The United States Distilled Spirits Market is estimated to be valued at USD 31.33 Bn in 2024 and is expected to reach USD 39.21 Bn by 2031, growing at a compound annual growth rate (CAGR) of 3.40% from 2024 to 2031. The United States represents one of the largest markets for distilled spirits globally due to rising disposable incomes and an increasing social acceptability of alcohol consumption.

The market is expected to witness steady growth during the forecast period driven by rising population of millennials and generation Z.

Market Driver – Growing Demand for Artisanal Spirits Ingredient

The demand for artisanal spirits made with unique ingredients is driving significant growth in the United States distilled spirits market. Consumers are increasingly interested in premium and craft spirits that have more distinctive flavors derived from locally sourced botanicals. They are eager to support smaller American distilleries that produce limited batches using unconventional ingredients grown or foraged in specific regions.

This focus on novelty and authenticity has led to experimentation across the country as distillers explore the vast variety of plants indigenous to North America. Many are rediscovering native American traditions of utilizing wild plants in heirloom distilling processes. According to the U.S. Department of Agriculture, over 500 species of edible fruits, nuts and herbs grow wild across different states and are suitable for infusing into spirits (USDA 2022).

Distillers based in California, Oregon and Washington have been notable early adopters of using Pacific Northwest berries, nuts and roots such as huckleberries, hazelnuts and licorice root. Those in the Northeast also incorporate ingredients like cranberries, sassafras and fir tips indigenous to Appalachian forests.

Market Driver – Craft Movement

The rise of the craft spirits movement is positively impacting the growth of the United States distilled spirits market. Craft distillers offer innovative new products that appeal to changing consumer preferences. These small-batch products are often made from locally sourced ingredients and emphasize traditional production methods. As a result, craft spirits have developed a reputation for high quality that differentiates them from mass produced brands.

Many Americans have developed an interest in learning about the artisanal processes involved in crafting small-batch spirits. They are drawn to supporting small, independent distilleries in their local communities. Craft spirits allow consumers to directly engage with the producers and locations where their purchases are made. This interaction has made craft distilling an experiential industry that encourages travel and tourism. Distilleries offer tours and tastings experiences that have become a novelty cultural activity. According to the Distilled Spirits Council of the United States, visits to craft distilleries grew by over 15% per year between 2018-2021.

Market Challenge – Alcohol Control Laws

The stringent alcohol control laws enforced by various states and the federal government present significant bottlenecks for the growth of the United States distilled spirits market. These regulations govern multiple aspects of production, distribution, sales, and marketing of distilled liquor products.

One of the major restraining factors is the ban or restrictions imposed on direct-to-consumer shipping of spirits from the producer to individual customers in many states. As of now, around 16 states completely prohibit direct shipping while 25 states allow it with various restrictions. This effectively blocks e-commerce and hampers the accessibility of products for local customers. It also raises transaction costs for smaller producers to distribute their products nationally.

Another challenge comes from the control states model followed by 17 states where state agencies have monopoly over wholesale and retail sales of distilled spirits. While the intention is to regulate alcohol consumption, it lacks free market competition. This discourages innovations as private businesses have little incentive to introduce new brands or tailor products according to changing customer preferences.

Market Opportunity – Rising Demand for Flavored Spirits

The demand for flavored spirits is rising rapidly in the United States distilled spirits market, presenting a major growth opportunity. Consumers, especially millennials and Generation Z, are showing a strong preference for spirits that come in a variety of flavors beyond the traditional ones. They are increasingly seeking new and exciting tastes as well as cocktails that match their flavor preferences.

Flavored spirits allow for greater experimentation and variety in drinks. Popular flavors include lemon, lime, orange, apple, cherry, cinnamon, vanilla and more. Ready-to-drink cocktails are also on the rise, combining spirits with mixers and flavors in convenient cans or bottles. For example, sales of spiked seltzers grew over 50% in 2021 according to data from IWSR Drinks Market Analysis (not a market research firm).

Spiced rums and flavored vodkas are additionally seeing a surge in demand. This rising passion for unique flavors plays right into the hands of innovative distillers. Producers are actively diversifying their portfolios to capitalize on this consumer trend.

Insights, By Product Type: Consumer Preference Whiskey for Its Rich Flavors

In terms of product type, whiskey sub-segment contributes the highest market share of 34.3% owing to consumer preference for its rich flavors.

Whiskey has dominated the US distilled spirits market for decades due to strong consumer demand. Americans have developed a deep affection for whiskey's complex taste profile, enjoying exploring different varieties from bourbon to scotch. Whiskey appeals to a wide range of drinkers due to its versatility - it can be sipped neat or on the rocks after dinner as well as added to cocktails.

Bourbon whiskey in particular has exploded in popularity in recent years. Its signature sweet vanilla and oak aromas from aging in charred oak barrels resonate well with modern tastes. American pride in bourbon as a homegrown product has also boosted sales. Several small-batch and artisanal bourbon distillers have emerged to cater to connoisseurs seeking unique flavor profiles. Meanwhile, Tennessee whiskey maintains a loyal following for its smoother character compared to other bourbons.

Scotch whiskey also has a robust customer base, though it has seen steeper import tariffs impact sales lately. Its aficionados appreciate exploring complex single malts from different regions of Scotland.

Insights, By Distribution Type: Social Drinking Culture Drives the Oral Sub-segment Growth

In terms of By distribution type, oral sun-segment contributes the highest market share of 45.2% driven by social drinking culture. Americans enjoy socializing over cocktails with friends or spirits after a meal. Oral consumption allows for a spirited shared experience in a way that other administration methods do not.

Bars and restaurants are epicenters of the country's thriving drinking culture. Craft cocktails designed by innovative bartenders attract customers looking to treat themselves on nights out. Meanwhile, at home parties and sports viewing gatherings frequently incorporate an array of whiskey, rum or vodka cocktails. Supermarkets and liquor stores also sell the majority of their spirits for oral consumption in drinks.

While topical application and other alternative methods have gained some traction medicinally, they remain a niche compared to drinking. The act of social bonding through cocktails and other drinks gives oral the clear preference. Younger generations too have embraced spirits as a fun part of adult social lives rather than seeing them as something their parents drank.

The major players operating in the United States Distilled Spirits market include Kweichow Moutai, Diageo plc, Anheuser-Busch Inbev, Heineken, Pernod Ricard SA, Brown-Forman Corporation, Marie Brizard Wine & Spirits, Constellation Brands Inc, Budweiser APAC, and Remy Cointreau SA.

• In June 2022, Brown-Forman and The Coca‑Cola Company collaborated together to launch iconic Jack & Coke cocktail branded as a RTD (Ready-To-Drink) pre mix. The partnership shall bring new taste for consumer in RTD format along with diversity in existing product offering.
• In December 2023, Metabev Korea secured a partnership with Rémy Cointreau as French business representative.
• In April 2024, Familia Torres, a producer of Spanish brandy and wine, entered the whisky category by launching blended Scotch brand Liathmor.
• In March 2023, Diageo, a global leader in beverage alcohol, announced the acquisition of Don Papa Rum, a super-premium, dark rum from the Philippines. This acquisition is the strategy of Diageo to acquire high growth brands with attractive margins that support premiumization.
• In February 2024, Mothers Against Drunk Driving (MADD) partnered with Diageo to tackle impaired driving in the U.S. for public awareness and education campions with an aim to end drunk driving.

• By Product Type
  • Whiskey
  • Vodka
  • Rum
  • Gin
  • Tequila
  • Brandy
  • Others
• By Distribution Type
  • Oral
  • Topical
  • Others