Consumer spirits preferences saw a drastic change over the past three years. Of course, there was the pandemic; drinkers sought out more local products and showed a new willingness to both spend more on premium bottles and embrace novel formats like single-serve cans. By the second half of 2022, restrictions had mostly lifted, but those trends continue to have a lasting impact.
Over the past couple of years, for example, consumers became accustomed to higher quality beverages outside of the bar space in the form of ready-to-drink (RTD) cocktails. And while a growing number of people began moderating their alcohol intake, many did so without compromising on flavor and complexity.
A shift in the type of premium liquor people seek out, mindful moderation, and the evolution of newly embraced formats are just some of the spirits trends that look set to shape how people drink over the coming months.
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1. Non-Alcoholic Spirits Come Into Their Own
Beer has long been the leader in non-alcoholic adult beverage options. Now, it’s time for spirits to shine. “Spirits is one of the greatest areas of growth for the category,” says Marcos Salazar, the CEO of the Adult Non-Alcoholic Beverage Association (ANBA), which was founded in 2021. Part of that growth can be attributed to direct non-alcoholic spirits alternatives, but there are also new botanical non-alcoholic spirits that don’t tie themselves to an alcoholic original yet serve the same purpose when used in a cocktail.
The growth trajectory of the non-alcoholic category has continued to rise over the past couple of years as more people focus on moderation. In January of 2022, 35 percent of U.S. consumers took part in dry January compared to 21 percent in 2019, according to Nielsen IQ’s CGA report. An IWSR Drinks Market Analysis study found that the volume of no- and low-alcohol alternatives will grow by an eight percent compound annual growth rate between 2021 and 2025. “Awareness is building, shelf sets are expanding, and non-alcoholic or dry stores and bars are opening at an unprecedented rate,” says Ila Byrne, the cofounder of the non-alcoholic agave spirits brand Parch.
Bars and restaurants will lead the way in 2023, Salazar says, with the increase of non-alcoholic options becoming as common as having gluten-free and vegetarian items on the menu. That will benefit non-alcoholic spirits sales across the board.
“I believe non-alcohol spirits on cocktail menus will only increase and will stay a thing for the future,” says Chris Hannah, the co-owner and bartender at Jewel of the South in New Orleans, which serves non-alcoholic cocktails like the Mockley Pomegranate Basil Sour, Tangerine Lemongrass Collins, and Orange Tea 75. “The brands that I’ve worked with are Lyres, Free Spirits, and Bare. Bare came out with a non-alcoholic Fernet for the spirit-free bartender’s handshake [a cocktail of equal parts Fernet-Branca and Branca Menta], which is clever.”
2. Full Strength RTDs Take Priority Over Seltzers
An IWSR Drinks Market Analysis study found that spirit-based RTDs held a 45 percent category volume share in 2021 and are seeing the most innovation in the category. In 2023, vodka and tequila RTDs will be the driving force. IWSR predicts vodka-based options will make up 50 percent of the market by the end of 2022 with the help of releases from established brands like Deep Eddy, Ciroc, and New Amsterdam.
The popularity of tequila in general has helped that segment branch out, with full-strength options from brands like Epic Western and Ranch Rider Spirits. Independent brands that have already entered the market will be able to capitalize most. Waterbird Spirits in Charlottesville, Virginia, which makes vodka- and tequila-based RTDs, recently opened a new canning facility after expanding to 40 states and increasing sales by 222 percent since 2019.
Premiumization trends will give an added boost. Premium-priced RTDs have grown faster than any other segment over the past two years, according to IWSR, and people are paying about double what they would for a single beer. This only increases the number of consumer choices, which will help the category as a whole, according to Robby Haynes, the founder of Sunday’s Finest, which makes the Gold Fashioned.
“Now that we’ve pulled top-quality cocktails out from the walls of cocktail-focused bars and restaurants, folks have the opportunity to enjoy elegantly crafted drinks that compete with world-class bar programs wherever and whenever suits them best,” says Haynes.
3. Distilleries Enhance Their Visitor Experiences
Distillery tourism hasn’t yet seen the type of attention that wineries and breweries have, despite decades of on-site tourism opportunities. The exception has been destinations known for whiskey. The Kentucky Bourbon Trail, for example, opened in 1999, and today, that head start is paying off—it received the most annual visitors in its history in 2021.
Now, even distilleries in lesser-known regions are taking a leaf out of the brewery playbook and offering taproom-like experiences, like John Emerald Distilling Co. in Opelika, Alabama, which serves the downtown community as a cocktail bar using solely the spirits produced at the attached distillery.
