A bartender makes a signature cocktail with Casamigos at Alo Miami’s opening party on Dec. 16, 2021.
Jason Kerner | Getty Images
CHICAGO – The spirits industry is overcoming economic headwinds to meet changing consumer preferences as it erodes beer’s dominance.
Spirits revenue market share will grow from 28.7% in 2000 to 42.1% in 2022, surpassing beer for the first time ever, according to the Distilled Spirits Association of America. Beer has a 41.9 percent market share, it said.
The trade group is celebrating its 50th anniversary with its annual meeting in Chicago this week. The event brought together spirits executives, trade leaders, distilling experts and industry stakeholders to reflect on key trends that have driven but also slowed growth across the industry this year.
Despite supply chain issues and high inflation, the beverage alcohol industry still has a lot to celebrate today, said DISCUS president and CEO Chris Swonger.
“It’s a great American success story,” Swonger said of the industry’s market share supremacy. “We’re focused on continuing to stay ahead through persistence and ensuring all the positive trends we’re seeing.”
As the spirits industry struggles to retain its top spot this year amid fears of a recession, here are some of the key trends that industry leaders interviewed by CNBC believe are shaping business today.
1. Star brands steal the spotlight
More and more celebrities are putting their time and money into the spirits industry.
Celebrities from all walks of life, from movie stars to athletes, models and musicians, are championing brands, participating in distillations, dictating flavor profiles or forming partnerships within the industry.
These agreements have proven to be profitable. Actor George Clooney with his co-owners in 2017 The $1 billion sale of fast-growing tequila brand Casamigos to Diageo inspired others to get in on the action.
“I see a lot of success in the celebrity tequila space, and that intrigues me,” actor Mark Wahlberg said on a panel at the Chicago conference.
Wahlberg launches tequila brand blue arrow Partnered with Mexican co-founder Aron Marquez earlier this year. The pair have been promoting the brand across the country, which Wahlberg calls a “summer drink.”
“I have friends who are very successful in this industry, and I like to beat them at everything I do,” Wahlberg said.
“But it’s not just about the name,” he added. “Everything we did from the beginning was about the quality of the product.”
Wahlberg joins other big names capitalizing on their booze fame, including Ryan Reynolds, Sean “Daddie” Combs, Kendall Jenner, Dwayne Johnson, Michael Jordan and David Beckham m.
2. Premiumization drives luxury spirits, RTDs
During the Covid-19 pandemic, consumers Developing a taste for higher quality spirits, they are used to drinking them in ready-to-drink cocktails outside the bar.
According to DISCUS, luxury brands will grow by 4% in 2022 compared to 2021. The group’s data does not track luxury brands’ overall share of the spirits market.
The trend, characterized by consumers willing to pay more for premium bottled alcohol, has led to a surge in sales of tequila, American whiskey and other spirits.
DISCUS said tequila sales will grow 21% in 2022, while U.S. whiskey sales will rise 19%.
Meanwhile, premixed cocktails, including spirit-based RTD drinks, have followed the trend. In 2022, sales of this category will increase by 35.8% to US$2.2 billion.
Brands are catering to the demand for spirits RTDs by offering a wide range of products.
hola spirits is a Pennsylvania-based vodka company that entered the ready-to-drink space last year with a line of vodka cocktail pouches that blend organic vodka and coconut water. Their flavors include lime, watermelon, and papaya.
Patrick Shorb, president of Holla, said: “These are excellent additions to our portfolio as it has become a common expectation of the brand.”
3. No-alcohol and low-alcohol beverages are popular alternatives
In recent years, major liquor companies, including Heineken, Anheuser-Busch InBev and Molson Coors Join the craze for no-alcohol and low-alcohol beverages.
There is growing demand for these alternatives from consumers who want to drink less, or who may want to abstain from alcohol for health or personal reasons.
According to IWSR Drinks Market Analysis, sales of non-alcoholic and low-alcohol beer and cider, wine, spirits and RTD products will grow by more than 7% in 2022 in 10 major global markets.
“Especially the younger generation, who drink less and drink more intentionally,” says co-founder Tobin Ludwig. Hella Cocktail Company
The company uses botanical flavors and spices to energize its line of non-alcoholic beverages.
“You no longer need alcohol to socialize and have fun. In fact, for many people, alcohol is seen or experienced as a detractor, and choosing non-alcoholic options is now socially acceptable, at some point in the sober curiosity movement.” In some parts, it’s the norm, not the exception,” he added.
Consumers today increasingly want to feel connected to brands that share their values. Companies are capitalizing on this opportunity by highlighting their sustainability efforts, contributions to local communities, and commitment to diversity.
This trend will continue as consumers become more vocal about their priorities and begin to hold companies accountable for their practices.
More and more brands are using eco-friendly packaging in their products to reduce their environmental impact. Craft spirits, often produced by small distilleries using local ingredients and ingredients, have also grown in popularity in recent years.
Additionally, brands are doubling down on diversity-related initiatives.
Jomaree Pinkard, CEO and Managing Director Pronghornsaying it would be “not only good for society, but good for everyone.”
The company runs incubator and accelerator programs to develop black talent in the spirits industry. Its research found that while black Americans make up 12 percent of all alcohol consumers, they make up just 7.8 percent of the industry’s workforce and 2 percent of the industry’s executives.
Pinkard said this “should alarm shareholders” as consumers become more aware of the way brands interact with marginalized communities.
5. Supply chain and inflation issues persist
Rising costs for glass bottles, oil for freight and other parts of the spirits industry’s complex ecosystem are a challenge for some companies.In some cases, supply chain disruptions resulted in Consumers have absorbed price increases.
The industry breathed a sigh of relief after the European Union and the United Kingdom lifted retaliatory tariffs on American whiskey. This has allowed brewers to regain a foothold in these key international markets, but some protections may soon expire.
Lisa Hawkins, director of communications and public affairs at DISCUS, said it was “critically important that these tariffs be permanently removed” to keep the momentum going in the spirits industry.
If a deal is not reached later this year, the EU will impose a 50% tariff on all US whiskey from January.