Despite maintaining market share leadership over beer and wine for the third consecutive year, the U.S. spirits industry experienced a revenue decline in 2024. According to the Distilled Spirits Council’s annual economic report, spirits supplier sales in the U.S. fell 1.1% to $37.2 billion, while volumes rose 1.1%.
Revenue Decline After Two Decades
This marks the first time in over two decades that revenue for the spirits category has fallen. Spirits revenues had been growing at an average annual rate of 5.1% since 2019, compared to 4.4% between 2003 and 2019. DISCUS President and CEO Chris Swonger noted the industry’s resilience but acknowledged the impact of disruptive economic forces and marketplace challenges in 2024.
Tequila and Mezcal: Bright Spots
Tequila and mezcal stood out as the only spirits categories showing sales growth, with revenue increasing by 2.9% to $6.7 billion.
Top Five Spirits Categories by Revenue in 2024:
– Vodka: $7.2 billion (flat from prior year)
– Tequila/mezcal: $6.7 billion (up 2.9%)
– American whiskey: $5.2 billion (down 1.8%)
– Cordials: $2.8 billion (down 3.6%)
– Premixed cocktails including spirits RTDs: $3.3 billion (up 16.5%)
Impact of Mexico Tariffs
Mexican spirits and beer have grown increasingly popular with U.S. consumers, with tequila and mezcal sales surpassing American whiskey for the first time in 2023. However, the future of these products remains uncertain due to the threat of tariffs. The Trump administration recently delayed imposing tariffs on Mexican imports, including mezcal and tequila, by one month while negotiations continue.
Industry Concerns
Sonat Birnecker Hart, president and founder of KOVAL Distillery in Chicago, expressed concerns about the impact of tariffs on the craft distilling community. Many craft distillers have invested heavily in expanding into international markets, only to face setbacks due to tariffs. Swonger added that tariffs would be a “catastrophic blow” to distillers, exacerbating supply chain pressures already strained by higher interest rates.
Consumer Spending Challenges
Consumers faced some of the highest prices and interest rates in decades, leading to reduced spending on luxuries like distilled spirits. Despite a slight dip in sales, consumers continued to choose spirits and enjoy cocktails with family and friends.
The industry’s resilience and consumer preference for spirits, particularly tequila and mezcal, underscore the importance of navigating economic challenges and potential tariffs in the coming months.
Source: CNBC
