Cocktails and Cutbacks Is the Party Over for Premium Spirits

A Sobering Reality Check for Spirits

Darling sometimes life imitates art and sometimes it imitates a slightly watered down cocktail. The U.S. alcohol industry it seems had a bit of a hangover in 2025. Revenue took a 2.2% tumble landing at $36.4 billion according to the Distilled Spirits Council of the United States (Discus). As I've always said "I like my money right where I can see it hanging in my closet," but apparently consumers are keeping their cash closer these days or at least not spending it on top shelf liquor.

Volume Up Revenue Down What's a Girl to Think

Volumes actually rose by 1.9% which means people are still imbibing just perhaps not as lavishly. Are we all becoming budget conscious babes? It seems the economic climate is making us rethink those pricey purchases. Could this be the death of the cosmo as we know it? As the CEO of Discus said the industry remains resilient but even resilience needs a fabulous pair of shoes to stand on. Speaking of resilience and shifting landscapes have you heard about Japan's Political Landscape Shifts: Takaichi Consolidates Power? Different world similar story shifts in power and influence are always on the horizon.

Tequila's Teetering Tower

Even tequila and mezcal the darlings of the spirits world for years saw sales slip. Tequila once the life of the party now seems to be taking a breather. The industry's fastest growing segment experienced a 4.1% revenue decline. It's a bit like when Big dumped me—unexpected and leaving a bitter taste although perhaps not as bitter as a poorly made margarita. Are we saying adios to premium tequila

RTDs to the Rescue

But wait there's a twist. Premixed cocktails or RTDs (ready to drink) are soaring higher than my Manolos on a good sale day. Sales surged over 16% reaching $3.8 billion. It seems convenience and cost are the new black. These canned concoctions have more than doubled their market share since 2021. It's like finding a fabulous dress at a sample sale—practical and oh so satisfying. Even within tequila consumers are opting for more affordable bottles. The lower price points are seeing volume growth while the premium stuff sits on the shelf gathering dust.

The Players in the Game

Companies like Diageo and Brown Forman with their exposure to lower priced tequila and the booming RTD market seem to be weathering the storm best. Diageo owns Casamigos and Brown Forman controls brands like El Jimador. Meanwhile beer heavy players like AB InBev and Molson Coors are playing catch up in the RTD game. Constellation Brands with both beer and tequila exposure is in an interesting spot but their RTD footprint is smaller. It's like a cocktail party where everyone's jockeying for position—who will end up with the best view and the most fabulous date

Trade Winds and Tariff Troubles

It's not just about what we're drinking; it's also about where it's coming from. American spirits exports fell 9% year over year thanks to trade tensions and those pesky tariffs. Uncertainty is never a good look especially when it comes to business. Industry leaders are calling for a return to zero for zero tariffs hoping to get American distillers back on track. Despite the revenue dip spirits still hold the largest market share at 42.4% compared to beer and wine. But the message is clear consumers are being more selective. In a tough economic environment cheaper tequila and canned cocktails are winning the race. As I always say "Maybe our mistakes are what make our fate." Or maybe our cocktail choices do.