2026-07-17
Ready-to-drink cocktails were the main source of growth in the U.S. spirits business over the past year, helping offset declines in traditional liquor categories as consumers pulled back on spending, drank less often and shifted toward convenience, according to a new Beverage Industry report published Thursday.
The report, drawing on comments from analysts at Keychain, S&D Insights and NielsenIQ, describes a market split between fast-growing premixed drinks and weaker sales for many conventional spirits. Brian Sudano, chief executive of S&D Insights, called 2025 a “tale of two markets,” saying RTDs grew about 20% in volume while traditional spirits fell around 6%. Taken together, total spirits volume rose about 1%, but dollar sales declined close to 3% because traditional spirits generally carry higher prices than RTDs.
More recent retail data suggests the category has regained some momentum, though not evenly across segments. Circana said spirits dollar sales reached nearly $14.3 billion in the 52 weeks ended April 19 across total U.S. multi-outlets, up 3.1% from a year earlier. Case sales rose 8.1%. But most of that improvement came from a narrow set of products. Premixed cocktails and cordials were the only spirits segments to post dollar growth during the period, while tequila was flat in volume and the rest of the category recorded case declines.
Premixed cocktails were the standout. Circana data showed sales in that segment climbed to $2.7 billion, up 39.8%, while case sales jumped 44.3%. Cordials reached $845 million, up 1.8%, with case sales rising 0.8%. Tequila sales slipped 1.4% to just under $1.6 billion, though volume held steady.
Analysts said the shift reflects both economic pressure and changing consumer habits. Mitch Madoff, head of retail partnerships at Keychain, said inflation, tighter household budgets and moderation all weighed on spirits in 2025 after several years of premium-led growth. At the same time, he said RTD cocktails benefited from flavor variety, portability and appeal among younger adults looking for lower-sugar and lower-carb options that fit broader wellness preferences.
That change matters well beyond one segment of liquor shelves. For distillers and distributors, growth is increasingly concentrated in formats that are easier to price accessibly and move through retail channels at scale. It also suggests pressure on margins and portfolio strategy as companies balance premium bottles with lower-priced canned cocktails and other convenience-led products.
Even so, premiumization has not disappeared. Kaleigh Theriault, director of beverage alcohol thought leadership at NielsenIQ, said consumers still want premium drinks but are buying fewer of them and focusing more on selected occasions or bar and restaurant experiences. She said premium-plus products account for 70% of spirits dollars, including RTDs, and that smaller or “right-sized” formats are helping make higher-end purchases feel more attainable.
Sudano said some trading down has taken place as economic strain has spread through household purchasing decisions, with volume moving toward RTDs. Madoff said consumers have not abandoned premium spirits altogether but have become more selective, reserving expensive purchases for specific moments rather than routine consumption.
The same moderation trend is reshaping demand for nonalcoholic beverages. Madoff said wellness-driven lifestyle changes and broader interest in sobriety have pushed younger consumers to reduce drinking frequency and try alcohol-free alternatives. On Keychain’s platform, nonalcoholic beverages posted 92% year-over-year growth last year, he said.
NielsenIQ reported that off-premise sales of nonalcohol beer, wine and spirits topped $1.01 billion, up 19.2%. Theriault said that shows moderation is growing, though she added that 95% of nonalcoholic buyers also purchase alcoholic drinks, suggesting these products often complement rather than replace alcohol.
In spirits specifically, analysts said alcohol-free versions remain small despite rapid growth. Sudano said nonalcoholic spirits account for only about half a percentage point of the category, compared with nonalcoholic beer at more than 1% of beer. Theriault said nonalcoholic spirits remain limited in off-premise retail but have gained traction in cocktails served at bars and restaurants.
If spirits are being reshaped by format shifts, wine is facing a broader downturn. Circana data showed table wine sales fell to nearly $12.4 billion in the 52 weeks ended April 19, down 4.7%, while case sales dropped 5.2%. Sparkling wine and Champagne also declined, with dollar sales just under $2 billion, down 2.1%, and case sales off 2.4%.
Nathan Greene, a senior consultant at S&D Insights, said 2025 remained a difficult year for wine in the United States and that declines were steeper than in other recent periods since 2021. According to S&D tracking cited by Greene earlier this year, total U.S. wine volume fell 3.3% in 2024, worsened to declines above 5% in the first half of 2025 and was expected to finish 2025 down about 4.75%.
Greene said weakness has been most severe in value and mainstream table wines, especially imports. He pointed to tariffs, inflation and weakening relevance among younger American consumers as major factors behind the slowdown. Nearly 30% of table wine consumed in the United States has historically been imported, he said, along with more than 50% of sparkling wine. Those imported categories had been gaining share before trade policy changes in 2025 added costs and uncertainty.
He said lower-priced imported wines have been hit hardest because higher shelf prices can undermine their value proposition while reduced margins leave less room for suppliers and retailers to absorb costs. In sparkling wine, where imported products had been one of the few scaled growth areas before tariffs, the effect has been especially disruptive. Greene also said uncertainty over how long trade measures might last has made planning harder, particularly for European Union products.
The pressure is not only economic. Analysts say wine is struggling with image and relevance at a time when younger legal-age drinkers are choosing beverages they see as easier to understand and more aligned with current lifestyles. Greene said wine often is viewed as inaccessible because it carries a steep learning curve for consumers. Since the pandemic, he added, many drinkers have felt its value proposition has worsened, especially in restaurants where markups can exceed retail prices by more than tenfold.
That challenge is compounded by competition inside the beverage business itself. As major distributors and suppliers expand into faster-growing categories such as spirit RTDs or beer, wine can lose route-to-market attention and investment. That could affect shelf space, promotional support and long-term brand building across the category.
There are still pockets of resilience in wine. Greene said super-premium and luxury wines have outperformed the broader market in some parts of the industry, especially limited-production bottles with clear differentiation or strong regional identity. Products priced around $40 a bottle have shown some of the strongest performance, he said, particularly wines from sought-after regions such as Napa and Burgundy.
That pattern points to a widening divide between highly engaged wine buyers and everyone else. Greene said many consumers now give little thought to wine when making drinking decisions, while those who remain active in the category are often deeply focused on quality, rarity or reputation.
Younger adults are central to that problem. Greene said millennials now have the disposable income needed to become core buyers and Generation Z is reaching legal drinking age, yet neither group is embracing wine consistently enough to offset reduced consumption among older generations. He said younger consumers tend to seek products that feel accessible but still distinctive, without what they see as inherited cultural baggage from earlier generations.
The industry once built loyalty among baby boomers and Generation X through travel, food culture and wine clubs, Greene said. But those same associations do not necessarily resonate with younger adults today and can even push some away from the category.
Nonalcoholic wine has shown some overlap rather than substitution as well. NielsenIQ found that 79% of buyers of alcohol-free wine also buy traditional wine containing alcohol.
Across beverage alcohol more broadly, analysts say consumer caution remains high. Theriault noted that as of July 2025, 72.5% of consumers were considered financially vulnerable. That backdrop helps explain why convenience-led RTDs are gaining share even as premium purchases continue for selected occasions: shoppers are trying to control spending without giving up entirely on quality or experience.
For producers across spirits, wine and adjacent beverage categories, the message is increasingly clear: demand is fragmenting by occasion, format and price point rather than moving uniformly higher or lower. Companies tied closely to traditional bottles face slower growth unless they adapt to canned cocktails, smaller formats or moderation-minded offerings; those shifts are likely to influence packaging decisions, distribution priorities and product development across the wider drinks market in the months ahead.