Alcohol Trends 2023: Key Factors Shaping the Industry this Year

The beverage alcohol industry is constantly evolving as producers and distributors work to offer specialized products that meet the changing needs of customers across all segments. Find out about the alcohol trends anticipated in 2023.

The beverage alcohol industry is constantly evolving as producers and distributors work to offer specialized products that meet the changing needs of customers across all segments. While decision-makers within the industry try to be data-driven, an excess or lack of data can make it difficult to spot specific consumer behavior patterns and anticipate emerging trends. Brands that want to deliver value to their customers continue to wade through the data that is available to understand what lies ahead for the industry in 2023 and beyond. This guide will help explore the existing data and uncover alcohol trends for 2023.

Beverage Industry Growth

When it comes to total consumption by volume, the alcohol industry continues to grow. The biggest shift has come post-pandemic as customers are once again able to enjoy on-premise beverage experiences. According to the Beverage Information Group, in the US in 2020, seltzers increased in consumption by 130 million cases, beer and malt beverages added 25 million cases, spirits increased by 15 million cases, and wine added another 3.5 million cases. Despite the pandemic, the beverage industry experienced significant growth that is expected to continue, especially as new consumers are aged into the market. 

How Fast is the Alcohol Industry Growing?

As of 2022, revenue in the alcoholic beverage segment reached $261.1 billion in the US. Between 2022 and 2025, the market is expected to grow by another 10.51% per year. The majority of revenue, $111.5 billion, can be attributed to beer sales. From a global perspective, China has generated the highest revenue numbers with sales of $319.8 billion.

The Next Big Alcohol Trends for 2023

Alcoholic RTDs with Natural and Herbal Flavors

The ready-to-drink segment, which includes malt-based, wine-based and spirit-based beverages, has been the fastest growing portion of the market and is expected to grow by an additional 8% by 2025. For existing RTD brands, this means more competition and the need to innovate with new offerings. In 2021, RTD beverages were trying to appeal to the 25% of alcohol drinkers who were looking for low carb and low/no sugar options. However, this approach won’t be enough to maintain a competitive edge moving into 2023. 

According to Sensient, millennials, who account for 62% of the RTD market, are now looking for RTDs that provide more flavor without the sugar. Millennials also tend to be early adopters of trends, making it even more important to address this demand. Sensient also discovered that marketing labels like “Made with Natural Ingredients, “Unique Flavor,” and “Refreshing Flavor,” topped the list as the most effective in appealing to consumers and encouraging purchases. For these reasons, RTD brands are leaning into herbal, botanical, and citrus flavors that provide a subtly sweet flavor and the perception of health benefits. 

Spirit Brands are Creating More Accessible Beverage Experiences

One of the alcohol trends in 2023 anticipates more consumers turning to spirits over beer, as they look for an experience that introduces them to new cocktails. Brands have to reach a delicate balance between offering something new without being too off the wall or intimidating. New spirits have to both be unique and familiar, which can be a tall order. 

Many spirits brands are also leaning into the botanical and floral trend to create a well-balanced product that still provides the sense of something new and exciting. For example, according to Angie Kerns, who specializes in flavor profiles for Sensient, “Tangerine is a flavor that is recognizable yet slightly uncommon, but when you pair it with the emerging and somewhat nostalgic flavor profile of honeysuckle, it becomes more approachable to a wider audience of consumers.” In many ways, spirits and RTDs are facing some of the same challenges when it comes to flavor demands. 

Classic RTD Cocktails Will Enjoy a Revival

Another 2023 alcohol industry trend expected to take root is a revival in interest in classic RTD cocktails, but this time with a makeover. As herbs and botanical flavors take over the industry as a whole, RTD brands are expected to incorporate these flavors into their classic cocktail recipes to provide a fun twist. These herbal and botanical flavors have created a real space for creativity even when it comes to age-old cocktail recipes. 

More Sophisticated Low and No-Alcohol Products

Sobriety and health conscious movements are driving the demand for more low and no-alcohol options. Currently, these products account for a 3.5% share in volume of the market. However, this segment is poised for significant changes with the help of more sophisticated flavors. 

