US Spirits Volumes Show June Improvement, But Recovery Remains Elusive: Bernstein

The U.S. spirits industry showed signs of life in June with its strongest monthly volume performance in over a year and a half, but a full recovery remains distant as underlying weakness persists in core categories, according to analysis from Bernstein.

Volumes Propped Up by Cocktails

Data from the National Alcohol Beverage Control Association (NABCA) indicated that spirits volumes rose 4.8% in June. However, the picture is more nuanced when looking at recent trends and category specifics.

• Three-month rolling volumes through June were up 0.6%, according to NABCA data.
• When excluding the popular ready-to-drink (RTD) cocktail category, that three-month figure shifts to a 2.2% decline.
• Nielsen data for the 12 weeks ending July 11 showed a similar trend, with volumes up 4.3% overall but down 4.6% when excluding pre-mixed cocktails.

Price-mix, a key indicator of profitability and consumer spending habits, remained negative. Bernstein noted a -2.3% price-mix in the three-month NABCA data. The analyst firm estimates that the value of the full-strength spirits industry declined by 4%, composed of a 3% volume drop and a 1% negative price-mix.

A Divergent Brand Landscape

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Spirits-based RTDs continue to be the market's primary growth engine, while tequila also showed strength with 2% volume growth. Performance among major producers was mixed, with some outperforming the challenged market while others lagged.

Diageo underperformed the market by 130 basis points (excluding RTDs) in three-month NABCA volumes. Key brands faced headwinds, with Crown Royal down 6%, Don Julio falling 7% (a sharp deceleration from 27% growth a year prior), and Casamigos seeing its rate of decline improve to -6%.

Pernod Ricard also underperformed the market by 180 basis points. Its Jameson and Absolut brands declined by 2% and 5%, respectively. However, the company saw growth from Malibu (+3%) and Código tequila (+13%).

In contrast, Campari Group significantly beat the market by 330 basis points, with volumes growing 1.1%. This was driven by strong performances from Espolòn tequila (+18%) and Aperol (+3%). Other companies that outperformed the broader market decline included Brown-Forman, Proximo, and Rémy Cointreau.