A collective sigh was heard from SipSource Analysts on January 1st, echoing many in the wine and spirits industry, knowing the end of 2023 had finally come. However, much like people emerging from seeking shelter due to a major weather event, the relief of believing the worst is over is quickly overshadowed by the reality of the hard work ahead to restore the landscape to its previous state.
Wine and Spirits Both End 2023 Down
Depletion trends for calendar year 2023 on Spirits were down -3.6% and down -7.5% on Wine. When the fast-growing Premixed Cocktails segment is removed, the picture for Spirits is noticeably worse and ended the year down -5.1%. When looking at Spirits, there isn’t a single product class where trends improved compared to the end of 2022. While a handful of Wine Segments improved in 2023, nothing improved and achieved growth compared to 2022.
Inflation Dampens Consumer Spending and Premiumization
It appears inflation took a toll on consumer spending as the momentum on higher priced segments lessened more than lower priced segments. Trends for the combined price segments of Traditional Spirits over $25.00, Table Wine over $15.00, and Sparkling Wine over $18.00, lost 650 basis-points of trend compared to 200 basis-points for products under those price points. The most impacted segments are Spirits over $100, down -12.5% and Sparkling Wine over $75.00, down -23.3%.
On-Premise a Bright Spot for Spirits 2023
One of the largest surprises in 2023 was the resiliency of Spirits in the on-premise channel which is up +2.8%. It has been a long hard slog for on-premise operators over the last four years and Spirits volume is within 30 basis-points of its overall share compared to pre-pandemic numbers. Tequila-Reposado (+ 7.2%) and Bourbon (+4.3%) are helping fuel this growth.
RTDs, Tequila, and Prosecco Continue Sustained, Long-Term Growth
Three product categories stick out as having shown sustained long-term strength which continued in 2023: Premixed Cocktails (+6.3%), Tequila/Agave Spirits (+1.5%), and Prosecco (+5.3%) have not been in decline over the last four years. We did also see significantly improved trends on Cognac in the holiday season after a long stretch of increasing declines.
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