The US alcohol industry faced a tumultuous year in 2023, experiencing a decline in total beverage alcohol (TBA) volumes by 3%. However, amidst this decline, the TBA value increased by 1%, reflecting a complex market landscape. According to data and forecasts from IWSR, the industry encountered several challenges, including imbalanced inventories, economic pressures on consumers, and a growing emphasis on health and moderation.
One of the significant impacts was seen in the spirits sector, which saw its first decline in nearly 30 years. Beer and wine sales also experienced declines, contributing to the challenging environment for the industry. These declines were attributed to various factors, including economic hardships on consumers, an increased focus on health and moderation, and imbalanced inventories that resulted from a surge in consumer demand during the pandemic and subsequent supply chain disruptions.
Despite these challenges, the US is poised to drive value growth in the mature alcohol markets, with forecasts indicating an incremental gain of over US$7.5 billion by 2028. This places the US in a key position for value growth, comparable to that of India, indicating a resilient market with potential for recovery and growth.
Looking ahead, the forecast from IWSR suggests a continued slow decline in consumption over the coming years, with an anticipated 2023-2028 TBA volume CAGR fall of -1%. The industry is expected to navigate through ongoing challenges, with excess inventory likely to have a continued effect on the market as it rebalances from the inflationary pressures of the past years.
Amidst the headwinds faced, there are positive signs starting to emerge in 2024, signaling a potential shift in the global total beverage alcohol market, although challenges are expected to persist until 2025 as household spending rebalances after strong inflationary pressures. These changes are mirrored in the US market, reflecting the broader global trends and the complex dynamics shaping the alcohol industry.
While the industry grapples with the aftermath of a challenging year, the resilience and potential for value growth offer insights into the evolving landscape of the US alcohol market. With a focus on adaptation and addressing the shifting consumer behaviors and economic dynamics, the industry is set to navigate through the ongoing challenges as it charts a path towards recovery and sustainable growth.
