The softness we saw in the industry in 2023 continued in January. According to stats from Wine and Spirits Wholesalers of America’s SipSource, Total Wine and Spirits declined 5.9% for the last 12-month period and was down 7.1% for the past three months.
Spirits fell 3.8% for the last 12-month period and 5% for the last three months, SipSource states. Looking at spirits without cocktails, the results are weaker, declining 5% and 6.5% respectively in the last 12- and 3-month periods. While spirits volume results in January weren’t positive, the results in wine were softer, declining 8% and 9% in the last 12- and 3-month periods.
Off-premise Sees Decline
Looking further into the January results, the decline of 3.8% for spirits was dragged down by a decline of 4.7% in the off-premise, which accounts for 82.1% of industry volume. The on-premise eked out a 0.8% uptick to kick off the year, although that is a 2.1% drop from the previous 12-month period, according to SipSource.
The industry was buoyed by two categories that increased both overall and in the on-premise. Cocktails and tequila increased overall 4.1% and 0.3% respectively, while they recorded 28.9% and 2.1% upticks in bars and restaurants, SipSource states. Also of note is the 1.2% positive on-premise result for Cordials & Liqueurs. Looking at the pricing spectrum for spirits, Prices Tiers 2,3,4 ($10.00 – $49.99) accounts for over three quarters of non-cocktail industry volume and declined 8.8%, 1.4% and 4.4% respectively in January.
Wine Sales Continue to Decline
The struggles in wine continued in both the on- and off-premise and they both ceded more volume in the latest SipSource data. In January, wine on-premise declined 5.4%, two percentage points lower than the December data, while off-premise wine dropped 8.4% a half of a percentage point lower than the previous period, according to SipSource.
The lone bright spot and category that posted a result in the black was on-premise cocktails. Wine increased 2.3%, although it’s important to note that it accounts for 2.2% of total on-premise volume for wine. Looking at price tiers and focusing specifically on table wine since it accounts for over three quarters of industry volume, SipSource reported losses across every price tier with the smallest decline posted by Table Tier 4 ($11.00-$14.99) at -4.7%.
Despite the gloomy results in January, SipSource expects a stabilization over the next two months, helped by an extra shipping day thanks to a leap year. Comps from March 2023 are -12.1% for wine and 8.6% for spirits, so there is an expectation of improvement that may be offset slightly by two fewer shipping days this year.
Also of note are economic headwinds, including consumer confidence that remains tentative coupled with concerns of consumer spending. In addition, higher interest rates are keeping inventory levels low for retailers, according to SipSource.
