The U.S. spirits industry stands at a pivotal moment, commanding an unprecedented $112.5 billion market while navigating a perfect storm of trade tensions, supply chain volatility, and structural shifts that are reshaping competitive dynamics across the category. As spirits capture over 42% of total beverage alcohol sales, the sector faces both remarkable growth opportunities and formidable operational challenges that demand new strategic approaches from brands of all sizes. These Bar Convent Berlin sessions provide essential intelligence on the forces reshaping American spirits, from the policy battles over tariffs that threaten billions in export revenue to the explosive growth in RTDs.
DISCUS: The State of the $112 Billion U.S. Spirits Market
At Bar Convent Berlin, Christine LoCascio, Chief of Policy & Strategy at DISCUS, breaks down the facts behind the $112.5 billion U.S. spirits market. Despite a “roller coaster” trade environment and shifting tariffs under the new administration, spirits now dominate 42.2% of the total beverage alcohol market, outperforming both beer and wine. Learn why RTD products have grown an astonishing 900%, why Tequila is on the verge of overtaking Vodka as the #1 spirit, and how the “Toast Not Tariffs” coalition is fighting to protect exports.
Why Small Spirit Brands Should Embrace Chaos
When you are one of the small spirit brands in the industry, economic uncertainty isn’t just a challenge. It can also be an opportunity. Nick Gillett, Managing Director of Mangrove Global, explained why craft and small spirit brands must harness agility and passion to disrupt the dominance of industry giants such as Diageo and Pernod Ricard.
Spirits Bottle Sourcing: How to Keep Stock Flowing Amidst Global Shocks
What can a former Amazon executive teach the spirits industry about sourcing spirits bottles during global shocks? Mehul Brahmbhatt, Founder of Tharra Company, applies the “Amazon Flywheel” (Selection, Price, Convenience) to the world of craft spirits. Discover the complex global journey of the Tharra bottle and tactical advice on overcoming 25% cost increases, unpredictable tariff policies, and glass sourcing challenges by building a resilient, multi-vendor supply chain.
DISCUS: The State of the $112 Billion U.S. Spirits Market Transcript
Christine LoCascio (0:03)
So, I’m Christine LoCascio, the Chief of Policy, Strategy, and Membership with the Distilled Spirits Council. I know maybe it can feel a little bit like this — sometimes you think, “What is going on? What is happening? There’s just so much confusion. How do I make sense of all of this?” And certainly, working on trade policy along with some of my colleagues, I’m not going to sugarcoat things. It is a challenging marketplace for all the reasons we know, especially for those of you in the industry. But let’s look at some of the facts and talk about the US as a marketplace.
The fact is, in 2024 the spirits market was still pretty strong. From a supplier revenue perspective, US spirits dominate the market. For the past few years, sales of spirits have been higher than those of beer or wine, and we now hold 42.2% of the total beverage alcohol marketplace in terms of supplier revenue.
Of course, we did see a bump during COVID. You can see the evolution of that over the past 20 years, and things have started to level out a bit. The value of the US marketplace was a little over $37 billion in 2024. But I’d also like to point out what’s not on this slide: at the retail level, the US spirits market is valued at $112.5 billion. That makes it the second-largest spirits market in the world.
I’d love to ask — does anybody know what the largest spirits market in the world is? … Joel? Yes, it’s China. Thank you, Joel. The Chinese marketplace was valued at $167 billion. I’m happy to go through the rest of the top five if you’d like — Germany comes in at number seven, in case you’re curious. (A round of applause for Germany!)
Christine LoCascio (1:59)
There have been significant variations in category trends over the last decade. Interestingly, in the US market, American whiskey has climbed about 93%. Cocktails and ready-to-drink products have had astonishing growth of over 900% — obviously coming from a very small base, but still a significant driver of growth in the spirits market. Tequila and mezcal have grown by over 200%, and vodka by 25%.
Supplier revenues from the fastest-growing categories have nearly tripled over that period, reaching $16.3 billion. One category I haven’t mentioned is Irish whiskey, which has also been growing significantly.
Vodka remains the top spirits category, second only to tequila, which has been growing steadily over the past decade. So there’s a lot to note about the US marketplace — tequila may be overtaking vodka in the near to short term. We shall see.
Cocktails and ready-to-drink products are the fastest-growing spirits category by revenue. Looking at the period between 2023 and 2024, there’s been significant growth in those categories — it’s a product category that seems to have come out of nowhere and has grown significantly.
