In 2025, the beverage alcohol sector saw significant evolution across its regulatory, distribution, and investment landscapes. In this comprehensive Year in Review, Park Street Insider hosts Emmett Strack and Andres Correa sit down to analyze the year’s defining moments through three key lenses: top industry news, emerging market trends, and major M&A activity.
In this episode, we review the headlines that mattered most, including the implications of RNDC’s exit from California, the shifting tariff environment, and notable CEO turnover among major suppliers. We also examine broader structural changes, from the complexities of the THC bill to the increasing migration of suppliers toward beer distributors, and break down the year’s investment climate, highlighted by AB InBev’s acquisition of Beatbox. We’ll explore the practical takeaways from these developments and discuss how they set the stage for the industry in 2026.
Mentioned in this episode:
Navigating Beverage Alcohol Tariffs: Short-Term Tactics & Long-Term Strategies
How Nosotros Tequila & Mezcal Navigated the RNDC CA Disruption and Returned to Growth
Beverage Alcohol Tariffs in 2025: Latest Developments & Industry Response
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Podcast Transcript
Emmett Strack (00:01.558) All right, so we are going to be recapping the year in spirits for 2025. I am joined by my cohost on the Park Street Insider podcast, a rare moment when we both get to share the mic, the fabulous Andres Correa. Andres, how are you doing today man?
Andres (00:16.833) Emmett, I’m doing really great and yeah, we don’t usually do this, but I think when you look back at 2025, it’s one of the more unique years since I’ve been in the business. So it really called for us to get on the mic together and recap everything.
Emmett Strack (00:31.49) Yeah, I totally agree. I think there’s a little bit of a the more things change, the more they stay the same vibe about 2025. But I think as opposed to the past couple of years, suppliers have more concrete reasons to be optimistic going forward. So Andres and I are going to recap the year in spirits and the wider industry. We are going to structure this by starting off by giving you some of our top stories from 2025, taking you through those. We are then going to hit on the top M&A deals of the year and give you our thoughts and reflections on what went down in that sector. And then finally, we’re going to get into some of the major trends that dominated the year.
Andres, what is your top news story of 2025?
Andres (01:28.833) You know, Emmett, you made a great point. I think as the year started off, it was really, really rocky. I do think by the time we get to talking more about stuff that happened towards the end of the year, there is a lot to be optimistic about. But it’s hard to deny that the top story of 2025 was tariffs, unfortunately. I think we all expected some tariff movement under this administration, especially those of us who covered the first administration, but the level of unpredictability kind of managed to exceed expectations this time, I think.
Emmett Strack (01:51.384) For sure.
Andres (01:57.41) I know very early on in the year there were tariffs on two key trade partners, Mexico and Canada, as well as China. Those were aimed at creating some negotiating leverage with border issues like fentanyl smuggling, but then came Liberation Day in April when we all saw that famous chart with all of the really high tariff rates and I believe the stock market dropped about 20% depending on the index you were following at the time. So yeah, it was one of those things that I think will always imprint on the brain. It was very visual and shocking. I know you and I were kind of chatting at the time it happened, just trying to keep up with it and deliver the proper information to our newsletter readers.
Emmett Strack (02:34.734) Somewhat surreal.
Andres (02:55.765) But from there, it was basically a major negotiation with every country around the world over the summer. And that’s a quick recap. But look, my biggest takeaway from all of that is just how resilient the industry is and how quickly a lot of brands and importers were able to adjust and become well-versed in all of these mitigation strategies, whether it was first cost law or the proper use of FTZ or even just shifting and renegotiating sourcing. You know, this year earlier on we had Alison Levitt of WSSA on the podcast twice and she was able to discuss the tactics that she saw that were working. And on the Park Street University YouTube channel we had a 20-minute feature from Maria Pearman where she dove into everything including duty drawbacks and smart contracts and much more. But I think something really important that we also saw this year was lobbying efforts like Toasts Not Tariffs, right?
Emmett Strack (04:03.158) Yeah, absolutely.
Andres (04:06.11) Yeah, and you mentioned those key agreements with major partners like the EU and UK and I think that is something to be very positive about moving forward. I think the biggest negative impact we’ve seen on the beverage alcohol side is just with the consumer population in Canada and how they’ve reacted towards American products because that’s something you can’t really fix so easily just by changing a tariff rate. That’s a relationship thing. Going into next year, I do think there should be some level of optimism on how this outlook develops. Just from a baseline, we do have those key agreements with major trading partners in place. So there seems to be at least a little less uncertainty around that. And even some hope that rates on alcohol specifically could go down further with partners like the EU.
But then there’s also the fact that the Supreme Court is reviewing tariff policy to see if President Trump overstepped his powers with the reciprocal tariffs. So there’s a possibility we’ll even see some refunds if that gets overturned potentially in the summer. Though I do think the whole refund process would be very messy and potentially years long. So not quite so simple, but just the concept of refunds might be something optimistic to look forward to for some people.
Emmett Strack (05:15.032) Yeah, so obviously this was a really big theme of the year and I think your optimism about 2026 is important. It’s warranted and it’s been really interesting to see kind of like you reflect that the industry really went through an accelerated learning curve in terms of global trade complexity. And five years ago, things that you were throwing out earlier, like first cost law, FTZ strategies. These were things typically only mentioned by specialists. And now they’re regular conversations at distributor meetings. And I think there’s something remarkable about watching the industry kind of collectively upskill under pressure like that. And I think that there’s also an element of learned adaptability that we all went through this year.
