Following a stronger-than-expected March, April depletion trends across beverage alcohol moderated largely as anticipated. While 12-month trends softened month-over-month, shorter-term performance indicators provided several encouraging signs, particularly within Spirits.
Key takeaways:
- Spirits Trends Improve: April showed stronger rolling 3-month volume and revenue trends than March, with broad-based improvement across Spirits categories.
- Premiumization Under Pressure: Revenue trends continue to lag volume trends in several categories, suggesting consumers remain focused on lower-priced offerings.
- Wine Softened While Select Segments Outperformed: Overall Wine trends weakened in April, though Sauvignon Blanc continued to post growth and remained one of the category's strongest-performing segments.
Spirits Trends Show Improvement
The most notable development came from the rolling 3-month Spirits trends, which improved as weak January results rolled out of the comparison period. Compared to March, Spirits volume trends improved by 50 basis points while revenue trends improved by 60 basis points. Although the category remains in negative territory overall, the improvement suggests consumer demand may be stabilizing as the industry moves toward the summer selling season.
Premiumization Presents Challenges
However, premiumization continues to present challenges across much of the Spirits landscape as consumers show signs of trading down across the Spirits category. Revenue is falling faster than volume in this category, indicating growing demand for lower-priced options.
Tequila and Agave spirits have been among the most affected. Still, the Reposado segment stood out in April, showing an improvement in volume performance and offering a potential sign of stabilization. The industry will be watching closely to see whether that positive momentum carries into the second half of the year.
Misleading Dynamics in Wine
In April, Wine was somewhat softer on a 3-month basis, with volume trends declining by 20 basis points and revenue trends declining by 60 basis points compared to March. While Wine revenue declines continue to track below volume declines, that dynamic can be misleading. Premium Wine continues to hold up relatively well, but the category remains under pressure. Much of the weakness is concentrated in lower-priced segments, underscoring the uneven nature of the recovery.
Gradual Improvement Expected in Summer
After April’s softer shipment activity, some volume could shift forward and partially offset the calendar impact. While May might present another modestly challenging month due to one fewer shipping day compared to last year. Beyond May, year-over-year comparisons become increasingly favorable, particularly for Wine, creating the potential for gradual improvement in reported trends during the summer months.
Vodka, Savvy B, Pinot Noir Stand Out
There are also several category-specific developments worth monitoring closely:
- Vodka continues to quietly gain momentum and is now down just -2.3% in volume over the latest three-month period.
- Sauvignon Blanc remains one of Wine’s strongest performers, generating +5.2% revenue growth over the same timeframe.
- Pinot Noir has also delivered two consecutive solid months, raising the possibility that the varietal may be approaching longer-term stabilization.
- Prosecco and Champagne gave back much of their March improvement during April.
As summer gatherings and celebrations ramp up and the World Cup kicks off in mid-June, all eyes will be on whether the stand-out categories can recapture momentum and ride the wave of seasonal demand.