Liquor Before Beer: Brews Not In The Clear

Beer has dominated the alcohol market in the United States for more than 100 years, outselling both spirits and wine.

If sales numbers from 2022 are any indication, beer’s reign may be over. According to the Distilled Spirits Council of the United States (DISCUS), sales of spirits accounted for 42.1% of revenue in the alcohol market while beer slipped to 41.9%. It is a trend that isn’t just being seen on the national level, but locally as well.

According to Adam Clarke, owner of Valley Foods and Valley Liquors in Saratoga, he has seen a noticeable change in spending habits over the past two years. Many of his customers who would typically come in looking for microbrews are now looking for small-batch bourbon.

Bourbon Boom

“There are so many people that are looking for weird, off-the-wall bourbons compared to beers now. Nobody asks for microbeers, they’re asking for a bourbon I can get,” said Clarke. “They want them from the South, the South is still the bourbon king.”

The bourbon boom, as it’s been dubbed, is old news in the alcohol market. According to VinePair, popularity of bourbon first started to rise in 2019 when distilleries in Kentucky filled more than 1.7 million barrels of bourbon. That trend carried through the pandemic and into 2023, with American Whiskey sales reaching $5.1 billion. The rise in popularity for bourbon has been so great that Buffalo Trace has recently completed a $1.2 billion expansion of their operations.

That demand is something which has impacted what, and how much, Clarke can sell in his liquor store. The bourbon boom goes beyond brands like Buffalo Trace, which Clarke can’t seem to order enough of now.

“If we get a case of Blanton’s, it’s gone in two hours, if that. A case of Weller lasted an hour and we limited it to one bottle per person. The bourbon market is crazy,” said Clarke. “Buffalo Trace used to be (where) we could buy it from the liquor division every delivery. Now we get two cases a month of each size, and they don’t last that long.”

Clarke said he gets calls from people outside the Valley, such as Colorado residents, asking what bourbons he has available and if he would hold onto them. While he would be willing to do something like that for a local customer, or a seasonal resident returning for the summer, he said he will not do it for anyone outside his service area. He isn’t the only liquor store to get calls like this, either.

According to a March 8, 2023 article from the Associated Press (“As bourbon booms, thirst for rare brands breeds skullduggery”), aficionados of rare bourbons are willing to go to great lengths to get their hands on scarcer spirit. In Oregon, for example, six officials from the Oregon Liquor and Cannabis Commission acknowledged routing bottles of Pappy Van Winkle 23-year-old to liquor stores for their own purchase. This was in 2022, when Oregon received just 33 bottles of the rare bourbon. That practice was allegedly going on for years and even included members of the Oregon Legislature.

Celebrity Spirits

While bourbon may be seeing an increase in sales, so is tequila. Both were major factors in pushing spirit sales ahead of beer in 2022. Part of that growth comes from celebrities getting involved in the spirit business by investing both their time and money.

In 2017, according to CNBC, actor George Clooney and his co-owners sold their tequila brand Casamingos for $1 billion. Since then, other actors have followed suit such as Mark Wahlberg, Michael Jordan, David Beckham and Dwayne “The Rock” Johnson.

“There is a draw with that, that celebrities are investing their money (in Tequila),” said Clarke. “The liquor is more celebrity driven.”

Valley Liquors sells Dwayne Johnson’s Teremana and Kevin Hart’s Gran Coramino, both tequila and both from small-batch distilleries.

“Tequila’s trying to do what bourbon’s been doing, but they’re five years behind,” said Clarke.

That seems to be a successful plan for tequila. According to Clarke, the number of tequila brands he carries has increased from 10 to 25 with interest in the small-batches over national brands such as Jose Quervo. He’s noticed a similar drop with bourbon, where brands like Pendelton aren’t nearly as popular as Buffalo Trace or Caribou Crossing.

Pandemic Effect

According to a June 5 article from Wine Enthusiast (“Move Over, Beer: Spirits Are Now Alcohol’s Biggest U.S. Money Maker”), stay-at-home mandates during the COVID-19 pandemic led to customers spending more on high-quality cocktail ingredients with the goal of creating experiences they couldn’t obtain elsewhere. Once those mandates were rescinded, those same customers went out with higher expectations than pre-pandemic.

That, combined with inflation, appears to have driven people from beer and towards spirits. Wine Enthusiast quoted Danelle Kosmal, vice president of research for the Beer Institute as saying “It’s hard for a $10 six-pack of beer to compete in dollar share with the $100 bottle of luxury tequila.” Clarke made a similar observation, noting the price increase of microbrews over the past few years due to aluminum and glass shortages impacting the industry. He’s also noticed a significant drop in domestic beer sales.

“Busch Light 30 racks were my number one, they won’t be this year and my number one 12 pack won’t be a Bud product,” said Clarke. “I guarantee it.”

Ready-To-Drink

The third factor in spirits overtaking beer sales last year, and likely this year, is the introduction of Ready-To-Drink (RTD) cocktails. According to Clarke, while those who used to drink microbrews are now going for small-batch bourbon, customers who used to buy White Claw or Truly are reaching for brands like Cutwater.

“Ready-To-Drink has picked up a bit,” said Clarke. “The State of Wyoming doesn’t have enough of them.”

According to CNBC, RTD cocktails grew 35.8% to $2.2 billion in sales. Wine Enthusiast reported that customers who developed a taste for cocktails during the pandemic are now experimenting with RTDs. Before the pandemic, they might have grabbed White Claw or Truly. Clarke said before 2020, Valley Liquor might have moved as much as 30 cases of hard seltzers—which are categorized as beer—between orders but now move around five cases. He said the increase in RTDs is similar to the drop in hard seltzers.

Their popularity has led Clarke to make some changes to the make-up of the liquor store. He’s added two more coolers to hold RTDs and has allotted space which previously went to wine.

Sky’s The Limit

Unlike beer, which appears to have a price point where customers drop interest, there doesn’t seem to be a ceiling in sight for the sales of spirits.

“There’s no ceiling in sight. People are drinking better, not more, and we hope in due course there will be an opportunity to reach market share gains in volumes as well,” DISCUS CEO Chris Swonger said in Wine Enthusiast.

Clarke agreed, saying, “High dollar bourbons, I don’t think there’s a threshold.”

Brian Crawford, president and CEO of the Beer Institute, doesn’t appear worried about the sales data. In a February 2023 article from Forbes magazine (“Distilled Spirits Are Now More Popular Than Beer In The United States”), Crawford said “If the liquor industry is making more money simply because they are charging a higher premium for their products, it’s not a true reflection of its market success.”

Clarke, while observing trends, will go the way of his customers’ preference. First it was microbrews, now it’s small-batch bourbons and RTDs. The future may hold something else in store.

“I’ll keep changing. It depends on the customer letting me know what they need,” said Clarke. “Maybe cans of wine are going to be next, single serve wines. They’ve been trying it for years.”