The U.S. spirits market has been real tough over the past 24 months, and the road ahead doesn't look any easier. For brands/suppliers—whether well-established or fresh players—the competition has never been more intense.
It’s been a tough 24-month stretch:
The last two years have been super challenging for the spirits industry. Consumer behavior has changed - there is a clear pre and post Covid, economic pressure is real ($44 pasta dish, anyone?), and market saturation have made is super hard for most brands/supplier to just maintaining ground.
There is no signs of easing up:
Unfortunately, everything points towards the game getting harder in 2025. If only for tariffs on imported booze, which are not going to help much.
The market feels real saturated. Competition is fierce. New brands pop up from nowhere everyday. Pretty packaging, cool story. Breaking through the noise has never been harder.
Tequila cant keep growing forever. Tequila has been crushing it. But with new brands popping up every week, one has to wonder how much longer this can continue.
Cognac and Armagnac, brandy in general, is stuck. The outlook for Cognac and Armagnac feels bleak. These categories have struggled to attract consumers’ interest for different reasons. It feels like Cognac has lost touch with the customer, isn’t sure who she is and how to talk to her. Marketing efforts addressed to everyone seems to be made while the category might not be aware of how few people are interested or drinking the stuff. We (PM) LOVE Cognac and it is heart-breaking to see where this category is at now.
When it comes to the the US market, Cognac in 2024 feels very much like Bordeaux in the 2010’s - an appellation which has not yet realized that the consumer has moved on to other appellations/categories that put in more efforts over the years to stay relevant. Armagnac has seen a sharp decline from heights in 2021/2022 that might have been a little artificial (consumers at home drinking more and willing to explore); this decline seems less worrying than for its “big brother” as the category feels like it remains attractive to the early-adopter’s eyes. If it keep it’s efforts explaining what it is it could maybe get back on the up and up.
Selling a second bottle of something is a challenge. If you think selling a customer on a new product is hard, try getting them to repurchase it. The market’s saturation & extreme variety of choices available mean that customers are more inclined to try something new rather than buy a second bottle of the same stuff they just finished.
Add to this that people are just drinking less (and/or better) as health-conscious lifestyles are on the rise and shoppers are very selective because price sensitivity is very high. The cost of entering (or re-entering) the market is skyrocketing. For those hoping to bring a new brand to market (or revive an old one) it’s going to take substantial investment over an extended period—not just in terms of money, but also in patience.
What’s the next big category? No clue.