There’s reason to believe that even if this environment remains somewhat uncertain going forward, that suppliers are now in a better position to deal with that uncertainty. I, of course, still wonder, like many of us do, if this is just going to be a new normal over the next couple of years where tariff stability is somewhat provisional. And I think it’s going to be important for brands to maintain those mitigation strategies and just consider them not emergency measures anymore, but as permanent ways of operating.
Andres (06:27.114) Yeah, and I think that’s what’s good about some of the mitigation strategies we learned this year. Specifically, I think Maria Pearman’s video did a good job of breaking down the short-term strategies, right, to deal with the short-term uncertainty. And then there’s kind of more of those long-term strategies in terms of changing sourcing and doing those types of things wherever you can to kind of shelter yourself from any tariff uncertainty that we may see in the future. Though, I think there is reason to be optimistic about some stability moving forward after kind of that whirlwind we experienced in the summer.
Emmett Strack (07:09.41) Definitely. And like you mentioned, we have a ton of resources on Park Street University for getting more familiar with mitigation strategies and ways to adapt and deal with these things. So anyone can feel free to go check those out.
So that’s my top story of the year really that we covered. But Emmett, I know you got a big one as well for story number two.
Emmett Strack (11:02.166) Yeah, sure do. And for my top story, I’m pulling off the board RNDC’s California exit. So we’re taking you to the distribution tier where we saw in early June the Republic National Distributing Company, the nation’s second largest distributor, completely pack up their bags and exit the number one spirits market by volume in the country, which is California. And this was a pretty unprecedented collapse for a major distributor. And the implications of this were massive. It cut about 1,700 jobs and left about 1,500 suppliers scrambling to find distribution solutions and really just served as a keen reminder of how fragile distribution relationships can be.
So how did we get here? This came as a result of a number of devastating brand departures throughout 2025. In January, Tito’s Vodka announced it would move distribution from RNDC to Reyes Beverage Group. Then in February, Brown-Forman came out and said it would do the same. In April, Gallo revealed that it would be moving the top spirits brand by volume in the U.S., which is High Noon, of course, from RNDC once again to Reyes. And then finally in mid- May, Anheuser-Busch InBev terminated its partnership with RNDC in California and several other markets, moving all of its spirits brand rights to Southern Glazer’s, which includes the high growth Cutwater brand, of course. This is something that had huge ramifications. RNDC’s California business was projected to generate about two billion in annual revenue before the exit.
Andres (12:41.727) That was a heck of a recap, Emmett. And let me just say I love that you said you’re taking the story off the board like we’re doing some kind of fantasy draft here. But I get where you’re coming from because there are such juicy high draft picks with these stories here. And this is a big one. This really might be the biggest of the year. And I think what’s interesting to me in all this is that on some level it does kind of put the bigger distributors on notice in terms of the service they provide to their suppliers, which is healthy. At the beginning of the year, we did put out a white paper on the distribution tier and a whole page of that paper is dedicated to the largest distributors and the fact that the market had consolidated over years to the point where the top 10 distributors controlled over 80% of the market. So Reyes really wasn’t on that graphic of top distributors, and look at the impact they’ve made in a short period of time. And it didn’t take the government stepping in with antitrust enforcement like some had suspected. It just took a smaller competitor making a big impact in terms of value proposition. And I think that’s hopefully a good omen in terms of the service that will be provided to suppliers moving forward from some of these bigger players. But ultimately, and I know you’re going to touch on this, but it would be better for suppliers, especially the smaller suppliers in California, if RNDC had actually been able to stay and provide them with some more options because they really just lost that altogether.
Emmett Strack (14:19.566) Definitely. Yeah, I know we have to think about where this leaves all of these suppliers. This was a huge power vacuum and a shakeup, which effectively meant that Southern Glazer’s and Reyes are now controlling a large, large majority of the premium spirits market in California. And just when you think about these suppliers, when your choice of distributor narrows to seemingly two options, when this happened, negotiating leverage can evaporate and getting attention in an already constrained market becomes even harder.
Brands really need to ask themselves if one of these relationships sours, do I have anywhere else to go? And is this the type of relationship that I want to get into in the first place? But luckily as a result of this, we saw some alternative options emerge. There are tech-enabled platforms like Park Street that have been able to give a lot of suppliers relief by embracing these self- distribution models and giving brands just more control over their own brand narrative and more specialized attention to key retail accounts. But there was also direct-to-retailer options and hybrid approaches that suddenly started to look less risky by comparison in terms of comparing to traditional distribution routes and suppliers who previously may have viewed these as nice-to- have and backup options are now considering them as primary strategies.
Andres (15:41.553) Yeah, and again, not to toot our own horn too much, but this is just clearly where an option like Park Street can be a lifesaver for so many brands because they were kind of kicked out of the plane with no parachute in a sense, right? And we had the opportunity earlier this year to interview Nosotros Tequila, and that article is up on our blog right now at ParkStreetUniversity.com if anybody wants to check it out. They were worried when RNDC left California. But what they fell back on really is their history with Park Street. And PJ Dwyer, their chief revenue officer, told us that their sales actually took a significant jump once Park Street allowed them to control their process again. So they kind of really took the bull by the horns.
Park Street allowed them to have a more direct relationship with on-premise and off-premise accounts and kind of be in charge of the sales a little more directly as well. And it paid off for them. It really was something that ended up not just being a fallback option, but something that helped them make 2025 a strong year, a year to remember for them. And we’re grateful to be part of that process.
Emmett Strack (16:58.488) Yeah, for sure. I mean, some brands were really able to create a lot of opportunity out of that chaos. And I think just a big takeaway is mid-size brands, craft players, they just really need to understand that they are vulnerable to decisions made by mega brands within your distributor’s portfolio. And it’s something to consider when you are getting into a relationship with a distributor, who else is going to be echoing in that environment?
