US Spirits Market Sees Shift to Affordable Options as Premiumization Pauses

In 2024, the US spirits market experienced a shift as consumers opted for more affordable options. This trend was highlighted in the annual economic briefing by the Distilled Spirits Council of the United States (DISCUS). Christine LoCascio, DISCUS policy chief, noted that the trend of premiumization has paused. While spirits sales by volume increased by 1%, sales by value saw a decline for the first time in over 25 years, dropping by 0.5%. Historically, spending had grown by an average of 4.4% annually over the past two decades.

A significant change was the rise in popularity of Ready to Drink (RTD) cocktails, such as High Noon. These beverages have become more popular than whiskey and are second only to vodka. RTD sales increased by 15% in 2024, while vodka sales decreased by 1%. This suggests that RTDs might become the top-selling spirit in the US by 2025. Other categories that saw growth in volume were Tequila/mezcal, up by 2%, and Irish whiskey, up by 1%. However, sales of other spirits like whiskey, brandy, gin, and rum declined.

The shift towards more affordable options was evident as consumers traded down in 2024. Sales of single malt Scotch fell by 17%, while blended Scotch dropped by 14%. DISCUS categorizes spirits into four price tiers, and the cheapest spirits saw a 4.6% increase in sales volume. Conversely, the most expensive spirits, typically priced over $50, experienced a 4.8% decline. RTDs played a role in this trend, as there are no "super premium" RTDs yet. Expensive brandies saw a significant drop of 31%, while the next tier, "premium," rose by 3%. A similar pattern was observed with vodka, where super premium brands like Grey Goose and Belvedere fell by 14%, while "premium" brands like Absolut and Ketel One increased by 4%.

Hasan Bakir, DISCUS director of economic studies, mentioned a slight shift towards less expensive products. He noted that premiumization had been ongoing since the 2008 recession but has slowed in recent years. The report also touched on potential tariffs. Canada and the EU have threatened tariffs on American whiskey in response to US tariff threats. This has caused concern within the American spirits industry. DISCUS president Chris Swonger emphasized the importance of managing tariff uncertainties and working with the Trump administration to protect the industry.

The US now boasts 3,100 distilleries, a significant increase from the year 2000. Spirits sales slightly surpass beer in revenue, and Americans spend nearly three times more on spirits than on wine. Swonger highlighted the potential job risks if the US loses access to export markets for its whiskey. He stressed the importance of working with the administration to ensure these distilleries can continue exporting.

Swonger also addressed the cultural shift of younger generations drinking less. DISCUS is committed to preventing underage drinking, and Swonger noted that two-thirds of teens have never consumed alcohol, marking the lowest recorded numbers. While the wine industry often expresses concern over lower consumption rates among young adults, DISCUS remained silent on this issue. Swonger did mention that spirits producers are closely watching the political debate over the next US dietary guidelines. He emphasized the need for these guidelines to be based on scientific evidence.