The latest SipSource forecasts from the Wine and Spirits Wholesalers of America (WSWA) provide quarterly projections of rolling 12-month 9-liter case depletion rates from Q1 2025 through Q1 2026 for each of seven major spirit categories and wine. According to the latest forecast, the rate of decline in consumer demand is slowing but overall demand continues to drop.
According to the WSWA:
The SipSource forecast relies on historical depletion data from 19 major wholesalers. The information is comprised of the most comprehensive data source in the industry. It’s twinned with 10+ macroeconomic indicators that affect consumer behavior. A sophisticated, artificial intelligence-based model leverages this information to provide accurate, forward-looking insights about growth.
The results of the 2024 projections underscored the remarkable accuracy of the SipSource forecasting model. According to WSWA:
The 12-month forecast released in January 2024 was more than 80% accurate. The model demonstrated improved performance over the year as more data was collected. The Q3 update, for example, was more than 90% accurate in predicting Q4 2024 consumer demand across most product categories.
According to the SipSource data:
In the initial outlook for 2025, the latest projections show stabilized but negative growth for the industry coming off a tumultuous two-year period between 2022 and 2024.
Rolling 12-month depletion growth rates for All Core Spirits are expected to gradually decrease from around –4% in the first half of 2025 to -4.32% by Q4 2025. This represents a slight improvement over the previous quarter forecast, with All Core Spirits ending 2024 near -5% decline.
Moreover, according to the SipSource projections, the rate of decline for rum, U.S. whiskey, and vodka is expected to stabilize by the end of 2025, reversing the sharp drops in 2022-2024.
On the other hand, Tequila and other agave spirits are forecasted to be near-flat by year-end 2025, following a sharp downturn in Q4 2024. Tequila may be the first spirit category to show positive growth in consumer demand, even if that doesn’t manifest itself till 2026.
The WSWA’s SipSource projections forecast the rate of decline moderating and the beginning of stabilization in retail sales to consumers but fall short of heralding a reversal in the overall decrease in consumer demand for alcoholic beverages that has played out since 2022.
According to the WSWA, in 2024:
The beverage alcohol industry encountered one of its most challenging years in collective memory, with all three categories experiencing volume declines. According to SipSource, spirits depletions fell -3.7% and wine fell -7.2% in December-ending data. Unlike previous cycles where volume shifted between categories, the overall decline signals the industry’s broader challenge – changing consumer behaviors trending away from alcohol consumption.
SipSource Analyst and industry veteran Dale Stratton went on to note:
Lifestyle choices – including the rise of moderation and abstinence trends – reshape consumption patterns. Additionally, the industry is facing competition from alternative adult beverages like energy drinks, botanical-infused drinks, and hemp-derived products, which are increasingly winning traditional alcohol consumption occasions.
Additionally, unlike in previous downturns, where the impact of volume declines was offset in whole or in part by premiumization-driven increases in revenue, the 2024 SipSource showed an overall revenue decline. Spirits revenue decreased 4.3%, and wine revenue fell 6.3% in 2024. The decline in spirits revenue exceeded the decrease in volume, indicating that higher-priced goods fell faster either because consumers were buying less or switching to cheaper beverages.
This trend significantly reverses the previous trend, where consumers traded up as they consumed less. SipSource says, “The premiumization trend is all but dead except for a few categories.”
In the case of wine, however, volume fell faster than revenue, indicating that higher-priced wines were declining at a slower rate than bottom-shelf offerings. This trend may suggest that the wine business is stabilizing ahead of the spirits sector. It may also indicate that low-cost wines are likelier to lose ground to RTDs than higher-priced wine offerings.
SipSource analysts also pointed out that:
Another key factor driving this downturn is the rapid rise in popularity of spirits-based premixed cocktails, which while contributing to growth in their segment, disrupted traditional distribution channels and impacted the revenue of conventional spirits.
According to WSWA, the SipSource forecasts “were not altered to account for the potential impacts of changing U.S. trade policy.” At this point, it’s not clear if the imposition of tariffs on foreign wines and alcoholic beverages will diminish overall demand or shift it towards domestic producers.
However, if one takes a more extended, multiyear view, wine and spirits industry trends diverge significantly. Although specific numbers vary by source, mainly because different organizations measure sales at various distribution levels in the industry, the underlying trend remains consistent even if the data sets don’t match.
Generally speaking, according to both The Spirits Business and the Distillers Council of the US (DISCUS), the number of 9-liter cases of spirits increased from roughly 290 million cases in 2019 to 310 million cases in 2022 before falling to 305 million cases in 2024. That puts 2024 volumes still well ahead of 2019 volumes.
Unfortunately for the spirits industry, many producers assumed the demand trend line established during the COVID-19 pandemic would continue. Instead, it has reset, by and large, to the lower, pre-pandemic, trend line. The increase in production came as demand began to fall from the COVID-19 trendline. A significant product surplus has accumulated at the producer and distributor levels. Given current trends, it will likely take another year to two before this overhang sells through.
Trend lines in the wine industry point to a different picture. According to The Wine Institute, roughly 408 9-liter cases of wine were sold in 2019. Sales peaked at 450 million cases in 2021, only to fall to approximately 366 million cases by 2024. That puts overall wine sales by volume well below the levels of 2019. The most recent SipSource trend forecast is that overall wine sales will continue in their free fall, although this is decline is centered on lower priced wines, and do not show any sign of stabilizing.