The latest SipSource® data continues to show a challenging environment for beverage alcohol, but the August results suggest the story is becoming increasingly nuanced. Consumers have not simply stopped spending. Instead, the data points to a market in which where they drink, what they buy and how much they are willing to spend are becoming increasingly important.
Key Takeaways
- Consumers are becoming more selective. Wine and spirits volume is down 6.7%, but consumers continue to spend selectively based on occasion, category and price.
- On-premise is outperforming off-premise. On-premise volume and revenue are down 2.4%, compared with declines of 7.5% and 6.7%, respectively, off-premise.
- Some price points and categories are showing resilience. Spirits priced $20–$29.99 and wine priced $16+ are holding up better, while Prosecco, Sauvignon Blanc and Champagne posted recent revenue growth.
Total wine and spirits volume declined 6.7% over the latest 12 months, while revenue fell 5.8%. The latest three-month trends remain negative as well, with volume down 6.1% and revenue down 5.3%. Yet underneath those topline numbers, performance varies considerably by channel, category and price point.
Perhaps the clearest divide is between on- and off-premise. On-premise wine and spirits volume and revenue each declined 2.4% over the latest 12 months. Off-premise volume, meanwhile, declined 7.5% and revenue fell 6.7%. Liquor and grocery—the two largest off-premise trade channels—are also among the weaker performers, with revenue down 7.3% and 6.2%, respectively.
Pricing adds another layer.
For spirits, premiumization remains difficult to find. Revenue continues to trail volume, while the $20–$29.99 segment is proving more resilient than other price tiers. Sixty-one percent of spirits volume is concentrated below $20, while just 6.5% comes from products priced at $50 or higher.
Wine presents a different picture. Lower-priced table wines remain a significant drag on the category, while price tiers of $16 and above are generally demonstrating greater resilience. The $20–$29.99 tier actually posted 0.9% revenue growth over the latest 12 months. At the same time, Prosecco, Sauvignon Blanc and Champagne all generated positive revenue growth in the latest three-month period.
Taken together, the August results suggest that beverage alcohol is increasingly becoming a market of pockets of opportunity rather than broad-based growth. Consumers appear willing to spend in particular occasions, categories and price points, even as the overall market contracts.
For suppliers and retailers, identifying those pockets—and understanding the consumer occasions behind them—may be increasingly important as the industry heads into the critical year-end selling period.