According to Sensient, only 17% of those who consume low and no-alcohol beverages totally abstain from drinking alcohol. Most consumers in this segment, 58%, will actually switch among low, no, and full alcoholic beverages during the same drinking event. The same flavor trends that are being seen in spirits and RTDs, are also influencing low and no-alcohol products. Consumers in this segment also want to be able to indulge while still experiencing a level of drink sophistication along with the health and convenience benefits.

Brewers Will Become More Experimental

Non-beer products dominate the emerging markets, but beer is still a steadfast product that appeals to a wide range of consumers. In the past year alone, 36% of consumers have reported that they have increased their beer consumption. Much like other segments of the market, brewers will need to continue to innovate when it comes to flavors. Moving into 2023, you can expect to see beers flavored with chocolate, chili pepper, and fruits for an adventurous beer experience. 

2023 Alcohol Market Trends & Forecast

More DTC Sales

Traditionally, wine has been the only type of alcoholic beverage that could be sold DTC in certain states. However, during the pandemic, many states relaxed their laws regarding DTC spirits sales and deliveries in order to prop up the industry. Opening this avenue to distillers made it clear that there are many opportunities for DTC sales, which empowered the push for DTC spirits sales to be managed similarly to the way wine is sold. 

Currently, there are nine states plus the District of Columbia that allow DTC sales for spirits, and 46 states where DTC sales are sanctioned. The spirits DTC movement is looking to close that gap.

The Distilled Spirits Council of the United States is leading the charge for increased spirits DTC sales and working to change legislation. According to a 2021 survey, they have the support of the public. In fact, 80% of consumers polled think that DTC sales for distillers should be allowed.

Continued Increase in New Products

In recent years, there has been an explosion in new products hitting the market and this trend is expected to continue well into 2023. As an example, the distribution company MHW, Ltd has recorded an increase of 36% in new brand products just during the first six months of 2021.

A large part of this growth can be traced back to the federal excise tax relief program, also known as the Craft Beverage Modernization and Tax Reform Act. This program was designed to help both domestic and foreign producers create jobs by providing certain tax incentives for wineries, breweries, and distilleries. The program became a permanent fixture in 2020, which means that producers will continue to enjoy these benefits and develop new products at an unprecedented rate.  

Premiumization will Continue to be an Alcohol Trend in 2023

For over 15 years, premiumization has had a huge impact on the industry and this trend will continue to shape the beverage industry in 2023. Consumers want to pay more to know that they are receiving premium ingredients and products that come with a story that highlights the who, what, where, when, why, and how of the brand.

Eco-conscious Brands and Products

The eco-conscious trend goes hand-in-hand with premiumization. Even younger demographics are willing to prioritize premiumization and eco-conscious characteristics. The focus is on quality over quantity and that includes shopping brands that are transparent about how their ingredients are sourced and what they are doing to reduce their impact on the environment. Today’s consumers are becoming more vocal about these sustainability issues and are holding companies responsible for their processes.

Diversity, Equity, and Inclusion (DEI)

Consumers also want to feel connected to brands through shared values. Increasingly, this means a focus on DEI, which means that companies are prioritizing representation, especially in leadership positions. This type of representation influences the company culture and ultimately what kind of products are produced. Everything from expanding flavor offerings to rethinking marketing and advertising strategies is now being done in a meaningful way to reach a more diverse and global audience. 

Fastest Growing Beverages for 2023

As mentioned above, RTDs are the fastest growing product category, with market share expected to grow 8% by 2025. From 2020 to 2021, spirits based RTD experienced a revenue increase of 42%. This may have been helped by pandemic lockdown conditions, which drove up the demand for off-premise drinks. A consumer survey that was part of a larger market analysis led by the Distilled Spirits Council (DISCUS), found that about 66% of respondents occasionally or regularly consume RTD products.

