It has become a tradition by now, as it is the 11th consecutive year in which spirits have gained market share in the US. That market share has been eroded from the beer and wine ones, new data from Discus (Distilled Spirits Council of the US) show.
Continuing gaining market share for so many years is no easy feat and proves a trend that is by now a cultural shift: Americans are loving more and more drinking high-alcohol content spirits instead of the easier to drink beers and wines. Considering that spirits are generally more expensive than any beer and the vast majority of wines, that also means an increased spending of the average American family for their alcohol intakes.
In 2020, spirits’ market shared was up 1.3% compared to 2019, reaching 39.1 of the total alcohol market. Nearly 1 every 2 purchases of alcoholic beverages in the US is now a spirit. A total increase of alcohol sales by volume was 3% in 2020. Suppliers have seen their sales soar of over 7% (7.7% to be precise) last year, reaching an impressive grand total of $31.2 billions. The overall volume of alcoholic beverages sold in the US in 2020 was 251 million of nine-litre cases. This as well showed an increase, 5.3%, compared to 2019.
Increases despite tariffs
The ongoing tariffs war between the US and EU hasn’t then prevented customers from enjoying their favorite spirits. It only stopped US and EU customers to spend more on foreign premium spirits, moving consumption towards local output. That is of course good for the local economy but not helpful in expanding the global market share of the local distilleries, both within the US and the EU.
The pandemic greatly affected the hospitality industry, reducing the purchases of spirits made by restaurants, bars and hotels as customers were forced to not frequent those places or do much less often throughout 2020. This was offset by the number of purchases of alcohol made in stores, for home consumption, and by to-go cocktails. Online delivery of cocktails or pre-made ones, ready to be taken away under the lockdown restrictions, are here to stay, with to date 18 states having filed legislation to make this way of serving cocktails permanent, even after the pandemic. In a way, the market is getting closer to the way coffee has been since decades already: reusable cups to take your coffee on the go and online stores to serve those who aren’t willing, or can’t, to go to the nearest bar or restaurant.
Alcohol sales surges in detail
The Discus report also showed us how exactly the Americans drank in 2020, and which of the many spirits showed the most increasing in its sales.
Unsurprisingly, the tariffs on EU whisk(e)y made American whisky soar in sales. Up 8.2% compared to 2019, with a net raise of $327 millions, making the overall sales of American whisky reach $4.3bn. Specifically, a revival of American rye whisky was noted by Discus, with sales up 16.9%, about $40m more than the previous year.
Whisky wasn’t the best performing spirit in 2020 within the US. It is by far the most sold and appreciated by consumers, but others have shown an even larger surge in sales in 2020 compared to it.
Tequila and mezcal sales rose 17.4%, and mezcal alone 7%. A net growth of $124 millions.
Cognac, which is an even more impressive data as it is largely subject to the US-EU trade war, reported a growth of 21.3%, with sales hitting $2.4 billions. It would have been very interesting to know how much Cognac would have progressed into the US market share if it hadn’t been one of the victims of the tariffs. A lower price would surely have helped it gain more fans within the US.
Pre-mixed cocktails, particularly helped by the to-go format and online stores’ successes in 2020, rose by 39.1%, for a total of $489 million in sales value.
Take home points
It is clear that the pandemic and the relative lockdowns caused a shift in alcohol consumption in the US. While beer and wine are still greatly appreciated and keep the crown of the market share, but spirits are catching up. It is not very far the day when spirits’ sales will overcome the beer and wine combined, becoming the majority of what Americans spend on when purchasing alcohol.
The need of consumers to revive the bar's atmosphere and quality drinks at home is clear from the Discus report. Not only sales of spirits increased, overall, but those of premium ones as well, if not more than the lower quality, and cheaper, ones. Consumers are willing to spend more for quality alcohol and are happy to buy it to pour themselves a drink at home or try to recreate the tasty cocktails that they used to drink in bars before covid-19 hit hard. Those unwilling to try bartending at home have made the to-go cocktails and pre-made ones one of the biggest successes in the spirits’ market of 2020.
It is fathomable that well crafted cocktails, ready to drink, will be a good part of the future market share of spirits. People want to experience the delicious drinks of the bars at home, at least until the pandemic is done with us. That can have a lasting impact on the market, as more people will learn more on how to mix cocktails themselves and keep fuelling the sales of spirits to keep being able to craft cocktails with their bartending home sets.
As we have seen with other beverages, like coffee and tea, a switch towards better ingredients and a recreating of the techniques of professionals at home, in an attempt to not compromise on the quality of drinks they love when forced to stay inside. Home bartending is a trend we’d be better looking at with increased attention in the future, as a source of a switch in consumers’ consideration and interests that will drive change in the spirits industry in the following years.