And also your performance doesn’t insulate you from a distributor’s larger strategic failures, which just reinforces how considerate you have to be when you get into these relationships in the first place. I also just want to make a point that the brands that recovered the fastest from RNDC’s exit were the ones with strong retail relationships and a diversified market presence. They weren’t people who relied on their distributor to sell for them, but really just had these relationships in place already.
And in 2026, I think that we are going to see that distribution resilience isn’t exactly an option. It’s just something that you need to factor into your strategy moving forward. So that is it for my first top story. Andres, do you want to hit us with your next story?
Andres (18:11.184) Yeah, I do. I want to talk about this one because it’s something that will come into play more so, I think, in 2026. But it was a little overlooked because we had this big government shutdown and this was basically slipped into the bill to reopen the government. But Congress finally moved to close what had been this legal gray area since the 2018 farm bill that allowed hemp-derived THC products to explode in the beverage space. So the 2018 farm bill, just to recap, decriminalized hemp but set a limit of 0.3% Delta-9 THC by dry weight, but it never defined exactly what that meant for beverages. So companies figured out you could have a 12- ounce seltzer, for example, with 10 milligrams of THC and still be legal because it was only 0.3% of the total weight, technically. So now they’ve fixed that, and the new rules are extremely strict and limit drinks to 0.4 milligrams of THC per container. So that’s a huge drop. It’ll essentially eliminate 95% of these types of products that are currently on the market. But the good news for these brands is that the effective date is November 13th, 2026. So there’s about a year runway for industry groups to lobby here one way or the other.
Emmett Strack (19:46.744) Yeah, this is something that’s probably been coming down the pipes for a while, but still created a lot of shockwaves when it first hit our news line for sure. We were reporting on it pretty heavily. Something that this just really highlights for me is the precarious position of any beverage category built on regulatory interpretation rather than clear legislation. You know, it’s something that the spirits industry learned over the decades. That’s why bourbon has such specific rules. It’s why geographic indications matter and hemp beverages really seem to try to speed run that process and are now learning that regulatory clarity, even when it’s restrictive, is actually more valuable than betting on perceived profitability. So for traditional spirits companies that were watching this space or even investing in it, it’s validation of any sort of cautious approach that was being taken. And this is something that, like I said, has been coming for a while and it’s worth keeping an eye on in the future because a lot of people have a lot of value tied up in this space. They were betting on it and it’s going to be interesting to see what happens from here.
Andres (20:47.346) Yeah, and I’ll just make one more point on it, which is I think a lot of people maybe in the beverage alcohol space might feel, you know, in a sense threatened, I guess, by THC beverages. They might see it as strong competition. I know that this was snuck in by Mitch McConnell, the senator from Kentucky. You know, he may have thought he was doing something for the bourbon industry there. I’m not going to try to get in his head too much, but I come from more of a thought process that if people are trying drinks, if they’re trying a THC seltzer, maybe that opens them up more to trying a vodka seltzer or something in the future. I think there’s room for everybody to succeed. I think if we can get those drinks on an even playing field in terms of regulation, that will help in terms of competition. It will also kind of put these drinks next to each other side by side. If it’s the same rules for alcohol and the same rules for THC, I think that the competition will be a lot more fair and I think people will be more inclined to mix and match products. So I think if we can get to a good place from a regulatory landscape with these drinks, it will benefit everyone more so than just if this ban holds. That’s kind of my final thought on this. Emmett, do you have anything else you want to add?
Emmett Strack (22:20.024) I mean, no, you make a really interesting point. I think there’s always been a perceived threat from this category that ultimately at the end of the day, it’s just going to kind of coincide with consumers’ want for a more diverse set of drinking opportunities and occasions. And I totally agree that there is room for all if it can kind of get on an even legislative playing field. So yeah, I think that’s a really good point and a kind of a sobering thought to anyone who has overly cautious views on the category.
Andres (22:51.163) Yeah, sobering is an interesting choice of words, but we’ll take it. So we’re gonna do one more top story of the year from Emmett here. Emmett, what do you got?
Emmett Strack (23:01.528) So for me, the last one, and this is kind of like a convalescence of a lot of stories that hit this year, but just CEO turnover among a lot of the major strategics. This was a theme across a lot of the industry’s biggest players as they grappled with a fairly uncertain environment. But it was highlighted by Diageo CEO Debra Crew’s sudden departure in early July after just two years in the role. And it was a period which saw Diageo’s share price fall more than 43% since Crew took over in June of 2023. Just last week, they recently announced a new CEO as of January 2026, who is Sir Dave Lewis. He has a strong track record of turning around consumer goods companies like Tesco in the UK.
In April, we also saw Eric Vallat of Rémy Cointreau step down after more than just five years at the helm. His departure similarly came amid some difficult market conditions and the company had seen some year-over-year sales drops, so they saw it necessary to make a change. It was also apparent when William Grant confirmed that their CEO Sorin Hagi resigned after nearly two years in the role. But I think that just given the current market conditions, this shows that major portfolios are less willing to rely on legacy and unwilling in general to ride out underperformance and they’re just ready to adapt and remain agile to respond to the turbulence that’s happening right now. But I also think it’s important to point out that there’s a strong case that this turbulence is cyclical as opposed to structural. And that seems like a debate that’s kind of going around in the industry right now.
