“That’s the spirit” is often a phrase used in cheerleading chants or as a way to show encouragement toward someone. The spirits category within the beverage industry has been “getting into the spirit” with innovations and creations that keep consumers interested.

Michele Scott, associate director of food and drink at Chicago-based Mintel, and Sydney Reibe, food and drink analyst at Mintel, explain that following years of measurable growth, the spirits market in the United States decelerated over the past year.

“The U.S. spirits market saw slowed growth compared to recent years, but did not outperform the alcohol market at large,” they say. “Growth in white spirits was driven primarily by the tequila segment, while other segments like vodka, gin, and rum struggled to make significant gains. Whiskey remains responsible for the growth of dark spirits.”

Mitch Madoff, head of retail partnerships at Keychain, New York, notes that the spirits market has experienced steady growth in the past year. The market continues to thrive, he says, due to evolving consumer preferences and exciting innovations.

“Ready-to-drink (RTD) cocktails are gaining momentum, offering convenience and premium-quality flavors that appeal to modern lifestyles,” Madoff explains. “Agave-based spirits, like tequila and mezcal, remain fan favorites, with strong demand fueling their growth.”

More recently, consumers are leaning toward a balance of premium and value-driven options, Madoff adds, exploring new brands and unique flavor experiences.

“Younger shoppers in particular are shaping the market by seeking products that offer a sense of authenticity, craftsmanship and sustainable choices,” he says. “Innovation is at the heart of the industry, with brands introducing bold flavors, eco-friendly production methods, and functional ingredients to meet changing tastes. Keychain helps brands stay ahead of these trends, creating standout products that match the wants and needs of today’s consumers.”

Premiumization is a trend that is impacting the spirits category, driving growth as more consumers seek high-quality, experience-driven drinking options, Madoff says.

“Consumers are willing to spend more on craft, small-batch and aged spirits, favoring products with unique flavors, premium ingredients and compelling brand stories,” he explains. “This trend is especially strong in tequila, whiskey, and gin, where high-end brands like Clase Azul Tequila and Monkey 47 Gin are in high demand. Limited-edition releases and collaborations, like WhistlePig’s Pit Viper Rye or Patrón El Cielo, also drive excitement.”

Simultaneously, economic pressures have led to a balancing act, Madoff notes, with many consumers alternating between premium splurges and more budget-friendly spirit options.

“Popular mid-tier brands like Espolòn Tequila and New Amsterdam Vodka continue to see strong sales as consumers look for quality at an affordable price,” he says. “With inflation still a factor, shoppers are being more mindful of their spending, but are still dabbling in spirits that deliver both value and enjoyment.”

Cara Piotrowski, client insights consultant at Circana, Chicago, also says that premiumiziation trends continue to drive growth for the category. 

Improved quality and taste, “coupled with convenience, availability on shelf and comparable ABV (alcohol-by-volume) to malt beverages, have premiumized the RTD space significantly in recent years,” making it the growth driver of the total spirits category in 2024, Piotrowski says.

“Premium traditional spirits have seen some growth with less price increases, yet they are outpacing lower-priced spirits,” she adds.

Mintel’s Scott and Reibe echo similar thoughts.

“Premiumization impacts the spirits category by driving innovation and marketing trends toward top shelf, celebrity-owned brands and those with strong ties to authenticity and heritage, particularly for the tequila and agave-based spirits,” they share. “In the dark spirits category, a focus on the craft of spirit-making has boosted bourbon, specifically. Claims about quality, flavor, and brand legacy/story have helped solidify bourbon’s role as a hobby, both as a collector’s item and general connoisseurship.”

Jon Berg, vice president for alcohol industry at NielsenIQ, and Kaleigh Theriault, associate director for alcohol industry at NielsenIQ, say that spirits premiumization is unique when considering shopper versus consumer.

“The shopper still supports premiumization in gifting and entertaining at home,” they say. “BevAl consumers have historically sustained their premium brand choices as a self-identifier and, in some cases, as part of the social fabric within their given personal networks. Even though that is the mindset, moderation pressures are likely to decrease overall consumption, and we expect will impact less spirits purchasing this year across all price tiers.”

Catering to consumer trends

Beyond premiumization, other consumer trends are influencing the spirits market. The sober-curious movement as well as the creation of alcohol-removed spirits, are impacting the category, experts note.

“Consumer concerns about health and well-being are motivating some to drink less, moving them away from alcohol and to categories like energy drinks and alcohol alternatives,” Mintel’s Scott and Reibe state. “This shift is most evident with Gen Z consumers, and brands have responded by diversifying offerings, including alcohol-free and low-alcohol products.”

Although small, the alcohol-removed spirts category has experienced continued growth (up 99% vs. a year ago (YA), gaining share within the total U.S. spirits category, Circana’s Piotrowski says.

“Additionally, a new wave of mocktails like AF, Aplos, Mingle, and Three Spirit have ushered in non-alcoholic offerings with improved taste, quality,y and ingredients, meeting consumer needs for mood elevation without the alcohol,” she explains.

Keychain’s Madoff says that the sober-curious movement and rise of zero-proof spirits are transforming all sectors of the alcohol market.

“Many consumers are re-evaluating their relationship with alcohol due to the rise of health and wellness trends seen on social media and in mainstream culture,” he shares. “While traditional spirits like whiskey, vodka, and tequila remain in strong demand, alcohol-removed spirits are gaining traction, particularly among younger consumers. At Keychain, we’re seeing this movement firsthand, with more consumers seeking thoughtful alternatives to traditional alcoholic beverages.”

Madoff adds that this growing interest is pushing brands to innovate, creating unique, flavorful non-alcohol products like Ritual Zero-Proof Gin, which mimic the complexity of aged spirits.

