Agave spirits to outsell vodka in US bars

Sales of agave-based spirits are expected to surpass vodka in the US on-trade this year, a new report has revealed.

Hospitality engagement platform Union analysed data from more than 1,000 bars and restaurants across the US to predict key trends for the on-trade in 2024.

Based on ordering data at Union venues, agave-based spirits are expected to close in on vodka when it comes to sales share of spirits sold in the on-trade.

Tequila and mezcal drinkers drank 13% less vodka and 14% less whisky in the 12 months to 31 October 2023. Mezcal also rose by 20% during the same period, making it the fastest-growing agave spirits subcategory.

Tequila and mezcal now represent a 29.4% share of spirits sold in the on-premise, with 2% growth in the 12 months to October 2023. In comparison, vodka currently leads in spirits sales share at 30.5%, but its share declined by around 2.8%.

IWSR Drinks Market Analysis previously estimated that Tequila would overtake vodka in 2023 to be the biggest category by value.

The Margarita was also the number-one best-selling cocktail at Union venues, which helped to drive sales of Tequila, Union said.

Union has also tipped the Espresso Martini to outsell the Old Fashioned (currently Union’s second biggest-selling cocktail), after the former became the second fastest-growing cocktail and third best-selling serve overall. The coffee-based serve experienced a growth rate of 53%.

The Blue Hawaiian, a rum-based serve made with blue curaçao and coconut cream, recently soared 10 spots and became the fastest-growing cocktail at Union venues.

Meanwhile, the growth of the ready-to-drink (RTD) category is being led by vodka-based variants, Union said, with spirit-based RTDs expected to soar this year.

Union noted that hard seltzers have lost share of the on-trade over the past year, as spirit-based High Noon replaced malt-based White Claw at Union venues last year. High Noon was the best-selling RTD (excluding wine-based) over the 12-month period, representing a 75% share of all spirit-based RTDs.

Union also said High Noon faced competition from vodka-based Nütrl, which became the third-biggest-selling RTD in the on-trade.

Additionally, Union highlighted a boom in non-alcoholic ‘spirits’, which were traditionally eclipsed by alcohol-free beer sales. The platform said sales of non-alcoholic ‘spirits’ have skyrocketed by 50% year over year, but the sector is small with a market share of less than 1% in Union’s on-trade venues.

Within the category, CleanCo dominated Union venues with its booze-free alternatives to Tequila, vodka, gin and rum.

Union also expects premiumisation to continue in the on-trade, despite reports that suggest a slowdown. Data from the past year showed that the share of drinks selling for US$15 or more has almost doubled at Union venues over the past two years. In the year ahead, Union predicts that guests will continue to choose more expensive, premium drinks despite inflationary price increases.

The final trend highlighted by Union was growth in imported beer, with Mexican and Irish beers expected to shine in 2024.

“We analyse our on-premise data throughout the year and we’re excited to see how these predictions play out,” said Layne Cox, Union’s chief marketing officer. “While some global metrics are showing a deceleration of spirits premiumisation, our ordering data shows consistent growth for premium prices drinks, which we expect to continue.

“With Millennials and Gen Z driving the demand for alternatives to alcoholic beverages, it will be interesting to watch the ordering data over the next year around non-alcoholic drinks on-premise, specifically spirits-based brands.”

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Author: Nicola Carruthers