Despite the hopes of many - the softness we saw throughout the industry in 2023 continued in the first month of 2024. SipSource analysts are cautious, however that this is not representative of the year ahead but instead an expected outcome from the high comps of January 2023.
January Total Wine & Spirits Still in Decline
Total Wine and Spirits declined -5.9% for the last 12-month period and was down -7.1% for the past three months. Spirits fell -3.8% for the last 12-month period ending January 2024 and -5.0% for the last 3 months (November 2023-January 2024). Looking at Spirits without Cocktails the results are weaker, declining -5.0% and -6.5% 12- and 3-month periods, respectively. While Spirits volume results in January weren’t positive, the results in wine were even softer declining -8.0% and -9.0% in the same periods.
Spirits Perform Well in the On-Premise
Looking further into January 2024 data for spirits, the decline of -3.8% for spirits was dragged down by a decline of -4.7% in the off-premise that accounts for more than 80% of total industry volume. The on-premise eked out a +0.8% uptick to kick off the year, although that is a -2.1% drop from the previous 12-month period.
The industry was buoyed by two categories that increased both overall and in the on-premise. Cocktails (Spirits) and Tequila increased overall +4.1% and +0.3% respectively, while they recorded +28.9% and +2.1% upticks in bars and restaurants. Also of note is the +1.2% growth in the on-premise for Cordials & Liqueurs. Looking at the pricing spectrum for Spirits, Prices Tiers 2,3,4 ($10.00 - $49.99) accounts for over three quarters of non-cocktail industry volume and declined -8.8%, -1.4% and -4.4%, respectively in January.
Wine Continues to Struggle
The struggles in wine continued in both the on- and off-premise as they both ceded more volume in the most recently available SipSource data. In January, Wine on-premise declined -5.4%, two percentage points lower than the December data while off-premise wine dropped -8.4%, half of a percentage point lower than the previous period.
The lone bright spot and category that posted a result in the black was On Premise Cocktails (Wine) that increased +2.3% although it’s important to note that it only accounts for 2.2% of total on-premise volume for Wine. Looking at price tiers and focusing specifically on Table Wine since it accounts for over three quarters of industry volume, SipSource reported losses across every price tier with the smallest decline posted by Table Tier 4 ($11.00-$14.99) at -4.7%.
What’s Next?
Despite the gloomy results in January, SipSource Analysts expect to see a stabilization over the next two months, helped by an extra shipping day thanks to a leap year and favorable comps from March 2023 that are -12.1% for wine and -8.6% for spirits. There is a broader expectation of improvement in 2024 that may be offset slightly by two fewer shipping days this year. Also of note are economic headwinds, including consumer confidence that remains tentative coupled with concerns of shifting consumer spending patterns. In addition, higher interest rates are keeping inventory levels low for retailers.