Covid apparently drove us to drink.
Total beverage alcohol volume in the US last year was up 2%, the largest gain for alcohol consumption in the U.S. since 2002, according to new findings from IWSR.
IWSR forecasts a more moderate growth rate over the next five years as normalisation returns.
“A key driver of US beverage alcohol consumption is flavor,” says Brand Rand, IWSR’s COO of the Americas. “Flavored subcategories – from beer to vodka to US whiskey – are significantly outperforming traditional non-flavored sub-categories. Flavor is also the top consumer driver of the fast-growing ready-to-drink (RTD) category, and that’s likely creating a halo effect on total alcohol as well.”
IWSR’s analysis of the US beverage alcohol market by category:
Spirits posts largest volume increase since 1990
Value increased as well.
Within the category, agave-based spirits grew 15.9% in volume in 2020, overtaking rum to be the third-largest spirits category in the U.S. behind vodka and whisky.
Cognac/Armagnac was also a big winner last year, and both categories are expected to continue their growth path over the next 5 years.
The whisky category showed mixed results in 2020, as tariffs negatively caused single malt Scotch to fall 6.1% in volume while bar and restaurant closures dragged down Irish whiskey. Last year was the first time on record that these two sub-categories posted volume declines in the US.
Overall, total whisky volumes grew 4.9%, led by Japanese, Indian and U.S. whiskies, in that order. The whisky category’s growth, however, is outpacing vodka, with total whisky expected to be larger than total vodka in volume consumption by 2022.
No- and low-alcohol spirits are being driven by alcohol-free spirit alternatives and spirit-adjacent products that focus on mood-enhancing properties like adaptogens. Though trending from a small base, no-alcohol spirits are expected to end 2021 up +31.4% in the US.
Wine resonates with consumers during lockdowns
Total wine in the US grew slightly, rising 0.7% by volume and 1.5% by value in 2020, reversing the volume declines seen in 2019. Both still and sparkling wine volumes were up, but still wine is forecast to go back to softening declines as RTDs and spirits grow at faster rates. Despite a non-celebratory 2020, sparkling wine managed to post growth, with Prosecco (especially rosé expressions) making up for declines in Champagne consumption.
Low-alcohol wine volumes more than doubled in 2020 in the US, with major brands entering the category offering lower calorie and lower sugar options in sessionable ABVs – a direct response to RTD occasion overlap pressure. Imported wine volumes grew more than domestic US wine from markets such as Chile, Italy, and New Zealand, which did not have tariffs in place.
RTDs set to become second largest beverage alcohol category in the US, in terms of volume consumption
The biggest gains in beverage alcohol consumption in the U.S. last year were seen across the RTD category (which includes the popular hard seltzer sub-category), making RTDs more sizable in volume than total spirits in the US, and by the end of 2021, larger than total wine.
RTDs grew 62.3% by volume in 2020, led by hard seltzers which grew 130%. Hard seltzers represent over 55% share of the total RTD category in the US, followed by flavored alcoholic beverages (FABs), and ready-to-drink cocktails/long drinks.
“Though the cocktail/long drink sub-category is still comparatively small by volume, the segment grew +52.7% in 2020 with canned cocktail growth spurred by on-premise closures and the on-premise pivot to ‘drinks to go,’ as well as more at-home consumption and outdoor socialization,” notes Rand.
IWSR has tracked a rise in more spirit-based RTD launches at a higher price point due to taxes in U.S., but volumes remain small compared to the traditional malt-based segment. However, several U.S. states have recently passed or are reviewing legislation to reduce spirit-based RTD tax reductions.
The overall RTD category shows no signs of slowing down – IWSR expects RTDs to grow to be 22% volume share of total beverage alcohol by 2025 in the US.
No- and low-alcohol beer is a bright spot for the beer category
Beer continued annual volume declines with a 2.8% loss in the U.S. in 2020, as volume gains in imported beer weren’t enough to sustain losses in domestic beer volume. Nonetheless, imported beer grew market share in 2020, ISWR said.
No- and low-alcohol beer proved a bright spot for the category, however, and the category is expected to continue to grow. Additionally, flavored beer grew 10.4% in the U.S. in 2020, driven by cheladas and radlers.
