California deep dive: why is spirits consumption falling?

California has seen a post-Covid decline in spirits consumption not replicated across the rest of the US, partly driven by the underperformance of agave spirits – but higher-priced beer, wine and spirits are proving resilient, and RTDs have recorded explosive growth.

The state is also notably vulnerable to the impact of trade tariffs, thanks to the scale of its alcohol industry, its dominance of US wine production and its status as a key import gateway for shipments from Europe and Asia.

These findings are part of a deep dive into California’s beverage alcohol landscape undertaken by IWSR, using the company’s unique US Navigator database, which provides a monthly read of total beverage alcohol (TBA) trends across all 50 US states.

While the evolution of wine, beer and RTD consumption in California broadly followed national trends between 2019 and 2024, spirits volumes tell a distinctly different story, declining by -9%, compared to a much smaller -3% fall across the US as a whole.

“While California’s spirits volumes have declined since 2019, the rest of the US has shown more resilience,” explains Marten Lodewijks, President US at IWSR. “In 2024, US spirits volumes excluding California remained above 2019 levels – but California is dragging the national figures down. Its underperformance is not reflective of broader category weakness, but more likely a state-specific consumer shift or economic pressures.”

Elsewhere, California’s double-digit wine consumption decline reflects national trends, reinforced by the scale of the state’s wine market, and beer volume falls also mirror the picture across the US, although growth at higher price points suggests a shift towards craft or lifestyle-driven products.

RTDs, meanwhile, have recorded explosive growth, with California outstripping national gains with an almost doubling of volumes between 2019 and 2024. The category continues to premiumise, offering lucrative opportunities for further expansion.

“It’s important for brand owners to understand the sheer scale and diversity of California,” says Lodewijks. “This is not just one market: sub-regions such as Los Angeles, the Bay Area and San Diego all behave differently and require a locally nuanced approach.”

The main findings of IWSR’s US Navigator California deep dive include:

Spirits: local declines fuelled by agave

California’s -9% decline in spirits volumes between 2019 and 2024 diverges strongly from the national picture, with a number of factors behind the fall, including the underperformance of agave spirits, sharper declines for vodka and flavoured spirits, and softer market trends for whisky, brandy and gin.

While agave spirits remain a significant volume driver in the state, their relative slowdown may appear surprising, given California’s status as a core market and category trendsetter. “The data shows that California’s agave growth significantly lags the rest of the US from 2021,” says Marten Lodewijks. “In some quarters, agave volumes in California fell sharply relative to 2019, while volumes in the rest of the US remained stable or grew.”

However, the picture is nuanced: core agave categories blanco/silver and oro/gold Tequila consistently underperform in California, with steep declines dragging down overall category volumes. But niche and premium styles, including cristalino and flavoured Tequilas, are holding up or even thriving, outpacing national growth trends.

“While cristalino and flavoured Tequila are growing in California, their base volumes are relatively small, and they are not enough to compensate for broader losses in mainstream options such as blanco or gold,” explains Lodewijks.

“More generally, RTDs and no/low-alcohol are disproportionately strong in California, so drinkers may be substituting away from spirits, and especially vodka and whisky. Meanwhile, wellness-oriented consumers, particularly in coastal metro areas, may be moderating or moving to lighter formats more aggressively than in other states.

“The spirits slowdown in California should not be seen as a rejection of the category, but as a reflection of shifting consumer priorities. Legacy formats like standard Tequilas are losing traction, while niche expressions are growing, but cannot carry the category on their own.”

Wine: ongoing premiumisation amid volume falls

Wine volumes fell by –14% in California between 2019 and 2024, closely following the national contraction of -15% over the same timescale. The largest volume losses occurred in the standard and low-price tiers, but premium-plus segments showed more resilience.

“California’s decline in wine volumes is critical due to its scale,” says Lodewijks. “Because the state is such a large wine market, this decline has a larger impact nationally than similar declines in smaller states.

“The fact that the losses are concentrated in lower price tiers, while premium (USD 9.50-15.49), super-premium (USD 15.50-24.99) and ultra-premium (USD 25.00-49.99) segments are more stable, highlights the ongoing premiumisation trend even as the category continues to contract.”

Beer: value shift, but declines continue

In similar fashion to wine, beer declines in California mirror the national trend: volumes fell -14% in the state between 2019 and 2024, versus a -13% contraction across the US.

The category continues to be dominated by the value segment (Under USD 2.30), but premium (USD 3.40-4.59) and super-premium beer (USD 4.60 and over) grew between 2021 and 2024. “The upper price tiers have grown steadily despite total beer volume declines, suggesting that higher-end beer is weathering category pressures better than mid-range or value options,” says Marten Lodewijks.

RTDs: California spearheads strong growth

RTDs have been a huge success story across the US in recent years, with national volumes rising by +87% between 2019 and 2024, and California outstripping this growth rate with a volume surge of +89% over the same timescale.

While this expansion has been spearheaded by the standard  and value price tiers, premium RTDs have tripled their volumes since 2019 – perhaps a surprising development, given the value pricing of early market successes.

“California is at the forefront of RTD gains across all price tiers,” says Lodewijks. “This extremely robust growth makes RTDs a critical driver of category switching, and an increasingly premiumised market segment, with strong opportunities for new, upscale RTD offerings.”

Tariffs: California uniquely exposed

Much uncertainty revolves around the fast-changing area of trade wars and tariffs, but California is likely to be more seriously affected than other states by the ongoing volatility.

Its status as the dominant wine-producing state makes it uniquely exposed to disruptions to global trade, with reports of reduced orders from key markets such as Canada as trade tensions ratchet up.

While tariffs on European imports into the US may create short-term competitive advantages for domestic producers, wineries face rising costs for essential materials such as glass, corks and packaging, much of which is imported. The latter issue is also a concern for beer companies.

In spirits, tariffs on imports of Scotch whisky, Cognac, Tequila and Canadian whisky could potentially reduce their availability or push up prices, delivering a short-term sales boost for local producers – although their exports could be limited by retaliatory tariffs abroad.

California is also a major entry point for imported beverage alcohol, especially from Europe and Asia. Tariffs on shipments of wine, Cognac, Scotch and Tequila will affect local supply chains and pricing more immediately than in inland or smaller states.

“Because beverage alcohol is such a large industry in California – spanning agriculture, manufacturing and tourism – the economic ripple effect of tariffs is greater,” explains Marten Lodewijks. “Other states may feel the impact more narrowly – for instance, at retail – while in California it affects producers, ports, supply chains and state revenue.”

To delve deeper into the data, go to the US Navigator section in the IWSR platform. If you don’t have access yet, please speak to your Account Manager or contact us to request access.