Distillery bars and tasting rooms are opening in city centers, too. The recently opened California Brandy House in Napa brings the distillery to the heart of wine country with a tasting room. In Louisville, Brough Brothers Distillery is opening a second location in 2023 where it will make vodka and gin and have a bar and outdoor area for games. In St. Joseph, Minnesota, a new distilling test site from Obbink Distilling that’s planned for 2023 will have a tasting room and outdoor space with the goal of incorporating the brewery model into the business plan.
“As a distillery, it’s easy to just sell some whiskey, vodka, or gin, but having a story behind it and the opportunity to show that story is important to what makes you stand out and what makes people come back,” says Seth VanLaanen, the general manager at The Family Jones Spirit House in Denver, which offers distillery tours tastings and serves small plates and cocktails on-site.
It comes with its challenges. Many states only allow distilleries to sell the alcohol they make, so distillery bartenders have to get creative, and distillers must approach new on-site releases with a cocktail-first mentality on what can supplement the on-premise. As more distilleries build out their cocktail tasting room capabilities, the industry will see a boom in distilleries as places to visit rather than just production facilities.
“It really empowers guests to dive a little deeper and ask questions,” says VanLaanen. “People come in and they get to see our whole lineup, get to see our little nerd lab upstairs, and the distillery itself. It’s more tangible for them than sitting at a table, ordering something, and getting a tab.”
4. Hyper Transparency Goes Mainstream
There’s a subset of whiskey distillers that provide an in-depth level of detail for the most passionate consumers. In some cases that information is seemingly coded for in-the-know drinkers, like the four letters that Four Roses uses to note the distilling location, yeast strain, the fact that it’s straight bourbon, and the mash bill. Others reveal the exact source of each blend of whiskey, like High West, which notes the mash bill and whether the bourbon or rye came from MGP, Heaven Hill, or was distilled in-house. But now an increasing number of consumers are seeking out that level of information, and more vodka, rum, gin, and whiskey distilleries are happy to provide it.
In tequila, the Tequila Matchmaker Additive Free confirmation is an opt-in program that serves as a way for brands to highlight the production process. To be confirmed additive free, distilleries must open up their production process and sourcing to on-site inspections. It started in 2020, and in 2022, 69 brands from 28 distilleries took part to prove to consumers that their spirits are additive-free and natural, with six more currently going through the process, according to Taste Tequila cofounder Grover Sanschagrin.
“We are also seeing an increase in the number of distilleries who want to participate … they want to be seen as a ‘100-percent additive-free facility,’” says Sanschagrin. “The brands and distilleries [that are] already part of our program have told us regularly that being on our list has given them a boost in sales and shelf space in the U.S.”
Elsewhere, a new line of “single origin” spirits from Bar Agricole founder Thad Vogler puts provenance and ingredients front and center with its Golden Alpine Amaro, Biodynamic California Brandy, and Demeter Certified Curaçao, as well as its rum, gin, and agave spirits. Redemption Sur Lee takes its entire production style and puts it right on the front of the bottle, and gins from Vara Spirits and Portofino list the location of where the brands source local juniper and other botanicals.
5. Premiumization Adopts a Sustainability Focus
Premiumization and sustainability have been guiding trends over the past couple of years. In 2023, these will merge as consumers seek out premium options that also have an eco-conscious way of doing business. According to IWSR Drinks Market Analysis, 48 percent of U.S. drinkers say sustainability initiatives positively influence purchasing decisions, and studies show that the majority of consumers are willing to pay extra for environmentally friendly products (and that people want to know sustainability credentials up front).
More distilleries are using local, traceable ingredients that command a higher price point now. Consumers can already see that from estate distilleries that grow their own core ingredients, like Waterford in Ireland, which sells bottles in a single farm series, including the first biodynamic whiskey, that starts at about $95 for each farm-specific release.
Eco initiatives offer distilleries a chance to justify the high cost of premium releases. This also relates to the move toward greater transparency as distilleries ensure their practices are easy for consumers to identify. Carbon-neutral distilleries in Scotland, Australia, and the U.S. lead the way through a mix of sustainable energy alternatives, waste and energy reduction, and carbon offsets. As consumers become increasingly wary of greenwashing, brands will make commitments to releases that have a real-world impact on the environment but inherently raise the cost of operations. And consumers will be there to pay for it.
Dispatch
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Nickolaus Hines is a journalist who writes about beer, spirits, food, and travel. He’s the food and drinks editor at Matador Network and has written about drinks for Liquor.com, Men’s Health, October, Hop Culture, Supercall, and VinePair.
