Despite challenging market conditions, the U.S. spirits sector maintained its market share lead for the total bev/al market, Chris Swonger, president/CEO, Distilled Spirits Council of the U.S., reported at DISCUS's "State of Spirits" summary Thursday (2/4). To be sure, supplier revenue declined 2.2%, but U.S. spirits volume grew 1.9%, he said.

Swonger noted the distilled spirits industry "is a significant contributor to the US economy. The US is the second largest spirits market in the world." The 2,300 U.S. distilleries generate over $250 billion in the U.S. economic activity annually, tied closely to the hospitality sector in general, supports more than 1.7 million jobs in the United States, from production to distribution to the sale of distilled spirits.

Christine LoCascio, chief of policy, strategy and membereship for DISCUS, noted that while growth has "softened" in recent years, "the past two decades, Spirit's revenue has more than doubled, again, reaching $36. 4 billion in 2025, up from $16 in 2005.

In terms of Total Bev/Al market share, LoCascio said spsirits gained seven percentage point, rising to 42.4%. In terms of volume, spirits gained six percentage points, reaching 39.5% in 2025.

Consumer Sentiment Reflect Economic Worries

As we've been warning for over a year, consumers are cutting back on affordable luxuries, including bev/al, been they are being squeezed economically. Whether it's a result of inflation or wages not keeping up with inflation, the simple fact is, as LoCascio noted, "consumers have less for discretionary spending on items like beverage alcohol."

Consumer sentiment has never been more depressed than it is currently LoCascio said, citing the University of Michigan's monthly consumer sentiment survey, which began in 1961,

Employment levels in the bev/al hospitality industry is "slightly above where they were prior to the pandemic. But it is nowhere near when it should be, based on historical patterns, LoCascio said. "Employment levels are up by 278,000 jobs compared to prior to the pandemic. (But) you would have expected, based on the previous increases, 2. 4 million new jobs based on that pre-pandemic trajectory," she said.

Vodka Remains Top Spirits Category

Of the five major spirits segments, only spirits cocktails and RTDs have shown positive growth, with revenue soaring 16.4%, LoCascio said. But she also noted that "the gap between vodka and tequila on the revenue side has been narrowing in recent years. So by way of background, when you go back to 2019, between 2019 and 2025, tequila and mezcals supplier revenues nearly doubled from $3. 4 billion to $6. 4 billion in 2025."

But the cap between vodka and mezcal in terms oif revenue has been narrowing, she said.

In terms of volume, cocktails and spirits-based RTDs grew 17.1% to 85.6 million nine-liter cases, beating out vodka for the top spot. "Here, too, four of the five categories declined, but with modest declines, almost flat, really, for tequila and mezcal, and only a 1% decline for the American whiskey category."

Spirits-based RTDs continue to expand and now account for 19% of the total ready-to-drink market, LoCascio said, adding the volume of RTDs has quadrupled in the past.

Premiumization

LoCascio noted that despite a 2.2% decline in overall spirits revenue amd a 1.9% increase in volume, the high-end and super-premium categories "are important as they still account for 58% of Total Spirits revenue. And that's only a 1% decline relative to 2024."

Super-premium and high-end categories showed a decrease in both revenue and volume. The premium category showed ain increase in volume, and the vatute category saw increases in both revenue and volume.

What this tells us is that the old adage that when times get tough, people continue to drink – they just shift doward from a higher, more expensive category to a less expensive category. It also suggests that when times will improve – and they will improve because they always have – consumers will return to the higher priced categories.

LoCasio said slight downward shifts in price at the super-premium andhigh-end categories is what's growing the value and premium categories. "What's growing growth in the value category is spirits-based RTDs," she said.