Are Craft Spirits Reaching a Tipping Point in the US? Why Sales Are Declining for the First Time in Nearly a Decade

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A new study named the 2024 Craft Spirits Data Project claims that sales of craft spirits — defined as any distiller that produces 750,000 gallons per year or less — declined in 2023 for the first time in nearly a decade. The report reflects an era of rapid change in the alcohol industry as brands large and small grapple with trends that may soon leave them in the dust.

On Tuesday, the American Craft Spirits Association reported that sales decreased from 14 million cases in 2022 to 13.5 million cases in 2023. As the total number of craft distillers continues to rise, they appear to be jostling for a smaller piece of the pie; the category reportedly lost 0.3% share volume and 0.2% share value compared to last year.

At first glance, it’s easy to blame heavy hitters like Bacardi and Moët Hennessy. A seemingly endless stream of advertisements, brand deals and celebrity sponsorships lend themselves to the assumption that big names are pushing out mom-and-pop operations.

Though there’s truth in this version of events, it should be noted that conglomerates haven’t fared so well, either.

No company exemplifies the tides better than Diageo, the British firm behind Guinness, Smirnoff, Casamigos and Johnnie Walker. The company recently reached a four-year stock price low alongside a $158 million net sales decline, leading to investor panic, sell-offs and rumors of a takeover bid. Recognizable names like Remy Cointreau and Pernod Ricard have faced similar difficulties on the market over the past couple of years.

The main culprit appears to be the aftershocks of COVID-19. The pandemic led to a surprise boom in at-home spirits spending as consumers reconstructed the bar at home — an unexpected, though perhaps understandable response to dour times. As restrictions lifted, premium spirits brands have reported larger and larger losses that have yet to stabilize.

Elsewhere, younger consumers are reconsidering their love of liquor. A study published earlier this year reported that 25% of Americans participated in Dry January; 35% of respondents had plans to cut out alcohol altogether by year’s end.

Preferences reported in these kinds of studies have yet to translate into solid losses for the spirits industry. Nonetheless, a growing genre of so-called “alternative” drinks has been quick to capitalize on the zeitgeist.

An array of mocktails, non-alcoholic spirits and THC-infused drinks have begun cropping up on liquor store shelves across the country. The loosely defined category is projected to reach a value of $3.9 billion by 2030, up from $1 billion in 2020. For perspective, craft spirits are currently valued at $7.8 million.

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