Are we in more of a perma-crisis? Are the things that we’re seeing a little bit more cyclical? And I just think it’s good to keep in mind that global spirits consumption is still projected to keep growing, particularly in premium and super-premium segments. You see this in categories like agave spirits, but also bourbon and premium gin. But I do think that a lot of the turbulence we’ve seen this year is likely over in Europe and North America, where macroeconomic pressures have showed a lot of slowing down in many mass market categories. Consumers are still trading up. They are choosing fewer drinks, but higher quality brands. And we’ve seen this time and again throughout the year. And I think if you look to a lot of emerging markets, Diageo’s recent quarterly report also showed that there was a tremendous amount of growth in these emerging markets of about 11% across many of them. So I think that there is plenty of reason to think that the worst is over and that many of these strategic companies were just trying to remain agile in an uncertain time.
Andres (25:59.292) Yeah, and you make a great point about some of these emerging markets that are really growing in their share of beverage alcohol. And it’ll be interesting to keep an eye on that. But just back to your main point, really, about all the CEO turnover, I think what’s interesting to me is we are in this kind of cyclical, complex economic time. And this tells you it’s not the moment right now where boards and investors are going to give CEOs the traditional three-to-five-year runway to execute a turnaround strategy. It feels like just a minute ago we were reporting on Debra Crew actually getting the Diageo CEO position and then within two years they’re making a change there. But you know it can be tricky if you’re constantly changing leadership every 18 to 24 months. That can be too little of a time frame to implement any meaningful strategic change. It’s interesting that Diageo went with Dave Lewis who did that Tesco turnaround. I do see from everything I read that that took about five years to execute.
That’ll be something to keep an eye on is how patient or impatient these companies are with their changes that they went ahead and made this year.
Emmett Strack (27:26.562) Yeah. And it’s going to be interesting to see how many of the new people who’ve stepped in to fill the void, how long they last and, you know, exactly what happens in that space. So we’ll keep reporting on that in the newsletter and keeping everyone up to date there, but a lot of turnover among just like the leading companies in our industry this year. So really interesting. Andres, now we are going to close out our top news stories section. We’re going to get into some mergers and acquisitions right now and talk about those.
Andres (27:56.199) Which are always kind of like the biggest news stories anyway. I mean, the mergers and acquisitions really tell you a lot about where the industry is moving towards or moving away from. So we’ll get into some interesting stuff now. What’s your top deal that stood out to you this year?
Emmett Strack (28:17.196) Yeah. And a lot of these deals we’re going to talk about have a lot of those push-pull factors and just shed light into how strategics are kind of positioning themselves moving forward. But for me, the number one deal of the year, this is one that just happened recently. It was Anheuser-Busch InBev moving to acquire the RTD brand BeatBox. This is a very interesting deal. It’s one that marks ABI’s first wine-based RTD and it’s expanding a portfolio that already includes Cutwater and Natural. BeatBox is a wine-based RTD brand.
Like I mentioned, it’s projected to sell 12 million cases in 2025. Just a really, really staggering figure. The brand is going to see AB InBev spend $490 million on an ownership that will comprise about an 85% stake of the company with a path to 100% after five years based on a predetermined pricing formula.
Just a little bit of info about BeatBox in general. The company was launched in 2011 in Austin, Texas by co-founders Justin Fenchel, Aimy Steadman and Brad Schultz, who were founding the company while pursuing MBAs at the University of Texas. Just another example of a story of a brand that was not built overnight. You know, you have lots of examples of brands like Tito’s not built overnight. They built up over the course of over a decade to become what they are now, and BeatBox being no different. In October of 2014, funny story about them being on Shark Tank where Mark Cuban invested over a million dollars for 33% equity of the company, which was one of the largest investments in the show’s history at the time. And by 2020, the brand had sold 380,000 cases.
Then in 2022, this rose to almost two million cases. So they really leveraged a lot of the RTD boom and got in at the right time there. And last year alone, the brand had grown by almost 80% to 5.4 million cases, which just speaks to an astronomical growth trajectory, which obviously caught AB InBev’s eye. And I think the brand got a lot of things right. You know, its branding is incredibly vibrant. We’ve seen many copycat brands come out since. It’s convenient. It’s a unique package format that really appeals to Gen Z along with its price point selling at four to five dollars per unit each. People are a little bit more price sensitive right now and they can still reach for those in a convenient format. It’s something that makes a lot of sense. And I think it’s really interesting to see AB InBev double down on their M&A efforts and make this move at a time when we’re seeing beer sales decline. You know, this is a pretty novel spirits portfolio that they have. Getting into spirits is novel for them, that is, and they’re just kind of building up that portfolio and making a strategic move to try to capture Gen Z and millennial consumers who are moving away from traditional beer and away from many of the investments that they’ve made in years past is just an interesting move.
Andres (31:24.124) Yeah, I have to go back and watch that Shark Tank clip and see what their pitch was at the time. It’s an interesting product. I haven’t had the chance to try it out. I know there’s an orange wine base to it and I think they might have some other options as well. But what really catches my attention about this one is just that it wasn’t a quick flip, right? We’re talking about a 2011 launch and then over a decade even since Mark Cuban got involved, which you’d think would have sped up the timeline. But I’ve seen people, some follows I have on LinkedIn saying they checked out BeatBox a few years ago and they didn’t feel like it was ready for investment. So it’s great that they finally found their moment, I think, in terms of being something that Gen Z can really gravitate towards in terms of style and convenience, like you mentioned.
I think what this validates is the long game approach for beverage brands. So you need the right format and a celebrity investor can help, but it takes a lot more than that. It takes a lot more time than that in many cases. This is a great example. You know, the industry, it takes time, a lot of distribution know-how and muscle and consistent execution over time as well.
