Tequila Takes Largest Revenue Share Of The Wine & Spirits Market
Friends celebrating with shots of Tequila.
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The latest Wine & Spirits Wholesalers Association's SipSource data provides insight into current wine and spirits market conditions. Despite a challenging first quarter of 2025, with volume and revenue declines across the board, the data also reveals crucial developments, some positive, about the market's present state and highlights several key emerging trends, especially regarding Tequila.
According to SipSource data, for the rolling 12 months ending in March, wine and spirits volume dropped by 5.13% and revenue fell by 4.4%. The downward trend accelerated in the first quarter, with wine and spirits volume dropping by 7.79% and revenue declining by 6.99%
Spirits volume declined by 3.49% and revenue declined by 3.5% for the 12 months ending in March. For the first quarter of 2025, spirits volume declined 5.93% and revenue fell 5.49%.
Wine volumes declined by 7.12%, revenues by 6.56% for the 12 months, and volume by 9.95%, while revenue fell 10.51% for the first quarter of 2025.
Tequila was the only spirit category to show net growth in both the first quarter of 2025 and for the rolling 12 months, and is now, by revenue, the largest spirits category.
For the rolling 12 months ending in March 2025, Tequila/Agave Spirits showed growth, increasing by 1.93% in volume and 2.35% in revenue. Despite a slight deceleration in the first quarter of 2025, the growth remained positive, with volume and revenue increasing by 1.1% and 1.52% respectively.
Tequila/Agave spirits represented 7.29% of wine and spirits volume for the 12 months ending in March and 7.25% for the first quarter of 2025. That placed it in second place for the year behind vodka, and third place for the quarter behind vodka and whiskey.
Revenue-wise, Tequila/Agave spirits represented 15.26% of total wine and spirits revenue for the 12-month period and 15.01% for 2025's first quarter. That makes Tequila the largest wine and spirits market segment by revenue, even though it only ranks 2nd/3rd by volume. It also means that Tequila/Agave spirits are the most premiumized wine and spirits category.
Despite mixed results, RTDs emerge as a potential growth area in the Sip Source data, offering a glimmer of hope in an otherwise challenging market.
For the 12 months ending March 2025, RTD Cocktails increased by 1.13% by volume and 2.66% by revenue. For the three months, however, they showed a 10.67% decline by volume and a 6.7% decline by revenue.
Wine-based RTDs showed a 1.59% decrease in volumes but a 3.34% increase in revenues for the year, while for the quarter, they showed a 2.8% increase in volume and a 7.18% increase in revenue.
Flavored wine, however, showed an 8.08% decrease in volume and a 6.97% decrease in volume for the year. For the first quarter, they showed a 13.9% decrease in volume and a 12.66% decrease in revenue.
Vodka remained the market leader by volume, representing 15.49% of wine and spirit volume for the 12 months and 15.52% for the first quarter. Revenue-wise, it was in second place for both periods, amounting to 14.44% of revenues.
For the 12 months ending in March, vodka volumes declined by 4.67% and 7.19% for the 3 months. Vodka revenues fell 4.52% for the year and 6.59% for the first quarter.
American whiskey represented 7.22% by volume for the rolling 12 months and 7.54% for the three months. It was the third-ranked category by both volume and revenue.
Canadian whiskey represented 3.91%, Scotch whiskey represented 1.36%, and Irish whiskey represented 1.04% of the 12-month volume. The four major whiskey categories collectively represented 13.53% of volume and 22.63% of revenue. That makes the whiskey category second in volume and first in revenue. Whiskey is the most heavily premiumized category after Tequila.
Trend-wise, for the 12 months, American whiskey declined by 4.5% by volume and 4.14% by revenue. Canadian whiskey declined by 3.63% by volume and 2.17% by revenue. Scotch whisky volumes fell by 8.11% and revenues declined by 8.36%. Irish whiskey volume decreased by 5.63% and revenue by 7.98%.
Whiskey trends for the 3 months were largely consistent with the 12-month trend, with one notable exception. Irish whiskey surpassed Scotch whisky in volume, 1.27% versus 1.23%, but still lagged in revenue, 2.49% versus 3.12%. This is the first time Irish whiskey volumes have surpassed Scotch whiskey since Prohibition.
Volume trends for rum (-8.22%), brandy/Cognac (-8.93%), and gin (-4.99%) also declined for the year. The trend continued for the first quarter (rum -8.10%, brandy/Cognac -9.93%, and gin -6.25%).
Revenue-wise, rum declined 8.3%, brandy/Cognac declined 13.08%, and gin declined 3.86% for the year. For the quarter, rum declined 9.22%, brandy/Cognac declined 13.37%, and gin declined 6.27%
Overall, gin is outperforming the two other categories, while brandy/Cognac is lagging in volume and revenue. Most of the decline in that category is attributable to Cognac, the highest cost portion of the mix.
In terms of wine, for the year, white wine declined 5.26%, red wine declined 8.45%, rose declined 10.56%, and sparkling wine declined 6.61%. Revenue-wise, white wine declined 4.84%, red wine declined 8.14%, rose declined 9.48%, and sparkling declined 6.22%.
For the quarter, white wine declined 7.56%, red wine declined 12.06%, rose declined 12.44%, and sparkling declined 8.62%. Revenue-wise, white wine declined 9.00%, red wine declined 13.1%, rosé declined 13.30%, and sparkling declined 6.15%.
White wine continues to outperform all other major wine categories, underscoring a substantial, ongoing shift, possibly generational, away from red wine in favor of white. After a period of rapid growth, Rose wines have now seen a reversal and are showing the most significant decline among all wine categories.
Moreover, according to SipSource:
'Previously encouraging trends for lower-priced Table Wines have reversed, while premium wines over $50 are seeing growth in volume but continued softness in revenue as suppliers move through inventory backlogs.' The data suggests substantial discounting in the premium wine category.
Additionally, according to SipSource, the latest data:
'Highlights a significant shift in premiumization trends. After years where revenue growth outpaced volume, recent months have seen volume trends outstrip revenue in the wine category, while spirits revenue has recently rebounded ahead of volume trends.'
Despite the negative year-over-year and quarterly results, the SipSource data underscore some significant trends. Tequila is now the largest revenue generator among wines and spirits and ranks second overall in volume. It is the only spirits category showing growth and will likely lead the industry forward. At the same time, for the first time in almost a century, Irish whiskey volumes surpassed Scotch whisky volumes in the first quarter and are on track to exceed them for the year.
These glimmers of hope surrounding Tequila notwithstanding, the wine and spirits market will remain challenging through 2025 and likely into 2026.
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