Was September the Low Point for Wine, Spirits Depletions? Danny Brager Thinks So

Depletion trends for 2023 are solidly in the negative, with combined spirits and wine depletion trends down 6.7% year to date and down 5.5% in the 12-month rolling period ending September, according to SipSource, the Wine & Spirits Wholesalers of America's monitor of depletion data.

But Danny Brager, SipSource analyst, thinks "we may have hit a trendline low point with the September-ending data." Indeed, he says, forward-looking depletion comparable trends make that a "compelling case." For spirits, depletions were up only +0.7% in the fourth quarter of 2022 and were down -4.3% in this year's first quarter. For wine, -5.5% and -6.8%, respectively. In other words, depletions were down so much this year that next year should lap them.

“While Spirits continue to outperform Wine, the gap is narrowing,” said SipSource Analyst Dale Stratton. “The trend gap is currently 390 basis points and narrowing each month. Unfortunately, the narrowing gap is being driven by the ever-declining trend in spirits while wine has been more stable, with declines in the mid-single-digit range over the long term.” 

Third-quarter depletions were especially soft for spirits, down -8.8%. The wine category also experienced a difficult third quarter, with depletions down -11.7%. Those declines have put wine down -7.4% with the latest 12-month numbers and down -8.4% year to date.

The Recreation channel continues to drive growth for both wine and spirits, up +6.0% for the two categories combined. Spirits leads the way in Recreation, up +9.2%, with wine growing +1.1%. It would also appear spirits are stealing share from wine in the Dining channel. Spirits are growing +2.1% and wine is down -4.4%. While wine still has more than a 50% share of Dining volume, the gap is getting very narrow.

Changing Methodologies

“Existing industry forecasting solutions rely on partial data and black-box methodologies to arrive at less-than-optimal forecasts,” said SipSource Director Michael Bilello. “For decades, this partial data has become the focus of business planning meetings, driving major decisions across the industry. With SipSource’s new forecasting capabilities, subscribers will be able to make better decisions because they have better information.”