California Spirits Consumption Falling: An In-Depth Analysis

California’s spirits market is experiencing a notable decline, diverging from national trends. According to the International Wine and Spirits Record (IWSR), from 2019 to 2024, spirits volumes in California decreased by 5%, compared to a 3% decline across the U.S.

Agave Spirits’ Underperformance

Agave spirits, particularly Tequila, have historically driven growth in California. However, since 2021, their growth has significantly lagged behind the rest of the U.S. While niche and premium styles like cristalino and flavored Tequilas are gaining popularity, they haven’t offset the declines in mainstream options such as blanco and gold Tequilas.

Shifting Consumer Preferences

Younger consumers in California are increasingly prioritizing health and wellness, leading to a rise in moderation and the consumption of no- and low-alcohol products. This trend is more pronounced in California than in other states, contributing to the decline in traditional spirits consumption.

Rise of Ready-to-Drink (RTD) Beverages

Despite the decline in spirits, RTD beverages have seen explosive growth in California. Between 2019 and 2024, RTD volumes nearly doubled in the state, outpacing national growth. Premium RTDs, in particular, have tripled their volumes since 2019, indicating a shift towards more convenient and health-conscious drinking options. The Spirits Business

Economic Pressures and Tariffs

California’s large alcohol industry and its role as a key import gateway make it particularly vulnerable to trade tariffs and economic pressures. Tariffs on imports of Scotch whisky, Cognac, Tequila, and Canadian whisky could reduce their availability or increase prices, potentially benefiting local producers in the short term but posing long-term challenges.

The decline in California’s spirits consumption is multifaceted, driven by the underperformance of agave spirits, changing consumer behaviors, and economic factors. While RTDs offer a growth avenue, the traditional spirits market faces significant challenges in the state.

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Source of information

IWRS Article — California deep dive: why is spirits consumption falling?

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