Emmett Strack (32:49.56) And just super impressive that they were able to grab BeatBox. I’m sure that there were other strategics eyeing up that one just seeing how much they’ve grown recently. And with RTDs being all the rage these days, that was definitely the apple of a lot of brands’ eyes. So I’m sure they’re thrilled to get that one through the door. Andres, do you have a second deal for us? Which one caught your eye this year?
Andres (33:11.808) I definitely do. I’m really excited about Tito’s getting into the acquisition game with their acquisition of LALO Tequila as well. So not doubling down on vodka, kind of spreading out into this agave category that many people feel is taking a share from vodka. It’s a really interesting move in my opinion, and it’s the first strategic acquisition in Tito’s history.
Significant milestone, of course, and just that expansion beyond vodka into the premium tequila segment. The deal gave Tito’s a majority ownership of LALO, which is one of the fastest growing tequila brands in the US. We didn’t get the financial terms, though what we do know is that the transaction includes some strategic sales support and expanded distribution network access.
And just to get a little bit into the background of LALO Tequila, it was co-founded by Eduardo “Lalo” González and two of his partners. And Lalo really, he brought three generations of tequila-making heritage to the brand, which just honored his family’s legacy. And I think that’s something we’re seeing so much in terms of really successful tequila brands. There has to be a
little bit of a legacy there in many cases, right? But the brand just really grew organically through word of mouth over time. In a sense, a lot of commonality with Tito’s in those early days in Austin, right? Just not a flashy brand, just exceptional marketing and getting more into that kind of not flashy aspect. LALO just uses three ingredients: fully mature Highland Agave, deep well water from Jalisco’s mineral-rich soil, and champagne yeast. So it’s just a different type of spirits partnership. I see a lot of shared values there and the structure allows kind of both companies to maintain focus on what they do best in my opinion. Obviously Lalo González is going to continue to steward the brand’s production. That’s huge.
So that family legacy that I mentioned earlier will continue. The brand will continue to be an authentic, artisanal brand, which is super important. And then the timing of it just works as we’ve all seen premium tequila kind of continue on that explosive growth trajectory, particularly now among millennials and soon-to-be Gen Z consumers that are just seeking that different, authentic, high-quality tequila with transparent production methods and those compelling legacy origin stories. So this one really caught my eye just for the synchronicity of it between the two brands.
Emmett Strack (36:27.426) Yeah, I think there’s a lot of synergy between the two of them and it strikes me as a mission-aligned acquisition and not just a typical revenue play. I think it’s funny because you and I have seen over the last couple of years, these types of acquisitions go through a lot, maybe not necessarily in terms of like an independent brand that’s as big a player as Tito’s is, but a lot of independent brands are kind of doing bolt-on acquisitions to shore up their own market presence a little bit as some of the major strategics—we’re starting to see less of the huge dollar figure acquisitions go through among them. And there have been a number in the last couple of years that have just been brands trying to shore up their own market presence. But I think that keeping Lalo González on in terms of production is really smart. It’s going to kind of preserve that continuity and the product integrity while they’re going to be able to leverage Tito’s distribution muscle, which is great. And it just points to a larger industry trend of these independent companies partnering with artisanal brands rather than fully trying to integrate them. So this is one that made a lot of sense. And I think you’re right to flag it.
Andres (37:37.104) Yeah, and I think you bring up a great point, which is beyond the fact that, you know, we’re seeing Tito’s get into the acquisition game and with such a strong brand that fits their branding in a sense. What really is interesting about this is that LALO was on a trajectory where you would have expected something like a Diageo or a bigger player like that to jump in the mix. But instead it was Tito’s, which made this really stick out to me. And those bigger players were seeing kind of engage in more divestment or streamlining their portfolios, which I think we’re going to get into now. What is your next big deal?
Emmett Strack (38:25.326) Yeah, I mean, this next one is a unique one and you’d be hard pressed to find one that is more celebrity-charged. But in April 2025, we saw Diageo swap its North American rights to Cîroc for a majority stake in the LeBron James-backed Lobos 1707. This was via a strategic joint venture with Maverick Carter’s Main Street Advisors, which is a move that tells you a lot about portfolio housekeeping and divestment, as you just mentioned, but it also tells you a lot about where these drinks companies think the growth is right now. I mean, Diageo obviously choosing to go in this direction following a negative association with Sean “Diddy” Combs, who was one of the original people in on Cîroc from the ground up. And this one is just super interesting to me in terms of deal structure. It’s not a typical cash M&A buy or sale. It’s an equity swap with a strategic joint venture. And here Diageo is flipping its majority control of Cîroc and in return, it’s going to take a majority ownership of Lobos 1707 worldwide as part of the joint venture. The companies framed it as a way to bring together two brand builders to grow both brands in their respective territories. But why is this happening and why does it make sense?
Swapping brand rights rather than outright writing a big check is going to allow Diageo to rebalance its portfolio without a large cash outlay. It also shifts the exposure from a declining vodka franchise in the US to a high-growth tequila play globally. So I think something like this makes a lot of sense for all parties involved. And joint ventures like this are increasingly becoming more common. I think since you and I started tracking M&A together, maybe as recently as 2022, we’ve seen just the types of deals that are going down increase and the diversity of those increase. You know, when major IP value of a brand is high, but maybe the performance is faltering or the ownership might be imperfect, something like this makes a lot of sense.
Tequila remains one of the strongest growth engines in spirits. The global tequila market is expected to grow from $11.5 billion in 2024 over to $19 billion by 2030, according to Grand View Market Research. And for a company like Diageo, getting a bigger piece of that growth just makes strategic sense. So this one definitely caught my eye earlier in the year.
