Dave Williams 0:11
I’m the VP of Analytics and Insights at Bump Williams Consulting, a three-tier beverage consulting group. Today I’m here to talk to everyone about what’s going on with the spirits category at retail across the U.S. Over the last few years, spirits as a category overall has outpaced the growth trends of both beer and wine, picking up share of the beverage alcohol space in the process. This happened prior to COVID, during COVID, and in 2021 through 2022. Those trends have evened out a little bit as beer has seen some growth coming from imports, flavored malt beverages, and even some domestics. At the end of the day, the spirits category remains super competitive when it comes to trends and maintaining or growing its share of business. As 2022 has worn on, retail sales trends for spirits have gotten even stronger: while dollar sales are relatively flat on an aggregated year-to-date basis, trends are up around 4% over the latest four weeks alone. That’s a really strong acceleration heading into the back half of the year, where spirits typically excel over the holiday stretches.
Dave Williams 1:32
Within spirits, a lot of what has been driving growth for the category is consumers’ willingness to buy premium brands—the premiumization trend. With inflation rising, purse strings tightening, and price increases happening at retail, the question we ask ourselves is: are those premiumization trends consistent in today’s environment? To some extent, yes. We’re still seeing growth among ultra-high-end price tiers within the spirits world. It might not be as fast as in prior years, but it’s certainly still growing, which is a good sign that consumers are willing to treat themselves as long as the quality justifies the price point. On the flip side, we’ve also seen improved trends on entry-level or value-priced brands. That means some shoppers might be trading down or being more selective per occasion. It’s not a complete abandon-ship mode because high-end shoppers are still active, but it’s something to note regarding retail strategy and price sensitivity.
Dave Williams 2:40
One of the other things we’ve learned looking at data over the years is that consumers in the beverage alcohol space tend to shift across categories depending on the occasion. Recent survey work suggests that around 70% of consumers drink wine, beer, and spirits. Response rates across those three categories are pretty tight, meaning there’s significant competition for beverage alcohol occasions. When digging deeper into the data, a clear strength for spirits over beer or wine is consumer demographics. While beer skews slightly more toward males and wine toward females, spirits demonstrate an even balance between male and female consumers. This tells me spirits have a well-diversified consumer base with the ability to reach both genders equally when competing for consumption occasions.
Dave Williams 3:40
Another strength for spirits from recent survey data is that the category appeals strongly to Gen Z and new legal-drinking-age consumers. In fact, spirits are consumed by a higher percentage of Gen Z than Gen X or Boomer generations. Spirits are doing a great job building a “farm team” of consumers—excelling in the short term while establishing a long-term foundation. Many of these shoppers are introduced to spirits via RTDs (ready-to-drink) or traditional cocktails. Whatever the entry point, it’s a good sign that spirits resonate with new consumers while continuing to source occasions from legacy consumer bases.
Dave Williams 4:57
So what’s the long-term outlook for spirits? Number one, spirits are winning with younger shoppers and building that foundation for the future, which sets the category up for long-term success. Number two, the emergence of RTDs acts as a gateway for consumers to experience spirits for the first time. Whether those translate into traditional cocktails down the road or lead to higher consumption frequency, it drives sustained long-term category growth. Number three, regarding premiumization, consumers remain willing to treat themselves on high-end brands as long as product quality justifies the price tag.
Dave Williams 6:01
Growth across spirits is multifaceted—it’s not just the rising RTD space, but also tequilas, whiskeys, cordials, and select vodka, gin, and rum brands. Shared efforts across categories create incremental gains for spirits as a whole, rather than relying on a single segment to do the heavy lifting. Finally, alongside national brands, regional and local brands are experiencing substantial success. As long as brands hit the attributes, styles, and price points consumers are looking for, there is room for everyone to succeed. There is a long runway for distillers and suppliers of all shapes and sizes to find sustained success in the spirits category today. Thank you!
