Pre-mixed cocktails, tequila and mezcal: The fastest growing US spirits categories

By Rachel Arthur contact

- Last updated on GMT

Pic:getty/indigoai
Pic:getty/indigoai

Related tags: Tequila, mezcal, spirits, Us, RTD alcohol

The distilled spirits sector achieved strong growth in 2021, driven by the gradual reopening of restaurants and consumers trading up to super-premium spirits at-home, according to the Distilled Spirits Council of the United States (DISCUS). Pre-mixed cocktails, tequila and mezcal were among the fastest growing spirits.

Nearly 82% of the spirits sector’s total revenue increase was from the sale of high-end and super-premium spirits brands: with craft cocktails popular with consumers staying in or entertaining at home.

Tequila was a key driver of growth: accounting for nearly one-third of the total increase in spirits revenue. “From sipping fine tequilas, to enjoying classic cocktails like the margarita and paloma, consumers’ tastes for super premium tequila took off in 2021,”​ notes the organization.

Sales increases

Supplier sales in the US were up 12% in 2021 to a total of $35.8bn, while volumes rose 9.3% to 291.1 million 9-liter cases. 

Spirits gained market share of the total US beverage alcohol market, with sales rising 1.7 share points to 41.3%. This represents the 12th straight year of market share gains for spirits overall.

Sales volumes at on-premise establishments, which represent about 20% of the US market, were up 53% in 2021 following nationwide restaurant and bar closures and restrictions. Off-premise sales volumes, which saw sharp gains in 2020, were flat in 2021. 

The top 5 spirits categories by revenue:

  • Vodka sales up 4.9% or $341m to $7.3bn
  • Tequila/Mezcal up 30.1% or $1.2bn to $5.2bn
  • American Whiskey up 6.7% or $288m to $4.6bn
  • Brandy & Cognac up 13.1% or $403m to $3.5bn
  • Cordials up 15.2% or $376m to $2.9bn

Top five fastest growing spirits categories by revenue:

  • Premixed cocktails including spirits-based RTDs up 42.3% or $489m to $1.6bn
  • Tequila/Mezcal up 30.1% or $1.2bn to $5.2bn
  • Irish Whiskey up 16.3% or $185m to $1.3bn
  • Cordials up 15.2% or $376m to $2.9bn 
  • Single Malt Scotch up 14.4% or $130m to $1bn

“Last year, enthusiasm for spirits continued as consumers spent more to elevate their cocktail experiences with super-premium brands,”​ said DISCUS president and CEO Chris Swonger, as the council released its annual economic briefing. 

“Consumers savoring spirits at home and trading up to higher-end brands, combined with the gradual reopening of bars and restaurants, resulted in record sales for the spirits sector. We’re also seeing strong growth for spirits-based ready-to-drink products, and that’s adding to our sector’s gains as well.” 

The premiumization trend, along with innovative COVID measures such as cocktails-to-go, delivery and e-commerce, have helped to boost restaurants, bars and small distilleries as they continue to manage through the uncertainty and volatility created by the lingering pandemic, Swonger added.

While the spirits sector has remained resilient during the pandemic, conditions remain unstable for the hospitality industry, notes the organization.

“The twists and turns of this pandemic continue to create volatility in the recovery of restaurants and bars,” ​said Swonger

“Restaurants showed signs of roaring back during the first half of the year but sales stalled in the second half with the new spike in COVID cases, staff shortages and supply chain disruptions. We will continue to advocate for more funding through the Restaurant Revitalization Fund to help them get back on the path to growth.”

Sales volumes at on-premise establishments, which represent about 20% of the US market, were up 53% in 2021 following nationwide restaurant and bar closures and restrictions. Off-premise sales volumes, which saw sharp gains in 2020, were flat in 2021. 

Since the start of the pandemic, around 90,000 restaurants have temporarily or permanently closed, and the industry still hasn’t recovered more than 650,000 jobs, according to the National Restaurant Association.

Many distilleries continue to face major challenges from supply chain disruptions, including difficulty securing glass bottles, closures and labels, as well as rising costs of materials and transportation.

However, tasting room sales are recovering, thanks to an uptick in tourism across the US.

Policy priorities

  • In the public policy arena, the return of a zero-for-zero tariff agreement on distilled spirits between the EU and US is good news for the industry and in particular the American Whiskey sector.  
  • 2021 also saw inclusion of small distilleries in the Restaurant Revitalization Fund legislation​
  • And inclusion of historic impaired driving prevention measures in the federal infrastructure bill 

On a state level, legislation has made pandemic alcohol sales easier:

  • Cocktails to-go now permanent in 16 states; additional 14 states passed legislation to extend measure ​
  • Retailer home delivery laws passed in eight states​
  • Tax reductions secured for spirits-based RTDs in Michigan and Nebraska
  • Passage of N.C. law permitting distilleries to sell bottled spirits on Sunday

DISCUS' priorities for 2022 are:

  • Securing the immediate suspension of UK tariffs on American Whiskeys
  • Continued support of the Restaurant Revitalization Act​ funding for restaurants, bars and distilleries affected by the ongoing pandemic
  • Legislation to permit the U.S. Postal Service to ship beverage alcohol in those states where it is currently permitted
  • Fairer tax treatment and increased access for spirits-based ready-to-drink (RTD) products in the states
  • Expanded marketplace modernizations including cocktails to-go, spirits direct-to-consumer shipping and the repeal of existing Sunday sales bans in SC, NC, MT, TX and MS​.

Related topics: Markets, Beer, Wine, Spirits, Cider

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