SipSource August Data: A More Selective Consumer Is Reshaping the Beverage Alcohol Market

The latest SipSource® data continues to show a challenging environment for beverage alcohol, but the August results suggest the story is becoming increasingly nuanced. Consumers have not simply stopped spending. Instead, the data points to a market in which where they drink, what they buy and how much they are willing to spend are becoming increasingly important.

Key Takeaways

• Consumers are becoming more selective. Wine and spirits volume is down 6.7%, but consumers continue to spend selectively based on occasion, category and price.
• On-premise is outperforming off-premise. On-premise volume and revenue are down 2.4%, compared with declines of 7.5% and 6.7%, respectively, off-premise.
• Some price points and categories are showing resilience. Spirits priced $20-$29.99 and wine priced $16+ are holding up better, while Prosecco, Sauvignon Blanc and Champagne posted recent revenue growth.

Total wine and spirits volume declined 6.7% over the latest 12 months, while revenue fell 5.8%. The latest three-month trends remain negative as well, with volume down 6.1% and revenue down 5.3%. Yet underneath those topline numbers, performance varies considerably by channel, category and price point.

Perhaps the clearest divide is between on- and off-premise. On-premise wine and spirits volume and revenue each declined 2.4% over the latest 12 months. Off-premise volume, meanwhile, declined 7.5% and revenue fell 6.7%. Liquor and grocery-the two largest off-premise trade channels-are also among the weaker performers, with revenue down 7.3% and 6.2%, respectively.

Pricing adds another layer.

For spirits, premiumization remains difficult to find. Revenue continues to trail volume, while the $20-$29.99 segment is proving more resilient than other price tiers. Sixty-one percent of spirits volume is concentrated below $20, while just 6.5% comes from products priced at $50 or higher.

Wine presents a different picture. Lower-priced table wines remain a significant drag on the category, while price tiers of $16 and above are generally demonstrating greater resilience. The $20-$29.99 tier actually posted 0.9% revenue growth over the latest 12 months. At the same time, Prosecco, Sauvignon Blanc and Champagne all generated positive revenue growth in the latest three-month period.

Taken together, the August results suggest that beverage alcohol is increasingly becoming a market of pockets of opportunity rather than broad-based growth. Consumers appear willing to spend in particular occasions, categories and price points, even as the overall market contracts.

For suppliers and retailers, identifying those pockets-and understanding the consumer occasions behind them-may be increasingly important as the industry heads into the critical year-end selling period.