Memorial Day weekend signals the start of the summer gathering season. Hosts and attendees alike will be wondering what folks will want to drink.
Here’s some of the trendiest choices to stock:
Americans continue to spend more on spirits such as whiskey, vodka and tequila as they perfect their own cocktail mixing techniques. Spending on spirits at retail rose 1.2% in 2022, according to data from Bump Williams Consulting, a Shelton, Connecticut firm, which services the alcoholic beverage industry and uses NielsenIQ data. Consumer spending on beer rose 2.2%, while sales of wine at retail declined 2.4% in 2022, according to NielsenIQ.
Entertaining at home remains popular as spending at restaurants and bars fell 3.7% in 2022 and has not returned to pre-pandemic levels, according to research from Circana, formerly IRI and The NPD Group. “Mentally everyone still has in the back of their mind, ‘Oh, should I be out there?’,” said Scott Scanlon, executive vice president of beverage alcohol for Circana.
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Also, many establishments have lower staffing, so the experience isn’t as good as before the pandemic, Scanlon said. “And even though, on premise inflation is not as much as off premise, it’s still a more expensive way to drink. So there is just less of an appetite to go back to them on-premise venues than prior to the pandemic.”
Some of the signs that Americans are drinking less
- Inflation. Consumer prices were up 4.9% in April 2023, compared to a year earlier, according to the Labor Department’s consumer price index. Alcoholic beverages prices were slightly better, up 4.6% in April 2023. But beer was up 5.9%, likely cutting into some spending; wine was up 2.5%, and spirits, 1.5%.
- Pricier choices. It may seem counter to trends, but some customers are willing to pay more for a pricier product such as a canned cocktail or imported beer rather than a typical domestic premium beer. For instance: A four-pack of Dogfish Head Vodka Lemonade canned cocktails costs about $13, while a six-pack of Budweiser is $11 or $12.
- Non-alcoholic options. Sales of non-alcoholic beverages – non-alcoholic beer, flavored waters, juices, teas and more – grew 3% in 2022, according to Circana. Generation Z consumers were most likely to opt for non-alcoholic drinks, with about 11.3% choosing them in 2022, Circana says.
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Most recently, “the biggest change may be seeing the continued declines of the domestic premium light segment with the massive declines in Bud Light sales at retail,” said industry consultant Bump Williams.
The boycott against Bud Light after its marketing partnership with transgender influencer Dylan Mulvaney has led to a 23.3% decline in revenue for the previous four weeks ending May 13, according to data from Bump Williams Consulting/NielsenIQ. Other Bud brands are seeing declines, too: Budweiser (9.7%), Michelob Ultra (3%), and Busch Light (2.6%), for the four weeks ending May 13.
Meanwhile, Coors Light, Miller Lite Beer and Pabst Blue Ribbon each are seeing upticks of 21% in sales in dollars, figures show.
Here’s how the consumer spending on alcohol at retail breaks down:
Breaking down the alcoholic beverage market share
- Spirits, which includes prepared cocktails such as Jack Daniels and Coke canned cocktails and The Perfect Cosmo by SJP, grew its market share of spending at retail to 24%, up from 21.5% in 2019, with sales of $21.4 billion, according to Bump Williams Consulting and Nielsen IQ data. Sales in 2023 are stable with ready-to-drink cocktails and tequila driving growth. (Note: Retail sales include supermarkets, drug stores, convenience stores and other retail outlets, but don’t give a complete picture of the alcoholic beverage market because there are some restrictions on where spirits and wine can be sold.) More summer sips: “With spirits we are seeing unusually high demand for bourbons/brown spirits alongside tequila and vodka,” Williams said.
- Beer, which also includes hard seltzers such as White Claw and Truly, flavored malt beverages like Twisted Tea and cider, accounted for nearly 54% of all spending at retail in 2022 down from more than 55% in 2019, sales totaling $48.3 billion. So far this year, beer sales are holding steady. More summer sips: All of the Modelo beers including Modelo Oro, a light beer, as well as New Belgium Voodoo Ranger Juice Force Imperial Hazy IPA, and Cayman Jack and Fishers Island canned cocktails, and Simply Spiked juice drinks.
- Wine declined from 23.4% of retail spending in 2019 to about 22.8% currently – totaling $19.9 billion in 2022 – with total wine sales remaining stable. Most of the wine growth is coming from canned wine drinks and prosecco from brands such as LaMarca. More summer sips: Buzzballz Chillers wine-based cocktails and mini bottles from Barefoot, LaMarca and other wine makers.
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Tequila and prepared cocktails give a shot to spirits sales
Tequila sales, which rose 7.3% in 2022, are up nearly 6% so far this year, according to NielsenIQ. Whiskey and vodka remain the most purchased spirits at retail, but are down slightly.
Nearly all of the growth in spirits can be attributed to the tequila and prepared cocktail segments, Williams said, “but there are obviously great growth brands within each segment of spirits like Tito’s Fireball, Woodford Reserve, Wild Turkey, Bumbu Rum, New Amsterdam, and a multitude of local Craft Distillery brands.”
High-end and premium tequila and American whiskey helped push total spending on spirits, including bars and restaurants, to a record $37.6 billion, according to the Distilled Spirits Council of the United States. Also driving growth: premixed cocktails, which rose nearly 36% in 2022, the council said.