Other spirits also experienced significant growth during this period, but nothing near RTDs. Here is a breakdown biggest growth according to type of spirit:

  • Tequila and Mezcal – 30% growth
  • Irish Whiskey – 16% growth
  • Single Malt Scotch – 14% growth

Even after lockdowns ended and customers were able to go out for drinks in bars and restaurants again, the convenience and quality of RTD products has continued to drive growth at a blistering pace.

U.S. Beverage Industry: Alcohol Trends for 2023

Craft Beer Makes a Resurgence

While craft beer certainly didn’t go anywhere, interest did lag as the market was flooded with IPA variations. Consumers simply became overwhelmed by the options. However, a resurgence in interest for craft beer is anticipated in 2023 as new innovations and flavors get to spend some time in the limelight. 

For example, some brewers are capitalizing on the popularity of American Whiskey to partner with distillers to infuse the flavors of aged barrels into beers. Shiner Bock recently partnered with Garrison Brothers Distillery to create the Barrel-Aged Doppelbock.

Oftentimes, innovations that begin in the breweries trickle down to other alcoholic beverages. Craft beer is catching the attention of younger consumers and laying out a blueprint for flavor  innovation that distilleries and producers of hard seltzer, kombucha, cider, and other drinks are sure to follow. 

American Whiskey Continues its Dominance

Over the past decade, American whiskey has come into its own and there is no sign of its popularity waning any time soon. While tequila and mezcal are also experiencing a boom, whiskey is still at the forefront. Many industry insiders contribute the renaissance of whiskey to pop culture, “Boardwalk Empire and Mad Men spurred a nostalgia for, and interest in, bourbon and American whiskey,” says Kevah Zamanian, a contributor to American Whiskey Magazine

The prevalence of whiskey in pop culture also prompted bartenders and mixologists to learn more about spirits and develop innovative new cocktails. These different factors have converged to add fuel to consumer interest that is expected to continue into 2023, even as consumers return to their pre-pandemic habits. 

More Modern Wine Branding

The wine market has had an especially difficult time connecting with Gen Z and Millennial consumers. Wine has lost some of its relevance among these young drinkers, which has prompted producers to rethink their branding and their labels. Even the most established and recognizable brands are continuing to update both their products and their marketing to attract new consumers.

The wine aisle can be overwhelming even for the most seasoned wine drinker. This makes it important for even popular brands to keep pace with innovation and create branding with strong messaging and eye-catching labels that speak to an evolving market. 

2023 Alcohol Trends Wrapped Up

The alcoholic beverage industry has experienced significant growth in the last two years and that will continue into 2023. The main drivers of the industry will continue to be RTDs and American whiskey, but even these leaders will have to innovate and find ways to connect with young drinkers who are aging into the market and looking for eco-friendly, low-sugar options. Consumers will see more fresh and light flavor combinations that incorporate herbal, botanical, and citrus notes. 

Overall, the beverage industry trends for 2023 are positive and have created a space for innovation and creativity that can only benefit everyone along the supply chain, including consumers.    

FAQs for Alcohol Trends 2023

Is the beverage alcohol industry growing? 

Yes, in the U.S., alcohol consumption increased by 45 million cases. 

How fast is the alcohol industry growing? 

The industry is expected to grow by 10.51% each year through 2025.

What are the current alcohol trends?

There will be increases in both new products and DTC sales. Premium products will continue to be popular and companies will be creating more eco-conscious products and focus on DEI within their company culture. 

What is the next alcohol craze? 

Herbal and botanical flavors will be popular across all types of alcohol, including RTDs. Spirit brands will be innovating while still trying to make the beverage experience more accessible. Low and no-alcohol beverages will become more sophisticated and brewers will also have to incorporate more creative flavors.  

What is the fastest growing product in the drinks industry? 

Ready-to-drink products are currently the fastest growing product in the industry and are expected to earn an additional 8% of the market by 2025.

What are some U.S. beverage alcohol trends in 2023? 

Craft beers will experience a resurgence as innovative new flavors continue to enter the market. American whiskey will also continue to enjoy a boom. Finally, wineries will be updating their marketing, branding, and labeling efforts to connect with a younger audience.  

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