As consumer preferences within beverage alcohol have shifted in recent years, research shows that premiumization, which has been a driving force for wine and spirits as of late, is one of just many trends impacting the future of these markets.

Like many other beverage categories, inflation has impacted sales within wine and spirits. However, the U.S. spirits market seems to have weathered this challenge fairly well, experts noted.

“Alcohol has become viewed as almost a non-discretionary product in many U.S. households, consumers will purchase alcohol regardless of economic conditions, although the quality and preferences may shift,” said Brigette Thomas, a senior industry research analyst at New York-based IBISWorld, in Beverage Industry’s April issue. “For example, during economic downturns, consumers drink more at home and when conditions are good, they go out to drink more. Overall, although alcohol prices have increased over the past year, the alcohol market experienced growth in both volume and revenue.”

Thomas attributed premiumization as well as on-premise traffic as contributors to spirits 2022 performance.

“Growth in the market has been driven by continued trends in premiumization, product innovation and increased demand from bars and restaurants following the lows of the pandemic,” she said.

At its annual economic briefing, the Distilled Spirits Council of the United States (DISCUS) President and CEO Chris Swonger noted that sales for supplier spirits were up 5.1% in 2022 to a record total of $37.6 billion. Volumes rose 4.8% to 305 million 9-liter cases.

According to 52 week data ending May 21 from Chicago-based Circana, spirits sales were up 5.3%, totaling $11.1 billion in total U.S. multi-outlets with convenience. Volume performance also continues to outperform other beverage alcohol markets with case sales up 6.5%, based on Circana data.

Two of the biggest growth segments for spirits are premixed cocktails and spirits seltzer centric. According to Circana data, premixed cocktails were up 24.8%, exceeding $1.1 billion, while spirits seltzer centric was up 85.8%, totaling $445 million, for the 52 weeks ending May 21.

Recently, The Boston Beer Co.’s Truly Hard Seltzer reintroduced its first spirits-based seltzer as Truly Vodka Soda. Rolling out now in time for the summer season, Truly Vodka Soda combines six-times-distilled vodka, real fruit juice and premium flavors, it says.

*Includes brands not listed
Source: Circana, Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending May 21.

All Truly Vodka Soda flavors are 5% ABV with just 110 calories, 2 grams of sugar, and are naturally gluten free. The spirits-based seltzers are available in three variety packs: Truly Vodka Soda Classic Pack: Lime, Mango, Blueberry, and Pineapple flavors; Truly Vodka Soda Paradise Pack: Mango, Watermelon, Passion Fruit, and Blood Orange flavors; and Truly Vodka Soda Twist of Flavor Pack: Blackberry & Lemon, Cherry & Lime, Pineapple & Cranberry, and Peach & Tangerine.

Experts also had noted the growing impact convenience is having on the spirits category. 

“Premixed cocktails and spirits seltzers led absolute dollar sales gains, as well as share gains,” said Scott Scanlon, executive vice president of BevAl at Circana, in Beverage Industry’s April issue. “Tequila was the only other positive share gainer among spirits categories.

Grace Wood, also a senior industry research analyst at IBISWorld, noted that RTD cocktails and tequila currently are taking the spotlight. 

“RTD cocktails and tequila are rapidly gaining popularity, having outpaced all other spirits categories over the past year,” she said in Beverage Industry’s April issue. “Premiumization trends are boosting these segments, compounded by a shift in consumer preferences toward spirits-based RTD cocktails instead of malt-based cocktails.”

Brian Sudano, managing partner at Beverage Marketing Corporation (BMC), New York, also highlighted the benefits the spirits market enjoyed for trading up mentalities. 

“The fastest-growing categories are premium to the total spirit market, tequila and Irish whiskey, which contributes significantly to overall premiumization within spirits,” he said in Beverage Industry’s April issue.

*Includes brands not listed
Source: Circana, Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending May 21.

IBISWorld’s Wood noted that health and wellness also is impacting the category. 

“Health consciousness is driving innovation in spirits, especially mixed spirits like prepared cocktails and hard seltzers,” she said in Beverage Industry’s April issue. “Mixed spirits producers are marketing new, low-calorie flavors to appeal to health trends. Craft spirits are also rapidly emerging as consumers, especially younger drinkers, are eager to try new brands and support local distillers.

Circana’s Scanlon suggested that the sober-curious movement will gain popularity among the spirits category, as well as sustainability measures. 

“Trends of mindful moderation will lead to more innovation in no/low spirits,” he says. “At the other end of the spectrum, consumers are looking for bold flavors and full-strength RTDs — moving away from current seltzer offerings. Sustainability, eco-friendly, single sourced spirits, while not a lot of volume, will continue to grow as consumers have heighted awareness.”

