In 2020, IWSR Drinks Market Analysis reported that global beverage alcohol consumption was not expected to rebound to pre-pandemic levels until 2024. Here we are; but while we await actual figures, there’s no denying both the surge that certain beverage categories have experienced since the pandemic began, alongside a marked shift in consumer behavior and consumption.
In recent years, the spirits category has seen the growth and development of celebrity-backed brands, the rise of non-alcoholic spirits, and an expansion of transparency, sustainability, and diversity initiatives, not to mention the many established and premium brands entering the ready-to-drink space. In 2023, the beverage industry continued to capitalize on all of these trends, while reckoning with lingering supply chain issues.
But bigger changes are coming. With nearly half of Gen Z reaching the legal drinking age by the end of 2024, the years ahead will be dynamic, as this younger generation’s value system begins to shape the course of spirit and cocktail consumption. Here’s what to look forward to in the year ahead.
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1. Rising Consumer Familiarity with a Range of Asian Spirits
Asian spirits such as Japanese shochu, Korean soju, and Chinese baijiu are among some of the oldest and most widely consumed worldwide, though they are still new to many American consumers. While buzz around Japanese whisky has been building for several years, a broader range of Asian spirits are expected to gain momentum in 2024. According to a report from Datassential, there has been an increase in consumer interest in soju at 50 percent, in baijiu at 37 percent, and in shochu at 40 percent, most notably amongst Gen Z, who show as much affinity with them as for more established categories like bourbon. “This will likely help propel innovation in blended categories that include those ingredients, like sake soda or a soju seltzer,” says Claire Conaghan, the associate director of Datassential.
Shochu has benefitted from the lobbying efforts of the Japan Sake & Shochu Makers Association to have it more clearly labeled in the U.S., with recent success in California and New York. (For decades it’s been mislabeled as Korean soju, adding to consumer confusion). Next they’re targeting Washington, Oregon, and Illinois, along with a nationwide education campaign. The numbers point to its success. “Since the law changed in New York in 2022, one of our distributors said they saw an increase of 400 percent in sales compared to the same month the previous year, which is incredible,” says Chikako Ichihara, the U.S. liaison officer for the Japan Sake & Shochu Makers Association. “Passing legislation is only one step in our mission. Our primary goal is to also educate consumers and restaurants on how best to serve and enjoy shochu.”
American consumers are becoming more curious generally about spirits distilled from a broader range of base ingredients, especially rice, notes Brandon Hill, the founder and master distiller of Tokki Soju, the first American-made, handcrafted soju. Kevin Diedrich, the operating partner and general manager of San Francisco’s Pacific Cocktail Haven, enjoys the potential of these spirits behind the bar. “Spirits [distilled from rice or sorghum] can add a ton of texture, along with new flavors that can differ from the same spirits bartenders have been using.”
2. No- And Low-Alcohol Beverages Go Mass Market
No- and low-alcohol beverage consumption has exploded in recent years, with a Nielsen IQ report showing double-digit growth for the non-alcoholic category between 2020 and 2022. This year saw the category expand and evolve even further, with the development of mainstream retail opportunities, tasting room experiences, and the arrival of a mid-strength alcoholic sub-category.
Ritual Zero Proof non-alcoholic spirits began rolling out in 400 Walmart stores nationwide in October 2023, demonstrating the mainstream embrace of such alcohol alternatives. “As alcohol sales decline, Walmart has recognized non-alcoholic as a new revenue driver, and one that supports a more inclusive drinking experience,” says cofounder Marcus Sakey. “As America’s largest retailer, this is another decisive step toward the full-scale adoption of the entire non-alc category.”
Wilderton, a botanical zero proof spirit from Hood River, Oregon, opened America’s first non-alcoholic distillery tasting room in July 2023. “While the non-alcoholic category is growing exponentially, general consumer awareness is still limited as to what non-alcoholic spirits taste like, how they are made, and how easy they are to enjoy at home,” says Brad Whiting, the cofounder and CEO, who hopes to address these concerns through the Wilderton’s tasting room. “The reception has been absolutely incredible, having provided guided samplings to nearly 1,750 guests since opening our door July 1.”
