There is much commentary in beverage alcohol trade publications on the trends in the US beverage alcohol market in 2024. Much of the news is negative. BW166 has just issued the Total Beverage Alcohol Overview for December 2024 with a special addendum. The report tracks 100% of the total beverage alcohol entering the US market based on TTB, customs, and other government sources. Different data sources portray their information as a view of the total US market but often only account for about 50% to 60% of the total market.
The reality is that 2024 was a rough year, but there are some bright spots. Looking across the market at Beverage Alcohol and Economic trends, the following highlights some of the key metrics.
Consumers increased spending on Beverage Alcohol to $408.8 billion (+3.2%) across both off-premise and on-premise channels. The data is sourced from the Bureau of Economic Analysis (BEA), which reports on significant economic data such as GDP and Personal Consumption Expenditures (PCE), which account for over two-thirds of GDP. The BEA data demonstrates the premiumization of Beverage Alcohol growing from 1.80% of PCE to 1.96% of PCE over the past decade. This is a material shift, but it is interesting to note that in 1960 spending on Beverage Alcohol accounted for 3.44% of PCE.
The BEA relies on survey data from the Census Data, which performs an economic census of businesses across the US every five years. They supplement this with monthly surveys of various Key channels. Trends for all consumer spending in channels important to the Beverage Alcohol industry in 2024 were:
- Supermarkets and Grocery Stores – $853,8 billion (+0.9%)
- Warehouse Clubs and Supercenters – $667.2 billion (+5.0%)
- Beer, Wine, and Liquor Stores – $73.8 billion (+2.4%)
- Full-Service Restaurants & Drinking Places – $566 billion (+5.3%)
Sales of Beer, Wine, and Spirits Wholesalers totaled $185.3 billion, -1.0%. Many sources have reported increased inventories at wholesalers compared to pre-pandemic levels. BW166 estimates that the carrying cost for inventories has tripled over the past five years due to higher inventory levels and interest rates. The carrying cost has increased from 5% of operating profits to 16% over this period.
All Wine shipped into the US in 2024 totaled 362 million 9L cases, a decline of 4.2%. Domestic bottled products were down 8.7%, while imports were up +6.6%. A bright spot in the Wine market were flavored Wine Beverages, +28%. Imported Sparkling wines and Imported Still Wines were also bright spots, +7.5% and +2.2%, respectively.
Beer and cider shipments into the US totaled 2.62 billion cases (2.25gals), a decline of -1.8%. Domestic Beer drove the decline, with a decline of -3.5%. Imported beer was another bright spot, with volumes of 579 million cases, +4.8%. Cider declined from 19 million cases to 18 million.
Spirits shipments into the US totaled 307 million cases, an increase of 5.7%. The key driver of growth was RTDs packaged in the US. The TTB reporting included RTDs in both Cordial and Cocktail segments. These two segments for products packaged in the US totaled 115 million 9L cases, +21.1%. This was an increase of 20 million cases in 2024 versus a growth of 26 million cases in 2023. Excluding these two segments, all other spirits packaged in the US totals 110 9L cases, a decline of -3.3%. Packaged imports totaled 82 million 9L cases, which was basically flat compared to 2023. A bright spot for imports was 29 million cases of Tequila, a growth of +5.3% versus 2023.
BW166 has an index of total servings of beverage alcohol entering the market. A serving is 12 ounces of Beer, 5 ounces of Wine, 12 ounces of Flavored Wine Beverages, 1 ½ ounces of traditional Spirits, 3 ounces of Cordials, and 6 ounces of cocktails. The calculation may slightly overstate the total servings given the growth of Spirits RTDs at 6% to 8% alcohol content. The index is based on 2003 = 100. At the end of 2024, the index stood at 118.04, a decline of -1.10% from 2023.
BW166 also has an index of servings per legal drinking-age adult. The base is also 2003 = 100. At the end of 2024, the index stood at 93.5, a decline of 1.98% from 2023 and a 6.5% reduction from the average between 1995 and 2022.
These two indices demonstrate a decline in the volume of beverage alcohol in the US market, although, as noted at the beginning of this post, consumers continue to increase their spending. Unfortunately, some recent Gallup survey data support the reduction in the market.
- Gallup reports that over the past two years, the percentage of adults who believe that moderate consumption of alcohol is not healthy has increased from 30% to 45%. This is driven by people under 30.
In addition to consumer attitudes toward beverage alcohol, the category has become more expensive. Over the past 30 years, average annual pay has been up 127%. The Off-Premise cost of Beverage alcohol per serving has increased by 200%, and the on-premise cost of beverage alcohol per serving has increased by over 300% during this same period.
The attitudes of younger consumers, coupled with the elevated costs, do not bode well for a broader adoption of Beverage Alcohol, especially with younger consumers. Couple these points with the pressure put on alcohol with claims of cancer risk, and the industry has some strong headwinds to deal with. The industry needs to address how to change perceptions and consider how to make products more affordable for younger consumers while contemplating the risk of class action lawsuits.
The industry has not faced these types of challenges since the 1980s. The solutions are more complicated today.