Christine LoCascio (3:26)
Now, looking at 2025 so far — of course there are challenges, but there are also some silver linings and pockets of positivity, and we’ll take a deeper look at that.
Looking at the NABCA data, which collects data from the control states — this only represents about a quarter of the market, but it does tell us some interesting things. We see that retail sales have declined by about 3%. Note that this does not include spirits-based RTDs, so with those included, it might not be a negative number at all.
In the first half of the year, spirits have continued to outperform beer and wine despite the challenges we face — this is according to Nielsen IQ data. Coming back to spirits-based RTDs, their importance to the spirits market has really helped drive growth in the marketplace.
Certainly, it won’t come as a surprise that imports have been declining in the first half of the year. We all know about the tariffs that have been imposed, and from our experience dealing with tariffs on both the export and import side, you see almost an immediate impact from the imposition of tariffs.
Just earlier this week, we issued a mid-year export report showing a decline in the second quarter of the year. In particular, our exports to the EU are down by about 12%, and overall by about 9%. It’s a little too early to speculate exactly why they’re down — we’re pleased to be here promoting American spirits exports into the EU marketplace, but it’s something we’re definitely tracking and want to learn more about, especially since we don’t currently face any tariffs going into the EU.
You mentioned Canada before — we continue to face a challenging market there, with provinces not permitting the sale of beverage alcohol, including spirits, from the United States in many cases. So we’ve seen a significant decline in our sales there. We’re hopeful that through continued negotiations and talks, we can get back on the shelf.
Christine LoCascio (5:44)
So, if you care about any of these issues and you’re in the US — the Distilled Spirits Council is part of a coalition called the Toasts Not Tariffs Coalition. It unites 57 trade associations in the US, including wholesalers, retailers, the National Restaurant Association, the National Bartenders Association, and many others. We’ve been speaking with one voice — stronger together — in opposition to tariffs on imports or exports of spirits, beer, or wine.
If you have a US presence, please take note of this opportunity to add your name to a petition. We’re currently collecting signatures on a letter to the administration urging a resolution to the tariff issues we continue to face, particularly with the EU and the UK. What we’d like to do is get back to “zero for zero” — something that was in place for about 25 years and led to tremendous growth in our exports and imports, supporting the industry across the board. So please take a moment to take a look at that.
And of course, every challenge presents an opportunity, and this new trade paradigm we’re facing with the administration is leading to opportunities for US spirits exports. Early in the year, the Indian government decided to lower their tariff on American whiskey from 150% to 100%. It’s still astronomical, but it was an amazing reduction. We’re looking forward to continued negotiations and opportunities to open up markets for US spirits exports around the world. And just recently, Turkey — which had been imposing retaliatory tariffs on many US goods for about seven years — decided to lift those tariffs. So there are some opportunities, and as a trade association, we’re working with the administration to find where those opportunities are to help promote and secure open markets for US spirits exports around the world.
Christine LoCascio (7:50)
Now, having talked about tariffs — since that’s the topic of the day — I also want to look at some other opportunities. In working with our distillers in the US, despite all these challenges and uncertainty, there are a lot of opportunities with distillery tourism, and many of our distillers have really focused on that, leading to continued growth for their businesses.
US distillery tourism is a really important economic driver. We did some research a couple of years ago looking at Texas distilleries and how much economic activity tourism to those distilleries generated for the state. So if you’re in the US and have a distillery, consider that — it’s a significant part of many companies’ businesses, and as a trade association, we’re working to highlight that.
If you have a distillery in the United States and want to be part of that, you can join Destination Distillery and add your name to our growing list. It’s a free resource — if you’re traveling in the US and want to visit a certain state, you can look up what distilleries are in Indiana, Texas, and so on. We’re also working to help highlight distilleries and the activities they’re doing through our networks.
As an association, we look at ways to highlight and promote US distilleries and their activities, and as a trade association, we also work to educate. One way we’re educating US distilleries is on how they can positively impact their bottom line — and one way is through energy efficiency. We’ve been working with the EPA for many years to help develop ways distilleries can reduce their overall energy costs, which is certainly important from a business perspective. We have free resources we’ve worked on, and we also have an academy where you can work toward a sustainability certificate to help improve the operations of your distillery in the US.
We’re the association that leads the spirits industry in terms of advocacy in the United States. We’re working every day to defend the industry’s priorities — whether on tariffs, alcohol and science, or fighting back on proposed tax increases at the state level. This just gives you a highlight of some of the work we do every day on behalf of the spirits industry. Our work is really about helping to modernize policy and protect economic growth — you’ve seen Toasts Not Tariffs, as well as Science Over Bias.
