Picture this: it’s mid-December, the air is crisp, holiday lights are twinkling everywhere, and families are gathering for those classic end-of-year celebrations. Normally, this is prime time for pouring a generous glass of bourbon-spiked eggnog or toasting with a fine cognac. But something feels different this year—and it has for the past few seasons. The buzz around spirits isn’t quite what it used to be.
I’ve always loved the ritual of a good drink during the holidays. There’s something comforting about it, right? Yet, as someone who keeps an eye on market trends, I’ve noticed the chatter in the industry turning somber. Sales in the North American spirits market are unusually soft, and experts don’t see a quick turnaround heading into 2026. It’s not just a blip; there seem to be deeper, structural changes at play.
In fact, recent insights from industry analysts highlight three major forces dragging down demand. These aren’t fleeting issues—they’re reshaping how people think about alcohol altogether. Let’s dive in and unpack what’s really going on.
The Structural Headwinds Facing the US Spirits Market
The spirits industry has enjoyed decades of steady growth, fueled by premiumization and cultural staples like cocktails at gatherings. But now, a combination of shifting consumer behaviors and external substitutes is creating real challenges. Perhaps the most interesting aspect is how these factors are intertwining to create a perfect storm.
Analysts point to persistent weakness that started post-pandemic and shows no signs of letting up. Even the usually robust holiday season has been disappointing so far. Wholesalers are sitting on mountains of inventory, and consumer pull-through just isn’t there. It’s a tough spot for brands that once counted on reliable upticks this time of year.
A Generational Shift: Gen Z’s Changing Relationship with Alcohol
One of the biggest drivers? Younger consumers simply aren’t drinking like previous generations did. Gen Z, in particular, is leading a more mindful approach to alcohol. Many are adopting habits like the “1:1 rule”—alternating alcoholic drinks with non-alcoholic ones throughout the night. It’s not about total abstinence for everyone, but definitely about moderation.
Think about it: growing up with constant access to information on health and wellness, this cohort prioritizes balance. Social media amplifies stories of fitness, mental clarity, and clean living. Why risk a hangover when there are so many appealing alternatives? In my view, this isn’t just a phase—it’s a fundamental evolution in drinking culture.
Older generations might reminisce about boozy college parties or regular happy hours, but today’s young adults often opt out. They’re more likely to choose events centered around activities rather than drinking. This shift means spirits brands are struggling to attract new, loyal customers who will carry the market forward.
Younger people are moving away from traditional alcohol consumption, embracing different habits that prioritize health and moderation over excess.
– Industry consultant insights
The impact is clear in sales data trends. Categories that relied on younger demographics for growth are feeling the pinch hardest. Brands have tried innovative marketing, but connecting authentically with this group remains a challenge.
- Gen Z reports significantly lower alcohol consumption rates compared to millennials at the same age
- Many follow moderation strategies to avoid negative health effects
- Social occasions increasingly feature non-alcoholic options prominently
- Wellness culture influences decisions, from fitness goals to mental health
It’s fascinating how quickly these changes have taken hold. Just a few years ago, the focus was on craft spirits exploding in popularity. Now, the conversation has flipped to how to survive in a lower-growth environment.
The Rise of Substitutes: From Weight Loss Drugs to Cannabis Products
Another major factor? People are turning to alternatives that directly compete with alcohol’s role in relaxation and socializing. Weight loss medications like GLP-1 agonists have surged in popularity, and one side effect users often report is reduced interest in drinking. Alcohol can interfere with the drugs’ effectiveness or simply lose its appeal when calories and habits are under scrutiny.
Then there’s the expanding world of legalized cannabis. In more states, options range from traditional products to innovative Delta-9 THC-infused beverages that mimic the experience of a cocktail without the alcohol. These drinks offer a buzz with potentially fewer downsides for some users, and they’re gaining shelf space fast.
I’ve seen this firsthand in social settings—canned THC seltzers popping up at parties alongside beer and wine. They’re marketed as fun, sessionable options, appealing especially to those cutting back on booze. Combined with the broader health trend, it’s no wonder spirits are losing ground.
Non-alcoholic spirits and mocktails have also exploded, providing the ritual and flavor without the effects. Bars now dedicate entire sections to zero-proof creations. For many, this satisfies the social aspect while aligning with healthier lifestyles.
