This year, millions of Americans are participating in Dry January — the tradition of abstaining from booze for an entire month. And the alcohol industry is waking up to a nasty hangover.
IWSR, a global data firm that researches beverages, found that the United States’ year-over-year alcohol volumes fell 2.6% in 2023 and 2.8% for the first seven months of 2024.
Per Nielsen, beer volumes declined by 2.9% last year and wine by 4.4%.
Even premium spirit brands suffered. Remy Cointreau reported a decline of nearly 23% last fall.
“Last year was a terrible year for the industry,” says Marten Lodewijks, president of IWSR US division. The “multi-billion dollar” question, he added, is whether changing consumer preferences and lifestyle choices, some brought on by increased awareness of alcohol’s health risks, will reshape the industry long term.
And right now nobody has an easy answer.
The roller coaster ride of alcohol sales
Until the last couple years, the drinking industry was steady.
Although sales of beer, wine, and spirits have each gone through cyclical lulls, the rising tide of at least one type of alcohol has led to consistent industry-wide growth. Between 1992 to 2022, liquor stores saw year-over-year sales declines just twice, according to US Census data.
The Hustle
Economic downturns have barely changed the outlook. Looking back at recessions since 1991, IWSR found that wine and spirits still saw low growth — which rose substantially the year after the recession ended.
The industry’s fortunes began to change toward the end of 2022 and into 2023 and 2024, when sales of spirits fell after 20 years of roughly continuous growth, bringing the entire industry into decline. The only spirits to see growth last year, according to Nielsen, were tequila and Canadian whisky.
Craft beer, meanwhile, continued a slide that began in the late 2000s (mainstream beer faded before that), and wine has been plateauing since around 2018.
The Hustle
Initially, Lodewijks says, the overall industry decline seemed to be a reversal of pandemic habits, when both alcohol sales and volume went up. As people started going out again, many balked when facing the markups for booze at restaurants.
“Now when they go out they don’t buy the single malt,” Lodewijks says. “They buy a blended scotch, which is just cheaper.”
But another reason for the industry-wide malaise, according to Lodewijks, is moderation. With prices up across the economy the last couple of years, consumers moderated by reducing their consumption of alcohol or buying cheaper alcohol.
They’ve also moderated their lifestyles. People have been drinking and going out less as they reconsider their alcohol habits. Last year, Gallup found45% of Americans considered drinking in moderation — defined as one-to-two drinks per day — as damaging to health. That’s roughly twice the share who did in the mid-2000s.
For middle-aged and older Americans, alcohol consumption hasn’t declined much. But Gallup discovered that 59% of 18-to-34 year olds (Gen Z and younger millennials) self-identified as alcohol drinkers, down from 72% of 18-to-34 year olds in the early 2000s. (This decline has coincided with a doubling of the share of Americans who smoke marijuana, with young people being the most likely to toke up.)
The Hustle
Similarly, GLP-1 drugs like Ozempic, which curb users’ appetites, may also lead to less alcohol consumption. Some 12% of drinkers have reported taking these drugs, according to IWSR, and its future effects on the industry are murky.
Larger economic forces cloud the picture, too. As with any number of industries, beverage companies are concerned about tariffs. If the incoming Trump administration enacts them to a wide extent, they could send prices soaring for:
Alcohol imported to the US, especially spirits like Mexican tequila, Canadian whisky, and European vodka.
Alcohol exported from the US, as foreign countries may reciprocate with tariffs.
How liquor companies adjust, Lodewijks believes, depends on consumer response. Will they pay the higher prices? Will they substitute European vodka or Mexican tequila with domestic beer and gin?
“If I had to put my money anywhere it would probably be on the US whiskey market, on the US vodka market,” Lodewijks says.
Facing the uncertainties of moderation, GLP-1s, and tariffs, he says liquor companies may try the following strategies:
Pivoting to growth: Although tariffs may dictate which drinks see gains in popularity, it’s likely non-alcoholic and low-alcoholic beverages, still just a fraction of alcohol sales, will continue to rise. Same with ready-to-drink beverages, such as canned cocktails and alcoholic teas.
Emphasizing Asia and Africa: Countries in these continents are seeing high growth rates.
Premiumization: The alcohol industry has already been trying to sell fewer liters at higher prices, largely by offering premium options for spirits priced at $50 and up. In the coming years, it may introduce premium options for lower priced spirits, trying to nab a few extra dollars on a $30 bottle of liquor.
More than anything, though, the future of alcohol may hinge on whether Gen Z’s shift to sobriety will last — or if they’ll eventually become degenerates like the rest of us.
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