Oak Proof

Great article from Fawn Weaver and The Spirits Business using actual data to articulate a picture of the market and consumer trends. The entire article is a great read and packed with data but if you only have time for a summary check it out below. Market Correction, Not Collapse: The spirits industry is experiencing a temporary market correction rather than a permanent decline.?This adjustment is similar to what occurred after the 1918 Spanish flu pandemic, where alcohol sales initially spiked and then stabilized. Consumer Behavior: --> While consumers are drinking less compared to peak pandemic levels, overall spending remains strong. --> The spirits market is stabilizing rather than shrinking, with volumes increasing by 1.1% to 312.2 million nine-liter cases in 2024. --> Despite the narrative of consumers moving away from alcohol in droves, the total beverage alcohol category saw retail sales only decline by 0.8%, from historic highs of +$113 billion in 2023, per NIQ. Premiumization Trend: Consumers are trading up to higher-quality spirits, with premium and ultra-premium brands showing significant growth.?This shift towards quality over quantity is particularly evident in Bourbon and Tequila categories. Non-Alcoholic Beverages: The impact of non-alcoholic alternatives is overstated. While growing, the non-alcoholic market remains small, with growth already decelerating.?Non-alcoholic "spirits" account for only 1% of total non-alcoholic sales. Other Factors: --> GLP-1 weight-loss drugs: Their long-term impact on alcohol consumption remains uncertain due to high discontinuation rates. --> Cannabis legalization: Studies show both substitution and complementary effects with alcohol, not a clear replacement. --> Gen Z drinking habits: This generation is shifting towards quality over quantity, similar to how Millennials evolved their drinking preferences. Regulatory Pressures: Recent regulatory discussions about cancer warning labels on alcohol are not seen as an immediate threat to the industry.?The article argues that if public health is the priority, risk messaging should be consistent across all dietary contributors to cancer. Conclusion: The spirits industry is undergoing a market reset, which is viewed as a short-term adjustment rather than a long-term decline.?The article suggests that this correction is both temporary and necessary, drawing parallels to past industry challenges that were ultimately overcome.

Why Oak Proof believes the best days for Bourbon are still ahead.