NielsenIQ’s Berg and Theriault share that adult non-alcohol products will approach $1 billion in sales soon, but still remain less than 1% of total BevAl sales.

“It’s important to note that 93% of non-alcohol buyers are still purchasing alcohol products as well,” they say. “This shows non-alcohol as an important moderation ingredient.”

Nielsen’s experts list the following as other notable trends:

• Non-alcohol and moderation lifestyle preferences
• Dietary guidelines and consumer wellness attitudes, including GLP-1
• Economic pressures including overall consumer pricing
• Social norms and behaviors reshaping consumption patterns beyond moderation
• Artificial intelligence (AI) in terms of marketing and for retail pricing/promotional events

Mintel’s Scott and Reibe note that consumers are increasingly focused on versatility, convenience, and flavor, as seen in the growth of tequila and RTD segments.

“Additionally, cocktail culture, especially among younger consumers, is growing, leading to a thirst for knowledge and customization in beverage choices,” they share. “Consumers continue to be interested in premium offerings and the heritage and process behind the spirits they choose.”

Keychain’s Madoff notes that consumers value sustainability and transparency, gravitating toward products with ethically sourced ingredients, environmentally friendly packaging, and attractive brand storytelling.

“Mindful drinking is also on the rise, with more people embracing moments like Dry January to reset after the holidays and focus on their wellness,” he says. “Some are cutting back on alcohol altogether, while others are exploring THC-infused beverages and spirits like Nowadays, which is gaining traction as an alternative to traditional spirits.”

Social media also is continuing to shape trends, Madoff adds, with influencers driving excitement through cocktail tutorials and creative drink recipes.

“This mixology content not only keeps spirits top of mind, but also inspires consumers to experiment with new flavors, helping to grow the category,” he shares.

Ebbs and flows

As for how various spirits segments performed, Circana’s Piotrowski shares that premixed cocktails realized accelerated growth in 2024, up 25% versus prior years, and drove overall spirits gains.

“Spirits seltzers, tequila, and whiskey grew dollars, but at a slower rate vs. 2023,” she notes. “Vodka, rum, and brandy/cognac led dollar declines for spirits vs. 2023.”

Mintel’s Scott and Reibe state that the tequila segment faired the best compared with previous years, continuing to lead growth in the white spirits category.

“In contrast, vodka, gin and rum have struggled to make significant gains, with some segments experiencing declines in volume sales,” they say. “Irish and Canadian whiskey performed especially well compared to previous years, though American whiskey performed better overall, with bourbon a close second.”

Keychain’s Madoff shares similar thoughts.

“Tequila and mezcal have seen the most impressive growth compared to previous years, benefiting from a growing consumer interest in agave-based spirits,” he says. “Brands like Don Julio have capitalized on this trend, with younger consumers particularly drawn to tequila’s versatility in cocktails.”

Keychain data shows that RTD brands like Surfside, High Noon, and Cutwater are performing exceptionally well, Madoff shares.

“The demand for convenient, high-quality drinks has fueled the category’s growth, making it a top choice for consumers seeking a quick, premium cocktail experience,” he adds. “On the other hand, shoppers have shifted away from traditional liqueurs and flavored whiskeys, like Baileys Irish Cream and Crown Royal Vanilla, as they move toward premium, lower-sugar options.”

Keychain has observed a shift driven by growing consumer awareness around health-consciousness and the influence of social media, where products with cleaner ingredients and healthier profiles are gaining traction, Madoff says.

The Keychain expert shares how potential tariffs could impact the spirits category.

“Tariffs on imported spirits could pose challenges for the market, potentially leading to higher prices and a change in sourcing strategies,” Madoff says. “Some brands may explore more local sourcing and production adjustments to mitigate tariff impacts, which could potentially reshape the competitive landscape.”

Although it is difficult to predict exactly how high prices could go, Madoff notes that, if supply becomes tight and costs stay high, consumers will see meaningful price hikes.

“At Keychain, we help brands navigate these challenges by staying ahead of industry shifts and adapting to changing market conditions,” he says. “Whether it’s exploring new manufacturers or identifying new growth opportunities, we work closely with our partners to ensure they remain competitive.”

Mintel’s Scott and Reibe share coinciding thoughts.

“Potential tariffs could significantly impact the spirits category by increasing prices and impacting availability,” they say. “With consumers already facing financial strain, higher prices due to tariffs could lead to reduced consumption and amplified category attrition. With much of dark spirit growth coming from imported varieties, the size and shape of dark spirits will likely look quite different if tariffs are implemented.”

Predictions for the future 

Experts share their forecast for the future of the spirits market.

“I expect to see continued growth in RTD cocktails as offerings and innovation align with consumer trends, while benefiting as an affordable luxury in the current economic environment,” Circana’s Piotrowski says. “Traditional spirits will continue to face headwinds as consumers reassess their alcohol consumption, as well as their discretionary income.”

Mintel’s Scott and Reibe anticipate that the market will experience flat to moderate growth.

“However, performance may be uneven across different segments, with premium tequila and RTDs expected to continue driving the market forward,” they say. “Whiskey will continue to lead dark spirits; specific segment growth will depend on how economic policies affect the price of imports.”

Although economic shifts and potential regulation changes might bring some uncertainty, Keychain’s Madoff notes that the spirits market is still on track for steady growth in the next year.

“It’s unclear how new tariff policies might shake things up, but for now, the outlook for the spirits category remains strong,” he concludes. “Innovation, premiumization, and the rise of ready-to-drink and hand-crafted spirits will fuel the category’s growth in 2025. As consumers seek high-quality, experience-driven drinking options, brands will continue to push the boundaries of creativity and craftsmanship.”