Andres (41:01.423) Yeah, it’s a great statistic about the growth of premium tequila as well. But this deal, I mean, it’s hard not to have it catch your eye. Obviously, everything we’ve learned about Diddy over the last year or two has been pretty intense. And this deal is fascinating in that sense because it kind of serves a little bit
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as a cautionary tale, right, about how quickly celebrity partnerships can go from this big asset to this big liability.
Emmett Strack (41:32.972) And those guys have been on the rocks for some time. Sean “Diddy” Combs initially instigating a lawsuit against them, which was later withdrawn because they ended up, Diageo ended up buying out both of his brands and that kind of went down from there. But this was reaching a boiling point for a while.
Andres (41:53.497) Yeah, that’s a great point as well. Even before we learned everything we did, there was already something going on between Diageo and Diddy to serve as a cautionary tale in that sense. But I think it’s really clever here how they engineered the exit rather than just kind of terminating the partnership or taking the hit, trying to kind of rebrand Cîroc from scratch. They essentially were able to trade the problem away and simultaneously upgrade in terms of category and just celebrity appeal with LeBron James. So it’s an amazing maneuver, probably best case scenario for them and definitely one of the stories of the year.
Emmett Strack (42:42.402) Yeah, and it comes at a time when, you know, this year and last year, so many of these brands are divesting. Everyone’s trying to offload auxiliary assets to just really focus on their core brands and their portfolios. And the fact that they were able to do this so creatively was really impressive to me. So that was my number two M&A deal, Andres. Let’s do one more M&A deal before we get into some trends.
Andres (43:07.322) Sure, and I just want to piggyback on the whole divestment thing because it is something that’s just been such a trend, not just this past year, but the last year as well.
When we went through the boom, we saw companies take on a lot of brands and really, in a sense, what they’re discovering now is their portfolios were a little bit bloated from the brands they took on. And so we are kind of seeing the realignment and brands ending up in the proper hands, in my opinion. So Pernod Ricard earlier this year sold the Irish whiskey brands Clontarf and Knappogue Castle to Dublin-based Cobblestone Brands for an undisclosed sum. And that was really the mark of the company’s ongoing effort to kind of streamline and focus on core assets. Days before, perhaps even a day before that acquisition, they had unloaded Imperial Blue to a company in India, signaling an accelerated divestment strategy just across multiple whiskey categories.
Just for the sake of simplicity, we’ll focus more on the Irish whiskey sales than the Imperial Blue, but I do think it’s important to note that they did sell Imperial Blue and these Irish whiskey brands back-to-back because it says a lot about where their mindset is now. And also, I want to highlight Cobblestone Brands because we did speak to Kevin Keenan earlier this year on the podcast, and he’s one of the founders of Cobblestone, and they’re the same team that started Glendalough Distillery, which is now owned by Mark Anthony Brands International. Both Clontarf and Knappogue Castle were acquired just six years ago as part of Pernod Ricard’s
$223 million purchase of Castle Brands in 2019. So it was a quick turnaround in that sense. Pernod explicitly stated the divestment aligned with their business strategy to focus on their core Irish whiskey portfolio. So clearly, I mean, very simply, they’re prioritizing their flagship brand, Jameson, which is the leader in Irish whiskey, over some of the more secondary labels as the market gets increasingly competitive. And I think this is just a good kind of lighthouse for the broader trend of major spirits conglomerates that are divesting these non-core brands to focus resources on fewer high-potential assets amid kind of a softening spirits demand and inventory corrections across the industry. And I think it’s really amazing that it created that opportunity for a team like Cobblestone Brands to jump in with these acquisitions that they’re actually really passionate about.
Emmett Strack (46:18.862) It’s funny you say lighthouse because Kevin in that interview for Cobblestone Brands actually really commented on a unique strategy in terms of growing sales in a major city, which he called the lighthouse strategy. So if you want to hear about that one, go check out the episode. For me, this one just makes sense for everyone involved. You know, Cobblestone Brands, Kevin and his team, they’re really experienced entrepreneurs and operators who, like you said, they built up Glendalough over time. And that’s just a brand that has done amazing things. And I just think with these brands that they are acquiring, it means they’re going to get the attention they deserve rather than getting lost in a much larger portfolio. And it’s going to give them space to breathe and just give them a platform to grow and innovate when otherwise they might have become a little bit stagnant and lost. And I think that both from a divestiture and just a growth standpoint on the side of Cobblestone, it’s something that makes a lot of sense.
Great. So that’s going to close out our talk about M&A trends, some of our top deals of the year that Andres and I flagged. We are going to be having our annual M&A report come out sometime in the first few weeks of January. So keep your eyes peeled for that one. And we’ll recap all of the deals that went down in the spirits industry in 2025. Now we’re going to look ahead to some industry trends and some quick hits that we saw happening this year, the trends that really encapsulated the year for us and yeah, we’ll get going on that one if you’re ready.
Andres (49:41.859) Yeah, and I think they’re going to give us a little bit of insight into what to look for in 2026 as well. Emmett, what do you think is your top trend in 2025?
Emmett Strack (49:53.44) This one is easy and I think I’m going back to the distribution tier, something we alluded to earlier with RNDC’s exit from California. But this one is just beer distributors making their move and growing their presence and influence in the industry. You know, Reyes was emblematic of this trend by absorbing Tito’s, Brown-Forman and High Noon. And they really positioned themselves, as we mentioned before, as the distributor of choice for mega brands in California.
