New York, NY – According to recent data from IWSR Drinks Market Analysis, the US spirits market saw a 2% decline in volume in 2023, marking the first decrease in nearly three decades. Projections indicate that the market will experience slow growth in the coming years, with a compound annual growth rate (CAGR) of just 1% from 2023 to 2028.
Persistent High Inventory Levels
Marten Lodewijks, President of the US Division at IWSR, highlighted the ongoing challenges facing the industry. “High inventory levels are expected to persist into 2024 and potentially beyond, with normalization now not expected until 2025 or early 2026,” Lodewijks stated. He emphasized that an increase in consumer demand is necessary to move existing stock through the distribution chain.
Tequila’s Ascendancy
Despite the overall decline, tequila is poised to drive value gains, particularly through premium-and-above expressions. Agave spirits saw a 4% increase in volume in 2023 and are projected to continue growing at a CAGR of 6% until 2028. This growth underscores the rising popularity and premiumization of tequila in the US market.
American Whiskey and Malt Scotch Trends
American whiskey experienced a slight 1% volume decline in 2023. However, growth is expected to rebound with a CAGR of 2% through 2028, driven by strong demand for bourbon and rye. Conversely, malt Scotch faced a significant 12% decline in 2023, with forecasts suggesting relatively flat growth over the next five years. Despite these challenges, the US remains a crucial market for malt Scotch producers.
Cognac’s Struggles and Recovery
Cognac faced a tough year, with volumes dropping by 17% in 2023. The segment is projected to remain flat in the near future, partly due to overstocking issues. Richard Halstead, COO of Consumer Research at IWSR, noted, “The latest US Cognac shipment data indicates that inventories are starting to unwind.” He also mentioned that the US Cognac consumer profile is reverting to its pre-pandemic state, skewing towards higher-income individuals, according to IWSR’s Bevtrac consumer data.
Looking Ahead
The spirits industry in the US is navigating a complex landscape with varying trends across different segments. While tequila and American whiskey show promise for growth, categories like malt Scotch and Cognac face challenges. The overall market is expected to stabilize gradually, with normalization anticipated around 2025 to 2026, contingent on increased consumer demand.
