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Wednesday, May 22, 2024

WSWA’s SipSource: 2024 Market Outlook

During a breakfast session at Access LIVE, SipSource Analysts Danny Brager and Dale Stratton reviewed key trends for wine and spirits sales from year-end 2023 and moving into 2024. Wine & Spirits Wholesalers of America’s (WSWA’s) SipSource is the leading source for authentic and validated wholesaler wine and spirits depletion data.

To begin, Stratton hearkened back to the COVID-19 pandemic. During 2020, he says, the market was distinguished by “the emergence of impacted consumers and insulated consumers.” Insulated consumers, he said, drove volume and premiumization until consumer sentiment turned sour in 2022. After a third unsatisfying holiday season in 2023, consumer sentiment is improving somewhat while inflation continues to moderate.

“But we still have a challenging road ahead of us,” Brager cautioned. “Everything is still down across multiple data sources, unless we include ready-to-drink (RTD) spirits within the spirits category, and then we see some growth.”

According to Brager, beverage alcohol faces a challenging road ahead, requiring all tiers of the industry to work collaboratively. Some of the economic headwinds confronting wholesalers include inflation, interest rates and consumer debt, which continue to impact American spending habits.

Generational trends are also impacting the markets, Brager said, and more diverse buyers mean changing tastes the industry needs to account for. Diverse consumers have embraced spirits more than wine.

Analyst Dale Stratton noted wholesaler inventories for wine, spirits, and beer are at historic highs. Consumers and retailers alike are pulling back, resulting in decreased demand. “In a constrained market,” Stratton said, “more items aren’t likely the answer — it’s about the right items.”

In spirits, ready-to-drink (RTD) premixed cocktails continue to drive growth, with tequila keeping up category growth. Higher-end price tiers will continue to slow, with the best rates of growth in the mid-priced groups.

Wine continued to decline, Brager said, but with white varietals doing better than reds. Prosecco growth remains healthy, and the growth in port (driven by a TikTok trend) is moderating. Table wines in the $11 to $25 tier are performing the best. Luxury wines continue their premiumization slide, though SipSource projects that to moderate later in 2024.

Michael Ooms from the consulting firm Kearney joined the SipSource team to ask, “What do we compare ourselves to when we say we’re going to beat the market this year? What numbers should we be using?” In addition to strategies anchored in data, suppliers and wholesalers need better planning and execution on the street, he said. That’s why SipSource, Kearney, NIQ (formerly NielsenIQ), and VIP have teamed up to create SipSource Forecasting.

According to Ooms, the platform combines SipSource depletions, NIQ point of sale information, external economic data, and more to provide businesses with useful tools for projecting sales. The biggest question, according to Ooms, is, “Is the slowdown complete? Have we reset?” In the opinion of the presenters, the answer is no.

“We haven’t gone back to where we would expect to be,” Ooms noted. “You’ll need better collaboration, ruthless execution, and fast, data-based decision making” to succeed in this challenging market.

About WSWA’s SipSource: WSWA’s SipSource is the ONLY reliable source for wine and spirits trends and share based on aggregated distributor depletion data. Representing more than 60% of wholesale products by volume from distributors in all 50 states, SipSource data is never shared with or sold to other data providers. WSWA’s SipSource relies on primary source, verified data directly from America’s family-owned wine and spirits wholesalers. The SipSource data set is built from single products sold from wine and spirits wholesalers to individual retail locations and includes hundreds of thousands of outlets. Get unrivaled channel segmentation and insights covering the largest number of products and retail outlets of any industry data set ever compiled.

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