The distilled spirits sector achieved strong growth in 2021 driven by the gradual reopening of restaurants and consumers trading up to super-premium spirits for at-home occasions, the Distilled Spirits Council of the United States (DISCUS) announced at its annual economic briefing for media and analysts.
DISCUS President and CEO Chris Swonger reported that supplier sales in the United States were up 12 percent in 2021 to a total of $35.8 billion, while volumes rose 9.3 percent to 291.1 million 9-liter cases.
In 2021, spirits gained market share of the total U.S. beverage alcohol market with sales rising 1.7 share points to 41.3 percent. This represents the 12th straight year of market share gains for spirits overall.
“Last year, enthusiasm for spirits continued as consumers spent more to elevate their cocktail experiences with super-premium brands,” said Swonger. “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.”
Swonger noted that the premiumization trend, along with innovative COVID-relief 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.
Uneven COVID-19 Impacts on U.S. Hospitality Industry Continues
Swonger underscored, however, that while the spirits sector has remained resilient during the pandemic, the uneven economic impacts of COVID-19 remain for certain segments of the U.S. hospitality industry.
“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 percent of the U.S. market, were up 53 percent 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, the National Restaurant Association reports that about 90,000 restaurants have temporarily or permanently closed, and the industry still hasn’t recovered more than 650,000 jobs.
During the briefing, Philip McDaniel, CEO and co-founder of St. Augustine Distillery and chair of the DISCUS Craft Advisory Council, also reported that 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.
On a positive note, McDaniel stated that the uptick in tourism across the country will help support the recovery of small distilleries, which rely heavily on tasting room sales.
“There are now more than 30 spirits trails across the United States,” said McDaniel. “This growth in spirits tourism not only benefits distilleries, it also helps transform surrounding communities, and boosts state and local economies.”
Consumers’ Preference for Higher-end Spirits Accelerated in 2021
In presenting an overview of 2021 spirits sales trends, Christine LoCascio, DISCUS chief of public policy, reported that the premiumization trend accelerated in 2021.
“Nearly 82 percent of the spirits sector’s total revenue increase was from the sale of high-end and super-premium spirits brands,” said LoCascio. “Purchasing luxury spirits to create craft cocktails was a simple pleasure for spirits consumers who hunkered down at home and curtailed spending on vacations and dining out for a second year in a row.”
LoCascio noted that 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,” said LoCascio.
2021 Spirits Category Trends:
The top 5 spirits categories by revenue:
- Vodka sales up 4.9 percent or $341 million to $7.3 billion
- Tequila/Mezcal up 30.1 percent or $1.2 billion to $5.2 billion
- American Whiskey up 6.7 percent or $288 million to $4.6 billion
- Brandy & Cognac up 13.1 percent or $403 million to $3.5 billion
- Cordials up 15.2 percent or $376 million to $2.9 billion
Top five fastest growing spirits categories by revenue:
- Premixed cocktails including spirits-based RTDs up 42.3 percent or $489 million to $1.6 billion
- Tequila/Mezcal up 30.1 percent or $1.2 billion to $5.2 billion
- Irish Whiskey up 16.3 percent or $185 million to $1.3 billion
- Cordials up 15.2 percent or $376 million to $2.9 billion
- Single Malt Scotch up 14.4 percent or $130 million to $1 billion
2021 Legislative & Policy Wins
In the public policy arena, Swonger highlighted a number of victories in 2021 on the federal and state levels including the important progress on the tariffs front.
“After three very difficult years of sagging American Whiskey exports, the EU and U.S. are back to a zero-for-zero tariff agreement on distilled spirits thanks to the Biden administration’s efforts to reset trade relations and bring an end to the needless damage being done to U.S. businesses caught up in the trade disputes,” said Swonger. “It’s time now for the UK to lift its tariff on American Whiskeys so we can get back to sharing the special taste, heritage and quality of America’s native spirit with our UK consumers.”
Federal:
- A two-year suspension of the EU Tariffs on American Whiskey in steel-aluminum dispute and a five-year suspension of U.S., UK and EU tariffs on spirits products in Boeing-Airbus dispute
- Inclusion of small distilleries in the Restaurant Revitalization Fund legislation
- Inclusion of historic impaired driving prevention measures in the federal infrastructure bill
State:
- 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
2022 Legislative & Policy Priorities:
Swonger also outlined top priorities for the coming year including:
- 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.
Promoting Responsibility and Road Safety
Swonger, who also serves as president and CEO of Responsibility.org, underscored the spirits industry’s strong commitment to encouraging responsibility and moderation. He highlighted the recent federal government data showing historic declines in underage drinking as well as the spirits industry’s support for provisions in the infrastructure bill that include the development of advanced technology in cars to eliminate drunk driving.
He also cited Responsibility.org’s leadership in forming the National Alliance to Stop Impaired Driving (NASID) to provide a strong, collaborative national focus on the growing problem of multiple substance impaired driving.
“Over the past year, being able to enjoy a cocktail and reconnect with family members and friends in person has been a source of great joy,” said Swonger. “While the overwhelming majority of Americans who choose to drink, do so responsibly, it’s important for adults to seek out resources or talk to a health professional if drinking is interrupting relationships or affecting daily routines.”