And this kind of creates a self-reinforcing cycle, right? It shined a lot of attention on this model and success is going to inevitably attract more premium brands who then again can command more retail attention. But just like this, Reyes was not alone. Johnson Brothers also picked up Brown-Forman’s portfolio in six different states that included Jack Daniel’s, Woodford Reserve and Old Forester.
And Columbia Distributing and Crescent Crown were also beer distributors who picked up other spirits brands over the course of the year. So this definitely made shockwaves throughout the industry. And we’ve reported on this before, but I think a lot of this has to do with the growth that’s being seen in the convenience store channel. In recent times, this has been the fastest growing off-premise sales location, one of the only ones that has shown positive growth of late.
And beer distribution has a really strong foothold in this channel. So it’s no surprise that spirits brands are really looking to get in here. Convenience stores now represent from 9 to 10% of total spirits dollar sales for the year in 2025, with spirit sales up nearly 8% in the 52 weeks ending in March earlier this year. So it’s something that’s been going on for a while.
This of course is really driven by RTD cocktails and I think we would be remiss if we would say that this did not have something to do with the fact that a lot of spirits brands are going down this RTD road, which commercially RTDs just move a lot more like beer and it makes perfect sense that this channel is somewhere where spirits brands are seeing a lot of value and getting into. I think that it was very clear that a lot of spirits distributors, this point has been made to me a number of times, just were a little bit slow after COVID—COVID hit, they all really invested in online ordering platforms. And as a result of that, a lot of them were kind of losing touch with a lot of the retail environment that existed out there and were kind of slow to reengage with this space.
A lot of their brands ended up taking notice, whereas beer distributors didn’t really have this problem. So I think a lot of spirits brands looked at the attention and time that beer distributors had and connections and relationships they had with retail accounts and decided to make that switch over. So it’s really gonna be interesting to see how this develops further in 2026, how much more are we gonna see other big brands go down this road, or if this is something which I wouldn’t be surprised about, or if it’s something that largely lived within 2025. But in general, I think it just speaks to an increasingly diverse set of ways that spirits brands are embracing when they go to market.
Andres (53:03.619) Yeah, and you bring up a great point about the sales operations and some of these bigger distributors and how they were able to or not quite as able to serve their suppliers as well as they were maybe pre-COVID when they didn’t kind of trim down those sales operations so much. And I think, again, like all credit here to the Reyes team and what they were able to kind of sell people on over the course of this year. They really made a name for themselves in a huge way. And again, you do bring up some good points about RTDs in general, right? And how they do function a little more like beer. I mean, it’s crazy. A lot of states don’t even allow spirits to be sold in convenience stores and yet you bring up that statistic that convenience stores now represent 9 to 10% of spirit’s dollar sales in 2025. So that just goes to show you about the proliferation of RTD cocktails and all of those things and how it’s kind of changed the game in a sense. And it does kind of lead into my trend, our second trend of this section, which is packaging trends, right? We’ve seen this really interesting pattern over the past few years where these convenient but also these quirky, eye-catching package formats have become serious acquisition targets for the big players. BuzzBallz to Sazerac is still, I think, the biggest one. Whiny Baby to Gallo, their branding is completely different from anything else we see, and then BeatBox as you mentioned. So there’s a clear playbook emerging here where heritage companies are buying their way into really Gen Z’s attention span specifically. Because you know traditional glass bottles just don’t have that same viral potential, right? You’re not posting a picture of yourself with a standard 750-milliliter wine bottle, but you may pose with a Whiny Baby or a BuzzBallz or a BeatBox if you’re a social media person or a Gen Z that just wants something that’s a little more original and tailored to their generation. But yeah, I mean just bringing up convenience stores. I think what some people may overlook in all of this is the impulse buy factor where you can pop in and buy a single serve of BuzzBallz and that’s a lot easier than buying a $30 bottle of some spirit, and once you have that single serve, you might be ready for a bigger purchase. There’s a lot of not just creativity, but utility in all of these packaging trends.
Emmett Strack (56:04.814) Yeah, it really feels like packaging trends are almost diverging one way or the other. You know, we have these like very loud bombastic approaches like BuzzBallz and BeatBox and things like that. But then you have a lot of brands going in the other direction as well and embracing minimalism at the same time. You know, you take a look at what Campari did with their rebrand and even Tequila Ocho going to much more minimalistic formats. And a lot of brands that were historically kind of on-premise darlings are now trying to stand out a little bit better on shelves as well as the off-premise grows so much and moving in that more minimal direction. So I think that’s really interesting. And I also just want to shout out our good friends at Stranger & Stranger who I think provide some of the best brand concepts and packaging solutions in the business. So if you need help in this area, I would just definitely go check out some of the work that they do. And they’re kind of aligned on both ends of the spectrum. They do very loud packaging and minimal things as well. So I think that’s a really interesting space to track how that develops and is really emblematic of a lot of the different strategies that brands are approaching.
Andres (57:14.22) Yeah, and speaking of Stranger & Stranger, we do have some content coming up. They were involved in a presentation at Bar Convent Berlin that we will be releasing on our YouTube channel early in the next year. So look out for that.
Emmett Strack (57:30.242) Definitely, definitely. Okay, so for my next trend, I am going to just cover a little bit about moderation. It’s something that we’ve been talking about so much over the last couple of years, but I think we saw something start to crystallize within moderation a little bit this year. And I think it can be seen by our industry as less of an enemy and more of an opportunity.
