August Depletions Show Sharp Declines – Can the Holiday Trends Turn the Tide

August brought another challenging month for the beverage alcohol industry, with both wine and spirits experiencing sharp year-over-year declines. While part of the downturn can be attributed to one less shipping day compared to last year, the overall weakness highlights ongoing consumer and channel pressures.

Spirits posted a -10.7% decline in volume and -10.1% in revenue, while wine fared even worse, dropping -16.3% in volume and -12.4% in revenue. Although Points of Distribution (PODS) trends have stabilized somewhat, they remain in negative territory, underscoring the continued fight for shelf space.

Price segmentation trends reveal additional stress. In spirits, both the ultra-premium segment (over $100) and the value tier (under $13) are struggling the most, a sign of pressure at both ends of the consumer spectrum. For wine, the under $13 price tier is taking the hardest hit, suggesting consumers may be moving away from entry-level offerings.

Looking ahead, industry focus is shifting toward the critical holiday season and the associated four-month comparison period. Historically, September through December represents a make-or-break stretch for the industry. Last year, spirits depletions were down -2.0% in volume and -2.5% in revenue during this window, while wine saw sharper losses of -6.0% in volume and -4.9% in revenue.

On-premise trends add another layer of complexity. While both wine and spirits are showing stronger volume growth than revenue growth in bars and restaurants, questions remain. Is the consumer benefitting from lower prices, or are operators adjusting costs and absorbing margin pressure to maintain traffic? For spirits in particular, improvement in recent months is encouraging, with the gap between volume and revenue widening. Whether this momentum can continue is a key storyline heading into Q4.

A few categories bear watching closely. Tequila/Agave, which had been one of the industry's brightest growth engines, is showing signs of fatigue with -0.4% YTD declines. In contrast, Champagne continues its remarkable surge, with off-premise volume up +13.4% YTD, reflecting premiumization and celebration trends even in a cautious spending environment. Finally, Whiskey by origin could be a flashpoint in the months ahead, as tariffs begin to directly impact pricing at the consumer level.