Minneapolis, Minn., (November 20, 2024) – The Distilled Spirits industry was the only bright spot within the on-premise beverage alcohol sector; it did not post volume consumption declines, although growth decelerated to +0.4% in 2023. Growth drivers have been innovation, line extensions that resonate with consumers’ interests and changing tastes, premium offerings, and an increased focus on aged expressions. Spirits have rebounded quicker than wine and beer, as consumers are more likely to splurge on premium spirits and fine cocktails when they do go out. Cocktails-to-go, which now have permanent or temporary approval in numerous states, have been instrumental in helping spirits outperform beer in the on-premise sector.
The spirits segment also attributes the on-premise growth momentum, which has continued to drive the ongoing recovery of the hospitality industry, partly to consumers’ perception that drinking spirits at bars and restaurants enhances special occasions, or the overall celebratory mood. It adds to the overall experience, more so than wine or beer. According to our Beverage Information Group 2024 Quarterly Beverage Alcohol Consumption Consumer Survey (Q3 2024), 73% of respondents reported consuming cocktails/mixed drinks while visiting on-premise establishments in the last three months. On average, 45% stated they consumed 1 to 3 cocktails monthly at restaurants and 48% drank 4 to 9 cocktails at bars.
The premiumization trend also encouraged consumers to gravitate toward high-quality options, resulting in a willingness to spend more on premium spirits and cocktails, albeit consuming fewer drinks overall in a single sitting due to economic constraints. Premiumization in spirits sales slowed overall in 2023, but remained strong due to the growth in the Tequila/Mezcal and American Whiskey categories. The deceleration was attributed to the softening of the economy, and the return to an average spirits growth rate following the pandemic boost. In our proprietary survey, 48% cited a bar offering premium or high-end alcoholic beverages as important/very important.
On-premise Wine consumption continued a decline that started when it failed to bounce back from pre-pandemic levels in 2021, with on-premise case levels declining -2.3% in 2023 versus 2022. The headwinds facing the wine industry are well-documented, from the ever-increasing competition with distilled spirits and cocktails to the barrage of ready-to-drink alcoholic beverages flooding the market. It doesn't help that many people are drinking less overall these days, not to mention that wine is not connecting with younger and multicultural consumers like other categories, such as spirits.
Volume consumption for the on-premise Beer industry was down just -0.4% in 2023, but was unable to turn the corner into growth. On-premise growth segments mirror overall total beer, with imports and FMB/hard seltzer showing over 3% growth, and craft beer also providing almost 2% growth.
About the 2024 Cheers BARometer On-Premise Handbook
The Beverage Information Group’s 2024 Cheers BARometer On-Premise Handbook is a comprehensive source of information on U.S. on-premise trends in the spirits, wine, and beer categories.
Order this publication here or by contacting Sherai Falcon at sfalcon@epgmediallc.com or 763-383-4400 ext. 4423.
