North American Spirits Growth
North American consumption of spirits is expected to grow 2.9% annually over the five-year period from 2016 to 2021. This would make North America the second fastest growing regional spirits market in the world, after the Asia/Pacific region. The increase in North American consumption is forecast to be led by increasing regional tequila sales and growth in US sales of craft spirits and cognac. According to 2016 data, North America has the third highest regional per capita consumption of spirits, at 6.3 liters per capita, and represents 15.6% of the global market by value.
Looking at the region by country, Mexico is currently experiencing the most growth in spirit sales, at 3.08% annually. The US market comes next, posting a 3.0% growth rate in 2016. Canada's spirits market trailed slightly behind, with an annual growth rate of 2.9% from 2006 to 2016.
Some trends we identified in our research include:
— In Mexico, the spirits experiencing the largest growth in sales are whiskey, at 9% annual growth by volume, and tequila, at 5% annual growth by volume. Tequila is traditionally a strong performer in the Mexican spirits market, accounting for 41% of all sales in 2016. Whiskey growth was led by low- and mid-priced brands, and both tequila and whiskey growth is attributed to increased consumption by young adults.
— In the US, 2016 spirits sales represented 32% of the total alcohol market, up from 26% in 2002. Growth in the spirits market continues to exceed growth in the beer and wine markets.
— Craft spirit sales in the US are expanding rapidly, with a projected growth rate of 40% from 2016 to 2020. This increase may be attributable to the growth of US cocktail culture, and is especially driven by Millennial consumers.
— US sales of cognac increased by 18.8% in 2016. Tequila posted the next highest increase in sales, at 7.4%.
— In Canada, imported spirits are outgrowing domestic spirits. The imported spirits sector posted a 5.1% annual growth rate from 2006 to 2016, compared to a more modest 2.1% gain in domestic spirit sales.
Regionally, opportunities for growth may exist where there are younger consumers to reach. These younger consumers are increasingly targeted by marketing from large brands, but may find smaller brands a better reflection of their cultural identity. Additionally, younger buyers may be less affluent and more inclined towards a lower-priced product.
We reviewed growth in the Spirits market for North America. Our findings include the conclusion that North America is the second fastest growing regional spirits market in the world, after the Asia/Pacific region. The North American spirits market appears robust and poised for continued growth over the next three years.