U.S. consumers are expected to consume $58 billion worth of spirits per year by 2020, an annual growth rate of 6%.
That’s according to a new report from strategy consulting firm L.E.K Consulting. Other trends in the report include:
— Ecommerce and direct-to-consumer (DTC) sales are on the rise. There are a lot of different DTC business models cropping up: distilleries are selling directly to consumers at a physical location or online, third-party cocktail clubs are gaining popularity in “cocktail culture” and ecommerce delivery platforms that deliver liquor purchased from local retailers directly to consumers.
— Millennials are a key demographic. Even though only 29% of the drinking-age population are millennials, they comprise 32% of spirits consumption by value. And as the buying power of millennials increases as they advance in their careers, this trend is only set to become more relevant to the space.
— “Drinking in” is now in. There are a lot of factors going into this trend, including a wealth of deals on spirits in the retail space, and millennials refusing to pay for the mark ups that are the norm at bars.
— Premium products are outpacing their mid-to-low shelf counterparts, especially among millennials. Specifically, from 2012 to 2017, high end spirits sales grew 6%-7% per year by volume.
— Craft spirits are the next big thing. The number of craft distilleries has increased around 35% per year since 2011 and the craft spirits market has grown 19% per year since 2015.
“Additionally, major brands, such as Maker’s Mark and Roca Patron, are seeing the big future opportunities in the craft spirits space and are developing products to capitalize on this trend,” says Rob Wilson, Managing Director at L.E.K. Consulting and report author.