Wine and Spirits Wholesalers of America’s (WSWA’s) SipSource released its Q3 2023 report and announced a slew of 2024 product enhancements, including the industry’s first rigorous, fully transparent, data-backed forecasting capability.
WSWA SipSource’s Q3 report identifies wine and spirits trends and explores commercial and consumer behaviors that drove negative trends in both categories year to date, the company states. The report focuses on data over a 12-month period (October 2022–September 2023), predicting what consumer trends will bring for both the on- and off-premise during the holiday season, while giving short- and long-term insight for the industry’s future.
Analysts Foresee Q4 Tailwinds
Current market conditions remain challenging, and 2023 depletion trends 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 2023, the company states.
“There is a compelling case to be made that we may have hit a trendline low point with the September-ending data,” says SipSource Analyst Danny Brager. “The basis of this thinking is largely driven by the forward-looking comparative depletion trends over the next six months. For spirits, depletions were up only +0.7% in Q4 of 2022 and were down -4.3% in Q1 of 2023. For wine, -5.5% and -6.8%, respectively. These comparative numbers provide some optimism around potential trend improvements, albeit still challenging.”
Narrowing the Gap
“While Spirits continue to outperform Wine, the gap is narrowing,” says 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.
Recreation Drives On-Premise Growth
As consumers continue to take advantage of on-premise experiences in the wake of the COVID pandemic, 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.
New! 2024 Subscriber Enhancements and Forecasting Capabilities
“Existing industry forecasting solutions rely on partial data and black-box methodologies to arrive at less-than-optimal forecasts,” says 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.”
Developed with partners at Kearney, VIP and NIQ (formally NielsenIQ) the forecasting capability will be rooted in wholesaler depletion data plus third-party data including macroeconomic, demographic and social media trends, brought together through AI-based modeling. Preliminary 2024 forecasting will be available for select categories including Tequila, Brandy/Cognac, and American Whiskey in the first quarter of the year, with more categories to come throughout the year.
Additional enhancements rolling out in January include the integration of new data contributors, optimization of the platform, as well as new data indicators including control state flags, account velocity, updated price tiers, demographics data, additional wine regions and more.