Earlier this year, Dr. Zero Zero launched its Amaro non-alcohol version: AmarNo. AmarNo was created by master “Amarologists” in Trieste, Italy, with extracts of sage, wormwood, Chinese rhubarb, quassia and orange, traditionally considered to stimulate smooth digestion and enhance energy level, the company says. AmarNo is a complementary component to creative cocktails, without adding alcohol, it adds.

In the wine market, however, the aspect of celebration has consumers turning to sparkling wine.

“Pent-up demand to celebrate weddings, holiday gatherings and other personal milestones after the restrictions of the COVID-19 pandemic helped accelerate sparkling wine growth to double digits in 2021,” said Adam Rogers, research director at IWSR drinks market analysis, in Beverage Industry’s February issue. “In the U.S., on-premise is also helping to bolster sparkling wine’s popularity, for example, through the brunch occasion.”

Mike Wyatt, consultant at Circana, also noted the positive impact that sparkling wine and Champagne are having on the U.S. wine category in Beverage Industry’s February issue.

“Sparkling/Champagne are attracting new consumers, resonating with existing consumers as evidenced by increased spend per consumer, and ultimately contributing a disproportionality high share of growth,” Wyatt said. “The positive contribution has been most notable in the $13-$35 price tiers. … With regard to type/flavor, Prosecco has been a standout.”

IBISWorld’s Wood echoed similar sentiments in regards to the sparkling wine segment. 

“Sparkling wine is growing in popularity, with Champagne and Prosecco in particular, experiencing substantial growth in sales,” she said in Beverage Industry’s February issue. “Younger consumers are especially fond of sparkling wines.”

According to 52 week data ending May 21 from Circana, sparkling wine/Champagne sales were $1.7 billion, up 0.6%, in total U.S. multi-outlets with convenience. However, case sales were down 3.1% during that same time period.

Table wines still account for a much larger portion of the U.S. wine market with sales totaling $11.6 billion; however, this is a decrease of 1.9% for the 52 weeks ending May 21, based on Circana data. Case sales also were in decline for table wine with Circana data showing it down 5.8%.

Despite some of the challenges that the wine category has experienced, experts pointed to the positive impact that premiumization as well as innovative packaging is having on the market.

Circana’s Wyatt notes that super-premium and luxury wines have performed the best, aligning with the premiumization trend from the past few years.

“Essentially, wine consumers continue to seek quality, either perceived or real, and are willing to pay a premium for it, which is driving pockets of growth within wine, regardless of overall wine category trends,” he said in Beverage Industry’s February issue.

Packaging also is affecting the U.S. wine market performance.

*Includes brands not listed
Source: Circana, Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending May 21.

“Smaller packaging, like canned wine, has gained favor among younger drinkers,” IBISWorld’s Wood said in Beverage Industry’s February issue. “Producers are also using lighter packaging materials to lower distribution costs.”

Circana’s Wyatt also notes how convenient packaging is important for wine consumers. 

“Packaging innovations and expansions have created more usage occasion options for consumers with an emphasis on convenience and freshness longevity, such as cans and boxes respectively,” he said in Beverage Industry’s February issue. “New item launches in cans and the subsequent sales have tapered off somewhat in the past year, but box sales have been strong, especially the 3 liter and 0.5 liter sales.” 

E. & J. Gallo Winery, Modesto, Calif., recognized the impact that canned wine is having on the market when two years ago it obtained exclusive U.S. distribution rights for Bev, a premium canned wines and spritzers. Recently, Gallo announced that it acquired Bev and its portfolio.

Gallo’s Bev portfolio features Bev Rosé, Bev Blanc, Bev Gris, Bev Noir, Bev Glitz, Bev Glam, Bev Glow, Bev PRIDE, and the newly released Bev Brite. All varietals are from California and are available in four-packs of 250-ml cans and retail between $15.99 and $17.99.

“After meeting Alix [Peabody] two years ago, I could sense the power of the Bev brand, and I respected the innovation and unique approach to reaching consumers,” said Stephanie Gallo, Gallo’s chief marketing officer, in a statement. “I immediately knew we had to find a way to work together. At Gallo, we are on a mission to serve joy as we win new friends for wine, which means ensuring consumers have access to products that make them feel welcome. 

“As an industry, we are adapting and evolving to remain relevant to the next generation of alcohol beverage consumers,” she continued. “I see the Bev portfolio as a welcome addition to Gallo’s product family that will allow us to continue to offer our consumers beverage options to celebrate any occasion.”

Going forward though, it looks like the wine and spirits categories will continue on its current path. In BMC’s “Alcohol Beverages Trend Analysis in the U.S.” report, the market research firm project that wine will experience declines of 1.3% in 2023 while spirits will see increases of 3.9% for the year.