Ready-to-drink cocktail sales jump as consumers seek affordable options
The four-year decline in U.S. spirits volume reflects a shift in drinking habits that analysts say goes beyond typical economic cycles, according to data from IWSR, an alcoholic beverage analytics firm. The share of American adults who report consuming alcohol fell to 54% in 2025, Gallup said, an all-time low in the polling organization’s tracking.
Affordability is playing a role. Bernstein analysts estimated that prices for spirits served in bars and restaurants have risen 29% over the past five years, outpacing overall inflation. In many U.S. cities, $20 cocktails have become common as venues pass on higher labor and ingredient costs. At-home prices have risen only 9% in the same period, according to Bernstein, making store-bought spirits a relative bargain — yet consumers are not shifting their drinking from bars to home, IWSR data shows; they are drinking less overall.
Younger generations are driving much of the change, according to industry analysts. Gen Z consumers typically drink one or two drinks or socialize without alcohol entirely, citing health consciousness. The use of wearable fitness trackers such as Oura rings and Fitbits has made the effects of alcohol on sleep more visible, contributing to moderation. The trend is spreading to older age groups, Gallup’s polling indicates.
Other factors are compounding the decline. The rise of GLP-1 weight-loss drugs has been linked to reduced alcohol consumption. Consumers in states where marijuana is legal have access to alternatives such as cannabis and THC-infused beverages. Low- and no-alcohol drinks are growing faster than the overall alcohol industry.
One segment of the market is bucking the trend. Ready-to-drink cocktails — bar-quality cocktails in a can — are growing 20% to 30% annually in the U.S., according to Mitch Collett, an analyst at Deutsche Bank Research. Gen Z consumers are drawn to RTDs for their convenience and affordability, Nadine Sarwat, a Bernstein analyst, said. A 12-pack of Cutwater Spirits margaritas costs about $25 at Walmart, whereas making a single margarita from scratch requires buying multiple bottles. “The category is telling us something about younger consumers…Gen Z wants to drink,” Sarwat said. She added that the outperformance of RTDs and smaller pack sizes suggests budget constraints, rather than outright abstinence, are responsible for at least part of the volume decline.
The publicly traded distillers have been slow to enter the RTD market, which is dominated by beer companies and privately owned spirits brands. Cutwater Spirits, for example, is owned by AB InBev, the brewer of Budweiser. Analysts said distillers may be reluctant to invest heavily in lower-margin canned products and are wary of boom-and-bust cycles that have affected craft beer and hard seltzers in recent years.
The shift in drinking patterns has weighed on the stock market valuations of major spirits companies. Pernod Ricard, which makes Jameson whiskey, is now cheaper than British American Tobacco and Marlboro owner Altria when measured as a multiple of expected earnings, according to data cited in a Wall Street Journal analysis. Diageo, the owner of Casamigos tequila, is trading at an earnings multiple last seen in 2009. Brown-Forman, the maker of Jack Daniel’s, trades at 16 times projected earnings, still cheaper than Philip Morris International.
Diageo’s incoming chief executive is expected to announce a new strategy later this summer aimed at reviving growth, including launching products at more affordable prices. The company continues to see healthy demand in emerging markets such as India.
The outlook for spirits companies in the U.S. remains uncertain. Analysts noted that while the U.S. outlook is unclear, the bad news may already be priced into the stocks, leaving them at valuations that reflect a pessimistic view of future consumption.