Finally, if you’re interested in learning more about the major policy issues, what DISCUS is doing, and want an opportunity to network with others in the industry — I’d like to do a quick plug for our annual conference, which will be held in Louisville, Kentucky, in early March. We hope you can join us. There will be lots of discussions on policy, and you’ll have the opportunity to meet others in the industry, including wholesalers, to find out what’s top of mind.
So with that — thank you very much, and I’ll turn it over to May.
Why Small Spirit Brands Should Embrace Chaos Transcript
Nick Gillett (0:03)
My name is Nick Gillett. I’m the founder and now Managing Director of Mangrove, a specialist importer and distributor of spirits in the UK market. I’ve been in the drinks industry in the UK for about 25 years, and I can see one or two of you I’ve worked alongside — and against — over that time.
The last 25 years have seen a lot of disruption, and we’re potentially accelerating that right now. We’ve probably never seen so many difficulties and challenges caused by macroeconomic forces, politicians who seem to not help no matter what they do, cost of living pressures, and access to capital. One of the things that happens in those times is we see the strength of big brands and large companies — but the truth is that dynamic has always existed. So if you work for Diageo, Bacardi, or Pernod Ricard, the next bit probably isn’t for you. You have a dominant market position and don’t need observations from me.
If you’re a small brand starting out, if you’re anything other than the market leader, the odds are stacked against you. Typically, the big players are the biggest, the richest, or the cheapest, with the most people, and they’ve built those positions and relationships over 300 or 400 years. It’s very hard for any brand — regardless of how good a salesperson you are — to come in and disrupt that. You have to provide a compelling reason.
Nick Gillett (2:01)
But small brands have a couple of secret weapons. One is agility, and the other is passion — driven by the founder or creator of the brand. And this is exactly why you should be embracing the current economic situation. When a US president decides on a tariff policy that throws the whole world into shock, it creates chaos. It breaks boundaries. It causes people to question existing relationships. And if you’re fast, agile, and have the right product, you can use that to your advantage.
Because the one thing you need in order to succeed is an opportunity. You need something to break open — an opening to happen. Economic uncertainty, unfortunately, does exactly that. It breaks some barriers, breaks some brands, and creates space on menus, shelf space at retailers, and openings elsewhere. We’ve certainly seen examples of this — and while the ones I’ll use are UK-specific, the same dynamics will be playing out across Europe and probably further afield. There have been clear winners over the last few years among those who were able to move quickly and adapt.
We’ve had a huge amount of rising costs — inflation through the roof, tax after tax in the UK on employment, packaging, and pollution — while at the same time everyone is trying to reduce their shelf price and offer consumers value for money. That equation clearly can’t hold. The last five years have also exposed vulnerabilities in the sourcing of raw materials: glass shortages, logistics challenges, a ship stuck in the Panama Canal for what felt like forever, causing supply issues for both raw materials and finished goods.
Nick Gillett (4:13)
But when costs move, they tend to move for everyone — big and small. And so there are things you can do to mitigate. You can choose to absorb those costs, or you can find smarter ways around them.
Avalan — a Calvados we represent, and I’ll put my cards on the table, it’s a remarkable Calvados — set up to be environmentally friendly many years ago. It’s in their DNA from day one. They started during a glass shortage, and they also realized that shipping glass around the world made it very difficult to be carbon neutral. So they chose to go to a Frugal Pack, which for those who don’t know is a paper bottle with a lined interior — very lightweight. The advantages are multiple: you’re not shipping expensive glass around the world, it’s more environmentally friendly and allows them to be carbon neutral, and now it also doesn’t attract a packaging tax, which in the UK is effectively based on weight. By a simple packaging change — and you can buy Frugal Packs off the shelf — they’ve been able to make their product significantly more price competitive.
Penrose, a spirit I have no connection with, formed around the same time when glass was also a challenge. They used recycled aluminium bottles. At the time it was a novelty — one of their key USPs, as they were the only brand in aluminium packaging. Sustainability was central to it: aluminium is infinitely recyclable. And now, although aluminium does attract a tax, it’s very lightweight, and their price point compared to brands in glass has come down noticeably. I’m not for a minute suggesting they set out to exploit a tax they couldn’t have predicted — but a simple packaging decision has delivered that competitive advantage.
