The Sobering Reality: How Shifting Habits and Trade Wars Are Remaking the Drinks Industry
A record low 54% of U.S. adults now consume alcohol, a figure that’s plummeted from 62% just two years ago. This isn’t just a blip; it’s a seismic shift reshaping the beverage landscape, triggering bankruptcies among established distilleries and breweries, and forcing industry giants to reassess their strategies. Coupled with escalating trade tensions, particularly impacting American spirits exports, the future of the drinks industry looks increasingly…sober.
The Rise of Sober Curiosity and Financial Prudence
The decline in alcohol consumption isn’t solely driven by health concerns, though a recent warning about the link between alcohol and cancer is undoubtedly resonating, especially with younger demographics. A significant factor is simply economics. As discretionary income shrinks amidst persistent inflation, consumers are re-evaluating their spending habits. “There’s a lot of concern around discretionary income,” explains Dave Williams, VP of analytics at Bump Williams Consulting. “People are making different decisions on the frequency or volume side.” This trend is particularly pronounced among millennials and Gen Z, who are increasingly embracing “sober curiosity” – a mindful approach to alcohol consumption that prioritizes wellness and moderation.
This shift is fueling a boom in the non-alcoholic beverage market. Sales surged 27% in 2024, reaching $829.2 million, according to data firm NIQ. From non-alcoholic beers and wines to sophisticated mocktails, consumers are finding appealing alternatives that allow them to participate socially without the effects of alcohol. The ready-to-drink (RTD) cocktail segment, while still smaller, is also experiencing growth, up 1.7% in sales, suggesting a desire for convenience and premium experiences even within the non-alcoholic space.
Bankruptcies and Brewshed: A Wave of Industry Distress
The changing consumer landscape is taking a toll on established players. 2025 has already witnessed a string of bankruptcy filings across the spirits and brewing industries. Distilleries like A.M. Scott Distillery (Ohio), Luca Mariano Distillery (Kentucky), Devils River Distillery (Texas), and JJ Pfister Distilling Co. (California) have all sought Chapter 11 protection. The brewing sector is facing similar headwinds, with Rogue Ales & Spirits (Oregon) and Iron Hill Brewery & Restaurant (Delaware) joining the growing list of closures. In fact, brewery closings are outpacing openings for the second consecutive year, with 434 closures versus 268 openings, according to the Brewers Association.
These bankruptcies aren’t isolated incidents. They represent a systemic challenge stemming from declining sales volumes, increased competition, and rising costs. Matt Gacioch, staff economist at the Brewers Association, notes that “changing consumer behaviors, retailer rationalization, cost increases due to inflation and tariffs, and more competition than ever have been compounding difficulties.”
Trade Wars and the Export Crisis
Domestic headwinds are compounded by international trade disputes. Spirit exports declined by 9% in the second quarter of 2025, according to the Distilled Spirits Council of the United States (DISCUS). Exports to key markets like the EU, UK, and Japan have faltered, but the most significant drop occurred in Canada, plummeting 85% after several provinces banned American spirits in retaliation for U.S. tariffs.
“There’s a growing concern that our international consumers are increasingly opting for domestically produced spirits or imports from countries other than the U.S.,” warns Chris Swonger, DISCUS President and CEO. The situation is so dire that even industry veterans are sounding the alarm. Kevin O’Leary of “Shark Tank” called the U.S.-Canada trade dispute a “self-inflicted mess,” pointing to Jim Beam’s decision to pause operations at its Kentucky distillery as a direct consequence of the political fallout. Read more about the Jim Beam situation here.
What Does This Mean for the Future?
The current turmoil in the drinks industry isn’t a temporary setback; it’s a harbinger of a more fundamental shift. Companies that fail to adapt to changing consumer preferences and navigate the complexities of global trade will likely face continued challenges. Here are some key trends to watch:
- Innovation in Non-Alcoholic Beverages: Expect to see continued investment in the development of sophisticated and flavorful non-alcoholic alternatives.
- Premiumization within Moderation: Consumers who *do* drink are increasingly willing to pay a premium for high-quality, craft beverages, but in smaller quantities.
- Direct-to-Consumer Strategies: Distilleries and breweries will likely explore more direct-to-consumer sales channels to bypass traditional distribution networks and build stronger relationships with their customers.
- Geopolitical Risk Management: Companies will need to diversify their export markets and proactively manage geopolitical risks to mitigate the impact of trade disputes.
The drinks industry is at a crossroads. The future belongs to those who can embrace change, prioritize consumer needs, and navigate the increasingly complex global landscape. The era of unchecked growth may be over, but opportunities remain for those willing to adapt and innovate.
What are your predictions for the future of the beverage industry? Share your thoughts in the comments below!