“While many consumers are feeling the pinch from inflation and reduced disposable income, they are still willing to purchase that special bottle of spirits choosing to sip a little luxury and drink better, not more,” said Christine LoCascio, the council’s chief of public policy & strategy.
Tequila has been the latest spirit to see plenty of celebrities get involved. Thomas Rhett and his cousin Jeff Worn launched Dos Primos Tequila in 2021 and just expanded the lineup with Dos Primos Añejo ($56-$59) in March. Coming in mid-June: Santo Tequila Añejo ($74.98), the latest tequila from Santo spirits founder Hagar and partner and celebrity chef Guy Fieri.
Shoppers have been willing to trade up for more expensive spirits and canned cocktail variety packs. Among brands looking to capitalize on the trend is Jack Daniel’s, which released 10-year and 12-year-old Tennessee Whiskeys in March, priced at $70 and $80, respectively.
Tequila, flavored vodkas and ready-to-drink cocktails will remain hot in 2023, Scanlon said. And consumers who want to “drink better” will spend more on premium beer and wine. “As long as people have jobs, they want to treat themselves,” he said. “And the best way to treat themselves is that premium product.”
Beer sales not quite flat. Modelo is a top performer
Modelo has been the top selling beer brand at retail so far this year, up 8.1%, leading the way in an imported beer category that rose 9% in 2022, according to NielsenIQ data.
When craft beer is factored in, consumer spending on beer in the U.S. rose about 15% to $115.4 billion in 2022, up from $100 billion in 2021, according to the Brewers Association. But total beer volume fell 3.1% in 2022, the trade group says, which also suggests beer prices have risen.
Imports grew to 22.2% of beer market, with domestic beer accounting for 64.5% and craft beer 13.2%, the association said.
But consumers continue to visit local and regional breweries and purchase craft beer at retail as craft beer sales rose 6% over 2021, to $28.4 billion in 2022, and there’s a record 9,552 breweries in the U.S., the group says.
Wine spending is down, but some brands including 19 Crimes Snoop Dogg fare well
Wine’s share of all drinks – alcoholic and non-alcoholic – has fallen from 13.5% in 2020 to 10.8% this year, according to Circana research.
The wine category “has been in trouble for a little while and I thought as many also did that the pandemic would really help wine out.,” Scanlon said. But instead, spirits and other alcoholic beverages – and non-alcoholic drinks, as well – cut into its market share.
But some specific brands have done well including Josh Cellars, Decoy, Meiomi, and La Marca Prosecco. Another winner: 19 Crimes Snoop Dogg wines, including Cali Red, Cali Rose and Cali Blanc, which has caught the attention of Black consumers who might not have considered wine previously, Scanlon said. “When a celebrity can pull in either a younger consumer or expand the demographic, that’s where the benefit of the celebrity really comes in,” he said.
Canned beverages from High Noon to hard seltzers continue to quench thirsts
Hard seltzers, led by brands such as White Claw, High Noon, Truly and Topo Chico, as well as beer makers including Corona, Bud Light, Michelob Ultra Organic Seltzer, and Vizzy Hard Seltzer from Blue Moon, grew from $1.6 billion in 2019 to nearly $4.7 billion in 2021.
But the category dipped in 2022 to $4.2 billion, according to NielsenIQ, and is down about 15% this year.
Other flavored malt beverages have been picking up the pace, including Smirnoff Ice and Boston Beer-owned Twisted Tea, which just released a new Rocket Pop flavor within a summer limited-edition Twisted Tea Party Pack. Sales of flavored malt beverages grew from $2.8 billion to nearly $4 billion in 2022 – and are up 20.6% so fare this year.
Prepared cocktails such as Two Chicks and Anheuser-Busch-owned Cutwater Spirits, also grew from $704 million in 2020 to nearly $1 billion in 2022. Prepared cocktails are up 42.5% so far this year.
“It’s really gotten into what’s the newest flavor out there,” Scanlon said. “The new ones grab the attention.”
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Non-alcoholic trending up
Non-alcoholic options may make up just a fraction of sales, but that fraction is growing. Non-alcoholic wine, such as Noughty’s Sparkling Chardonnay and Proxies’ non-alcoholic wines, have risen 16.5% this year and non- alcoholic spirits made by companies such Ritual Zero Proof, CleanCo. and Ish are up 84.5%, according to NielsenIQ data..
Non-alcoholic beers such as Bud Zero, Athletic Brewing Co. and Brooklyn Brewing’s non-alcoholic variety pack increased sales by 21.6% in 2022 and are up 34.2% so far this year, according to NielsenIQ data.
Younger consumers have developed a taste for non-alcoholic beers as the percentage of adults who drink them has grown from 0.6% in April 2020 to 5.2% in April 2023, according to a new YouGov survey. Those aged 30-44 make up more than half of non-alcoholic beer drinkers with those aged 21-29 making up 29%, the survey found. Favorite brands: Heinekin, Corona, Samuel Adams, Guinness and Budweiser.Consumers’ focus on flavor has led soft drink makers such as Dr. Pepper to release new concoctions such as Dr. Pepper Strawberries & Cream. Even breweries have gotten into the act with non-alcoholic, hop-flavored water: among them Sierra Nevada Hop Splash and Lagunitas Hoppy Refresher.
“As consumers adopt healthier habits, better-for-you beverage alcohol options, including low- and no-alcohol options are gaining traction,” Scanlon said.
Follow Mike Snider on Twitter: @mikesnider.
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