January 10, 2024 Cans of a variety of instant alcoholic beverages are on display for sale in a supermarket, including Captain Morgan Rum and Cola, Bacardi Mojito, Archers and Lemonade, Malibu and Pineapple, Pina Colada Cocktail and Gordon’s Gin and Tonic.
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2025 marks another somber year for the U.S. alcohol industry.
Annual revenue for spirits suppliers fell 2.2% to $36.4 billion, according to new data from industry group Distilled Spirits Council of the United States (DISCUS). The decline occurred as economic pressures and weak consumer confidence weighed on discretionary spending.
“Although total U.S. spirits sales declined 2.2% in 2025, the spirits industry remains resilient,” DISCUS CEO and President Chris Swonger said in a statement.
Total sales volume for the year increased by 1.9% to 318.1 million 9-liter cases, indicating growing demand. But the decline in income suggests that while Americans are still drinking, they are also drinking less, choosing lower-priced spirits and buying fewer premium liquors.
Almost all major spirits categories recorded declines in revenue. Vodka sales fell 3% to $7 billion. Tequila and mezcal sales, the industry’s fastest-growing segment in recent years, fell 4.1% to $6.4 billion. American whiskey and cordial sales decreased by 0.9% and 3.2%, respectively.
The exceptions are convenience and value.
A final call for optimism
Sales of premixed cocktails, including spirit-based ready-to-drink beverages, increased more than 16% year-over-year to $3.8 billion. The category, known as RTDs, has more than doubled its market share since 2021 as consumers gravitate towards lower price points.
Even within tequila, there is a shift toward more affordable bottles as macro headwinds cause consumers to reconsider splurging on premium brands. Sales volumes at the lowest tier of tequila/mezcal tracked by the industry group increased by 6.5% in 2025, and by 2.8% at the higher end. Volumes for whisky, vodka, rum and gin all declined in these price ranges.
As consumers seek more affordable spirits, companies are diageo and brown forman The company is believed to be in the best position because it has the most exposure to low-cost tequila and the fast-growing RTD category. Diageo owns Casamigos Tequila and has built a large portfolio of spirit-based RTDs, while Brown-Forman controls major mixed-price tequila brands such as El Jimador.
On the other hand, players who consume large amounts of beer AB InBev and Molson Coors Our exposure to tequila is minimal, but we are growing our RTD portfolio. Owner of Modelo and Corona constellation brand Although in a unique position to handle both beer and tequila, RTD has a smaller footprint.
Overall, the beverage alcohol market has softened after years of pandemic-driven growth, and new data from DISCUS confirms that normalization is now turning into contraction.
“Companies that have started reporting are reporting weaker numbers, but it’s not as bad as we expected,” said Trevor Sterling, Western beverage analyst at Bernstein. “The rate of decline is not getting worse, it may be slowing, and we can dream of a return to volume growth.”
Prolonged trade tensions
Distillers are also weathering headwinds overseas. American spirits exports fell 9% in the second quarter of 2025 compared to the same period last year as trade tensions dragged on and U.S. products were removed from many Canadian stores following President Donald Trump’s tariff hikes on the neighboring United States last year.
Industry leaders say price uncertainty makes long-term planning difficult.
“The unpredictability surrounding global trade issues continues to weigh on the U.S. spirits sector,” Swonger said. “Reinstating zero-for-zero tariffs on distilled spirits must be a top priority to put America’s distilled spirits producers back on the path to growth and prosperity.”
Despite the decline in sales, spirits maintained their market share lead with 42.4% of the total beverage alcohol market, compared to 41.8% and 15.7% for beer and wine, respectively.
Still, the message from 2025 is clear. Consumers are drinking less, but those who still drink are becoming more selective. As economic conditions tighten, tequila and canned cocktails are becoming more popular behind bars, as they are cheaper than expensive bottles.