We also partnered some time ago with Ecospirits, a closed-loop system that removes all dry goods costs and allows you to get a spirit to market at a more cost-effective price, with no compromise on quality. The vessel goes into a venue and comes back. There’s no waste tax. I’d love to say it’s a revolutionary idea, but beer companies have been doing it with kegs for decades. The good news is it’s very environmentally friendly and very accessible. The slightly complicated news is that Diageo, Bacardi, and Pernod Ricard have also taken it on. But that doesn’t erase your advantage — because they’re not putting every brand into the system. As a brand owner, you can look at that and say, “Actually, that narrows my competition set.”
Nick Gillett (7:24)
So there’s a real advantage in packaging. And there are also a lot of statistics floating around at the moment saying that nobody’s drinking — Gen Z aren’t drinking, they’re not going out, the industry is in freefall. That doesn’t appear to be entirely true. I think the industry is in better health than some of that narrative suggests. Yes, it’s tough. But it’s been tough before.
There used to be a belief — going back a number of years — that you couldn’t sell anything over £19.99 a bottle. Nobody would buy it. Too expensive. And then a brand called Hendrick’s launched, deliberately pricing at exactly £20. Everyone said, “That’s an unusual price point.” But people paid £20 and didn’t seem to miss that one penny back. Once that psychological barrier was broken, brands that were at £19.99 thought, “Well, £20 isn’t so scary,” and moved up. Then they were at £25, then £30, and so it went.
And one of the effects of the current cost pressures is that brands perceived as great value at £19.99 are now at £23, and suddenly they don’t feel like great value anymore. Consumers start asking what else is out there. This ever-increasing cost cycle is pushing some entry-level brands into price points where they lose their value perception — while some brands that were always considered uber-luxurious are now becoming more accessible. Retailers are starting to say, “If you can’t hit the right AM level or hold the right price point, I’m going to open up some shelf space. It might just be a single facing, but it could be a full listing.” And that’s where smaller brands that offer something genuinely different — something the big brands don’t, built on passion and direct consumer relationships — have a real opportunity, because those boundaries are breaking.
Nick Gillett (9:49)
It’s very difficult for small brands to win entirely on their own, so we should be banding together. Governments need all the help they can get right now, and producers, distributors, and brands can all work together through lobbying and industry bodies. If you go and bang on a door alone, nobody listens. But if you all bang on the door collectively, it carries weight. We’ve seen this with the tariffs on Scotch — the industry has been working hard together on that.
If you’re a brand, talk to your distributor. Distributors often know what’s going on. We always seem to know when someone is running low on stock, or when a competitor’s shipment is stuck somewhere, and a good distributor can help you turbocharge an opportunity — whether you’re filling a gap in supply, or looking at pricing and strategy. We’re stuck in the middle in the best possible way, and we can help.
A couple of things about building a business. By the way, I built Mangrove and someone once said to me, “What do you know about running a business through tough times — you sold it.” Well, I sold it in 2023 and I’m still working on it. I’ve been through a couple of recessions, one small thing called Brexit, and a global pandemic — and we’re still here. What I’ve learned is this: the army will tell you that a plan lasts right up until the moment the first shot is fired. Whatever plan you’ve built — the one that impressed your bank and your friends — it survives until about the first meeting with a distributor, the first bump in the road, or the first global pandemic.
Nick Gillett (11:44)
What is clear is that volatility, economic change, fluctuating capital availability, and shifting tax rates are not going away. There will be a new challenge every few months. And the mistake is waiting too long. The mistake I made when Brexit happened was not raising my prices despite the pound collapsing — because I thought, tomorrow it will recover. It cost me about half a million dollars, because I was too slow to react and too frightened to raise my prices. Better times, I’ll let you know when they’ve fully arrived.
But brands that do really well have it in their DNA to prepare for things going wrong. They prepare for the possibility that their bottler runs out of glass. They prepare for the fact that if elderflower suddenly becomes in demand — because Hugo Spritz takes off — they might not have enough. The challenge is: how do you stay responsive without constantly firefighting?
Every shock isn’t just a disruption — it’s an opportunity to adapt and to take advantage of something. We love a quote at Mangrove, and I’ve gone with a scientist this time rather than a sports person. Charles Darwin said it’s not the strongest who survive — it’s those who are most adaptable. And if you look at what’s happening right now, the brands winning opportunities are those who can adapt their packaging and pricing without ever compromising on quality.
So my closing message is this: when you’re not the biggest and you don’t hold a dominant market position, embrace the shocks and the change. Yes, it’s hard — I won’t pretend otherwise. But it’s precisely those shocks that are going to provide you with the opportunity to get your brand out there. Thank you.
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