Alcohol consumption

U.S. alcohol consumption at highest level since 2002

Alcohol consumption in the United States rose 2% last year, marking its biggest rise since 2002, new data from beverage market analysis IWSR has revealed.

According to the IWSR, the rise in consumption in the United States last year was driven by at-home consumption fueled by the pandemic.

The upward trend is expected to continue this year, with year-to-date sales volume in the United States still higher than in 2019.

In fact, the IWSR predicted that by the end of the year, volume sales of alcohol in the United States will increase 3.8% year-on-year, while value sales will increase by 5, 5%.

A more moderate growth rate is expected over the next five years, with a CAGR of +0.5% in volume and +2.8% in value forecast for the five years 2020-2025.

“One of the biggest drivers of alcoholic beverage consumption in the United States is flavor. Flavored subcategories — from beer to vodka to American whiskey — significantly outperform traditional unflavored subcategories,” said Brand Rand, COO of IWSR for the Americas.

“Flavor is also the primary consumer driver for the fast-growing ready-to-drink (RTD) category, and this likely creates a halo effect on total alcohol as well,” Rand added.

Last year, spirits sales in the United States showed the largest increase in volume (+4.6%) for the spirits category since 1990, with a value increase of +7.7%.

Within the category, agave-based spirits grew by +15.9% in volume in 2020, overtaking rum to become the third-largest spirits category in the United States, behind vodka and whisky.

Cognac/Armagnac was also a big winner last year, posting volume gains of +20.1%. Both categories are expected to continue growing over the next five years.

The whiskey category posted mixed results, with tariffs negatively impacting Scotch single malt (-6.1% in volume), while bar and restaurant closures drove down Irish whiskey ( -0.5%).

Last year marked the first time on record that both of these subcategories showed volume declines in the United States.

Overall, total whiskey volumes increased by +4.9%, driven by Japanese, Indian and American whiskies. Growth in the whiskey category, however, is outpacing that of vodka, with total whiskey expected to exceed total vodka consumption by volume by 2022.

Sales of alcohol-free and low-alcohol spirits in the United States are driven by alternatives to alcohol-free spirits and spirit-adjacent products that focus on mood-enhancing properties like adaptogens.

Although the trend is starting from a small base, the IWSR predicts non-alcoholic “spirits” to end 2021 up +31.4% in the US.

Wine sales in the United States, meanwhile, increased slightly last year, at +0.7% in volume and +1.5% in value, reversing the declines in volume seen in 2019.

Still and sparkling wine volumes increased by +0.8%, but still wines should return to a more moderate decline, with RDTs and spirits increasing at a faster rate.

Although there is not much to celebrate, sparkling wine managed to show growth last year, with Prosecco (particularly rosé) compensating for the drop in champagne consumption.

Volumes of low-alcohol wines more than doubled in 2020 in the United States, with major brands entering the category offering low-calorie and low-sugar options in session ABVs.

Imported wine volumes increased more than US domestic wines (+2.5% versus +0.3%) from markets such as Chile, Italy and New Zealand.

Last year’s big winner was RTDs, which are expected to become the second-largest alcoholic beverage category in the United States by volume of consumption.

The largest increases in alcoholic beverage consumption in the United States last year were seen in the RTD category (which includes hard seltzer), making RTDs larger in volume than total spirits in the States. States and, by the end of 2021, greater than total wine.

RTDs increased by +62.3% in volume in 2020, driven by hard seltzers which increased by +130%. Hard seltzer now accounts for a 56.7% share of the total RTD category in the United States.

“While the cocktails/long drinks sub-category is still relatively small in volume, the segment grew +52.7% in 2020 with canned cocktails growth driven by on-site closures and on-site pivot to ‘drinks to go’, as well as more at-home drinking and outdoor socializing,” Rand said.

The IWSR expects the RTD category to represent a volume share of 22% of total alcoholic beverages by 2025, up from 9.6% currently.

Beer continued its annual volume decline with a loss of -2.8% in the United States in 2020, as the volume gains of imported beer (+3.1%) were not enough to support the losses of domestic beer volume (-4.4%).

Imported beer nevertheless increased its market share to 21.8% from 20.6% in 2019. Non-alcoholic and low-alcohol beer, however, proved to be a bright spot for the category.

Volume consumption of non-ABV beer is expected to exceed that of low-alcohol beer, with non-alcohol beer expected to increase in volume CAGR by +23.6%, from 2021 to 2025.