You know, one of the most interesting things that happened within moderation in 2025 was this idea of moderation without abstinence. You know, moderation has gone from more of a niche thing to more established. I think it’s important to note that with this trend, people aren’t necessarily drinking less overall. They’re just changing the way that they drink and the occasions in which they drink alcohol. And this is actually creating a lot of new drinking occasions that weren’t really mainstream and it’s not that they didn’t exist, but they weren’t as readily embraced a few years ago. You think of things like early evening spritzes and the whole trend of people starting to drink earlier and earlier in the day. You know, people having at-home dinner parties, for example, where they rotate between full-proof and light-proof drinks or even zebra striping throughout a night out, which becomes a strategy more for longevity rather than restraint, I think in general. So it’s not about cutting alcohol. It’s kind of about smoothing the curve of consumption so that the whole social experience can last longer for a lot of people. And I think this is really being seen within Gen Z. You know, Gen Z being dubbed this whole sober generation. And that started to kind of even out over the last year, even more recently than that.
And they’ve started to respond and catch up to older generations when it comes to participation at the very least. So according to the latest global survey from IWSR, the share of legal drinking age Gen Z respondents who said that they had consumed alcohol in the last six months rose from 66% in March of 2023 to 73% in March of 2025. And in the US, the jump was even steeper. It went from 46% to 70% over the same period. So what’s interesting about this trend is that it actually expands total category engagement. When you give consumers some of these lower ABV options, they tend to participate in more occasions, more happy hours, you know, earlier dayparts and longer gatherings that kind of lean into social rituals. So I think that we’re starting to see moderation become just more of the norm and no longer the enemy of the spirits industry. It’s actually becoming an access point and people seem not necessarily to be drinking less often, just with more intention, which opens the door for different types of product offerings, more variety, and ultimately just more opportunities for spirits brands to meet consumers where they are.
Andres (01:00:31.767) Yeah, and Emmett, I’m going to correct you as well because we had a survey from IWSR come out earlier this year that’s kind of an update to that statistic you provided about Gen Z respondents who said they had consumed alcohol in the past six months. So it rose from 66% in March 2023 to 73% in March 2025, as you mentioned, but the latest survey has it up another point to 74%. So we are trending in a really great direction with Gen Z finally and their interest in like abstinence events like Dry January is also kind of leveling off or dropping down in a lot of markets. So I think everything you hit on here is really important and something to definitely monitor over 2026. I’m going to be taking a very close look at Gen Z and the relationship to alcohol that not just they have, but millennials and really across the board, any generation that’s participating in moderation. How are they doing it? Are they doing abstinence or are they actually participating, but in a more mindful way?
Emmett Strack (01:01:56.184) Yeah, and I think it’s just important that we reframe the whole moderation conversation from one of doom and gloom to one of it’s a force. It’s something that people are actively doing, but it just changes how people are drinking and it’s on the industry to kind of respond to that and adapt to meet them where they are, like I said. So that is my next trend. And then, Andres, why don’t you close us out with one more trend?
Andres (01:02:21.559) Yeah, so what I saw and it might be a result of some of the economic factors that we’ve faced this year and in previous years as well, but I do think it’s a really interesting data point from the Craft Spirits Data Project that tells us a lot about where the industry is headed. So since 2021, craft spirit sales in home states have increased their share of total craft spirits by 1.1 percentage points, while out-of-state sales have decreased by 1.2 points. So I think there are a few factors driving this. Like I mentioned, first, economics, right?
Multi-state distribution deals are tough for small producers. And we saw how fragile those relationships can be with what happened with RNDC again. But craft distillers, I think, are realizing, especially in times like this, that dominating your home market is often more profitable than being marginally present but in 20 states. I think a great model for that that I always like to bring up when we have this conversation is Cedar Ridge, an Iowa distillery where I just checked their social media. They just celebrated six years as Iowa’s top-selling bourbon. So it’s one of these things when you’re local, you can do your own sales calls. You can really build your own
stronger relationships with your accounts and you can do more experiential marketing like at your personal distillery. Another thing that comes to mind obviously is just when economics are uncertain, locally people want to support small businesses in their community as consumers as well. So I think this is a trend to look out for and one that I think is a positive one for the most part as well.
Emmett Strack (01:04:17.634) Great thing to bring up and the shift towards the stronger home state sales really just highlights the value of control and direct engagement for craft distillers.
And when you can control that local market of yours and experiment with different pricing and promotions and storytelling, it’s something that you just have a lot more control over in ways that wouldn’t be possible across a lot of distant states. And people always want to be this big national brand. But time and again, it really just counts to double down on where you have the most depth of reach rather than just broad spanning reach. So these home markets can be a laboratory for growth and it can allow you to build deeper relationships with bartenders, retailers and consumers on the whole. And I always think about when we asked John Oliver from Breakthrough Beverage Group at BCB this year and we asked him what he said his biggest turnoff for distributors were when spirits brands go to pitch to him. And he said, when they say, “I want to be in all states.” That is a hard no. So stay focused for sure.
Andres (01:05:23.637) Yeah, definitely good advice. Cut short and go deep, is that what they say? There you go.
Emmett Strack (01:05:28.152) That’s it, exactly.
All right, well that is going to close out our recap of the spirits industry in 2025. If you want to stay up to date on anything that is about to unfold in 2026, Andres and I are signing off for the year right now, but we are going to be coming back in January with more trends, trend watches, more interviews with some of the leaders in our industry and we’ll keep you up to date on all the latest stories that are happening. So if you guys are listening, tell us what we missed. Comment in the comment section. Send us an email to psu@parkstreet.com. Let us know what your biggest stories of 2025 were. And just thank you so much to everyone for tuning in and joining us.
Andres (01:07:31.222) Thanks for tuning in, guys.
Emmett Strack (01:07:33.454) All right, cheers. Happy New Year.