premium segment, with innovation playing a crucial role. New product developments, such as blending different whiskey types and experimenting with new production techniques, are helping brands maintain consumer interest without relying solely on longer aging processes. Nonetheless, distillers must be cautious about reducing prices, as this could undermine the premium positioning that drives value in the higher price tiers.