- GLP-1 medications correlate with decreased alcohol cravings for many users
- Cannabis legalization has introduced direct competitors in beverage form
- Delta-9 THC drinks provide alternative relaxation options
- Non-alcoholic alternatives maintain social rituals without intoxication
- Health-focused consumers view these as preferable substitutes
This substitution effect is structural, not cyclical. As access to these options grows, they’re likely to chip away at traditional spirits demand over the long term. Brands are responding with their own low- or no-alcohol lines, but it’s an uphill battle.
Inventory Overhang: The Lingering Supply Chain Headache
If the demand side wasn’t enough, supply issues are compounding the problem. Wholesalers built up massive stocks based on pre-pandemic growth assumptions and pandemic-era surges. When consumption normalized—and then softened—those commitments turned into excess inventory.
Current levels are among the highest in years, preventing any quick normalization. Even if consumer demand stabilizes, it will take time to work through the overhang. This dynamic keeps pricing pressured and margins tight across the industry.
Holiday performance, typically a bright spot, has underwhelmed. Retailers report slower movement, and promotions aren’t moving the needle as much as hoped. It’s a classic case of supply outpacing demand, and the correction could drag on.
Persistent overstocking from wholesale commitments continues to weigh heavily, with inventory among the worst seen in recent years.
For producers, this means cautious production planning ahead. No one wants to add to the glut. The result? A market that’s slow to recover, even as some categories show tentative signs of stabilization.
Looking Ahead: A Lower-Growth Future for Spirits?
Taking a step back, the outlook for 2026 remains uncertain at best. Many experts believe the US spirits market won’t return to its historical mid-single-digit growth rates. Instead, low-single-digit increases—or even flat performance—might become the new normal.
That said, not all categories are suffering equally. Cognac, for instance, appears to be finding its footing. After years of decline, there’s growing evidence it’s bottoming out. Efforts to appeal to younger consumers through collaborations and fresh marketing are starting to pay off.
Projections suggest cognac could be roughly flat next year, a relative win compared to broader declines. Premium players in champagne have also shown resilience. It’s a reminder that innovation and targeting can make a difference, even in tough conditions.
Still, the sober revolution sweeping the country is real. From pandemic-era overindulgence to today’s focus on wellness, the pendulum has swung. Republicans and Democrats alike have adjusted habits in different ways, but overall consumption is down.
- Overall spirits likely low-single-digit decline in 2026
- Cognac expected to stabilize and potentially flatten
- Premium segments showing more resilience through innovation
- Long-term growth moderated across the board
In my experience following markets, these kinds of structural shifts don’t reverse overnight. The industry will need to adapt—perhaps by doubling down on non-alcoholic extensions or exploring new occasions. Tequila’s recent boom-and-bust cycle serves as a cautionary tale of oversupply risks.
Agave shortages turned to surpluses as plantings caught up, flooding the market. Similar dynamics could play out elsewhere if demand doesn’t rebound. For now, caution seems wise.
What This Means for Consumers and the Broader Culture
On a personal level, I find this trend intriguing. Are we entering an era of more intentional consumption? Fewer regrettable nights, more clear-headed mornings? There’s something appealing about that balance.
Socially, gatherings might evolve too. Imagine more brunches, outdoor activities, or creative non-alcoholic pairings taking center stage. The rise of sophisticated mocktails proves you don’t need alcohol for elegance or fun.
For investors watching luxury goods or beverage stocks, this is worth monitoring closely. Companies with exposure to US spirits face headwinds, though diversified portfolios and strong brands can weather it. The key will be agility—spotting where growth migrates next.
Ultimately, markets reflect society. This sober turn mirrors broader priorities: health, mindfulness, alternatives. It might feel like a loss for traditional spirits lovers, but it opens doors to innovation. Who knows what exciting beverages we’ll be toasting with in a few years?
As we head into another holiday season, it’s worth raising a glass—alcoholic or not—to changing times. The spirits market’s challenges are a window into larger shifts happening all around us. And in a way, that makes this moment feel particularly alive.
Whatever your drink of choice this December, enjoy responsibly. The landscape is evolving, but the spirit of celebration? That endures.
