SipSource data for August shows the weakening of any momentum posted in July as the latest 12-month period spirits declined 2.5% and wine dipped 6.6%. When looking at the trends for both segments year to date results were also poor with spirits and wine declining 4.3% and 7.5%, respectively. However, despite these less than stellar trends, there were some positive results posted in August for both segments of the market.
Within the spirits industry the same three segments that posted positive results in July did again in August. Cocktails gained 11.1%, Tequila rose 3.1% and Cordials & Liqueurs eked out a slight 0.3% advance. While all three posted gains in the black for August their growth slowed from July. The gain within Tequila was driven by a strong result by Reposado, up 12.1% in August. The on-premise remains strong for spirits, up 5.2% in August. Of the eleven primary spirits classes tracked by SipSource, seven of them posted positive results in bars and restaurants, led by Cocktails (+47.2%), Tequila (+6.3%), Gin (+5.3%), and Cordials & Liqueurs (+4.2%). Another bright spot in spirits has been premiumization, particularly when comparing the segments above and below $25. The three segments with the largest gaps between growth of these price tiers were Canadian (-12.6% below $25 vs. -4.6% $25 and above) Gin (-7.2% below $25 vs. +0.2% $25 and above) and Rum (-8.4% below $25 vs. -1.7% $25 and above). Of note, Tequila, while a positive driver of the industry had higher growth below $25 (+3.7%) than its premium segment $25 and above (+2.6%).
Wine continued to struggle in August with a -6.6% decline, the lowest for the industry over the past year, and year to date the downturn was more pronounced at -7.5%. The two segments of the industry that posted positive results in August were Specialty/Dessert (+0.9%) and Cocktails – Wine (+1.6%). Within the on-premise Table Wine – White grew 0.4% in August driven by gains by Sauvignon Blanc (+5.5%), Pinot Grigio/Gris (+1.4%), and White Blends (+0.2%). The $15 and over price tiers fared better for all three product classes of table wine while the $18 and over price tier of Champagne/Sparkling declined at 16.5% compared to a loss of 4.2% for the lower price tiers.
With all the numbers and stats show there has been a downturn in both segments of the industry, there are pockets of growth and optimism as we move through the remainder of the year and into next. The comps for spirits are softer in October and November and looking further out the comparisons in early 2024 are extraordinarily forgiving which has us forecasting stronger growth. As always, the fragility of the economy particularly consumer confidence and spending will remain a factor moving forward along with a looming deadline for the government to increase the debt limit (shutdown or continuance).