Finally, a fledgling trend for mid-strength spirits is emerging with the arrival this year of brands such as Sommarøy, offering gin and vodka expressions with a mellower 27.5% ABV. According to data from IWSR Drinks Analysis, the majority of people who consume alcohol alternatives still consume alcoholic beverages. “In a landscape where non-alcoholic options have gained significant traction, we recognized the absence of a mid-strength spirit that could meet the discerning standards of these moderation-minded consumers,” says cofounder Michael Barkin. So far, most other brands in this sub-category are based in the U.K., such as Quarter and Luxlo, demonstrating its potential for growth in the U.S.
3. Coffee as a Cocktail Ingredient beyond the Espresso Martini
Rising in popularity over the past few years to become one of the top ten cocktails in the U.S, according to a report by CGA by NielsenIQ, the Espresso Martini has ushered in a new era of coffee cocktails. “It’s a great starting point for interpretation,” says T. Cole Newton, the owner of New Orleans’ Twelve Mile Limit and the current president of the United States Bartenders’ Guild. “I was recently tasked with judging a cocktail contest that tasked competitors with updating a classic, and more chose the Espresso Martini than any other,” he says.
To that degree, many of the top cocktail bars are eschewing variants on the Espresso Martini in favor of other coffee cocktail expressions. “It’s pretty easy to understand why coffee is such an enduringly popular cocktail component,” says Newton. “Bitter, acidic, fruity, nutty, or more, depending on the varietal—coffee can have so many of the flavors that mixologists look for.” Backbar, a bar inventory resource, did some math on that score: more than half of North America’s 50 Best Bars have coffee cocktails on their signature menus, with less than half of those cocktails appearing as Espresso Martini variants.
Coffee also offers a point of relatability for consumers and a functional caffeine hit, which is especially relevant as brunch cocktails are trending. “Most consumers are very familiar with coffee, but might not be so with a lot of the ingredients used creatively in craft cocktails,” says Hannah McKee, the bar manager for Pittsburgh’s Con Alma. “Seeing these flavors on a brunch menu makes cocktails approachable, and additionally more appropriate for the time of day.”
Beverage pros are also placing bets on other classic coffee cocktails unseating the Espresso Martini in the coming year. According to Google Trends, interest in the search term “Carajillo” has doubled in the past year, with some early predictions that the two-ingredient Mexican coffee cocktail might be the “it” drink of 2024. Laura Unterberg, the owner of The Fox Bar and Cocktail Club in Nashville, thinks otherwise: “My money’s on a modern update to the Mind Eraser—a sparkling variation on the Black Russian—toppling the Espresso Martini from its throne.”
4. Gen Z Comes of Drinking Age—With a Preference for Spirits
According to a Pew Research Center report, Gen Z (born between 1997 and 2012) is the most diverse population to date, with the potential to be the highest educated. As such, its progressive ethos has already begun to impact the industry, with 47 percent wanting to support brands that address racial and gender equality, and the same amount prioritizing sustainability credentials, according to a 2023 ICSC report. For brands relying on historical popularity or legacy that may present new challenges to recruit this next generation of consumer.
While much has been made of Gen Z drinking less (27 percent say they never drink alcoholic beverages, citing the physical and mental toll of drinking amongst their reasons), those that do drink do so more frequently than older adults, and have shown a preference for spirits and spirit-based cocktails over beer and wine
Spirits brands with ethical and sustainable credentials look set to draw these new drinkers. The same ICSC report noted that 56 percent of respondents said they would spend more to purchase sustainably sourced products.
5. The Map of World Whisky Expands
Alongside the already increasing popularity of Japanese and Taiwanese expressions, whiskies from other lesser-recognized whisky-producing countries are attracting attention among aficionados, and pushing established regions and brands toward innovation. Denmark’s Stauning, Israel’s Milk & Honey, Australia’s Starward, and Peru’s Black Whiskey have taken top prizes in competitions and evaluations in the last couple of years, such as at the International Whisky Competition, Whisky Magazine Awards, and the San Francisco World Spirits Competition.
South America could be of particular interest to whisky fans. “South American whiskies are exciting as they come from an area without a long tradition, so almost anything goes,” says Billy Abbott, an ambassador for The Whisky Exchange and the author of The Philosophy of Whisky. “Add to that the continent’s excellent wines, giving the potential for maturation in casks [not typical] in more traditional whisky countries, and you’ve got a recipe for new styles and flavors that we’ve not seen before.”
With whisky projected to overtake vodka sales by volume in the U.S. for the first time in two decades, as reported by IWSR Drinks Analysis, look to see more of these world whiskies enter the U.S. market in the coming year.
Dispatch
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