Control State Spirits Remain In Positive Territory – (2024)

Double-digit growth from spirits-based ready-to-drink (RTD) co*cktails, strong on-premise sales, and steady growth from Tito’s vodka and Tequilas in the nation’s 17 control states lifted spirits sales in 2023. Trading up trends, particularly among Bourbons, also contributed to control states’ modest dollar sales growth, outpacing a small volume gain. Spirits’ volume results were mixed, but all 16 control states increased category dollar sales. “Overall, it’s a good result with everyone up in dollars,” says David Jackson, COO of trade relations at the National Alcohol Beverage Control Association (NABCA). “I’d rather see premiumization growing than the lower-end products going up.”

In all, control state dollar sales increased 2.9% to $13.64 billion on a 0.2% volume gain to 61.82 million 9-liter cases, according to NABCA and Impact Databank. “People are still trading up, but the gap between dollar sales growth and volume was bigger in previous years,” Jackson says. “Decline in Cognac is bringing the dollars back down. Tequila has also gone from all of the growth being in the ultra-premium to being in the super-premium and premium.”

Control states’ on-premise spirits’ sales increased 6.8% to approximately $2.35 billion last year, up about $150 million, from 2022. Of the top seven control states in on-premise spirits sales, Pennsylvania posted the highest growth rate at 11.5% to $427.4 million. Ohio remained the No. 1 control state for on-premise spirits sales with 4.2% growth to $452.5 million. If trends continue, however, Pennsylvania will pass Ohio this year to become the No. 1 control state by on-premise spirits’ sales.

Growth Accelerators

Tito’s ($20 a 750-ml. at Fine Wine & Good Spirits in Pennsylvania) remained the No. 1 spirits brand in control states with 7.8% growth to 3.38 million cases. Tito’s continues to benefit from being sold in multiple size packages and remains unscathed by its portfolio of one singular vodka offering. While Smirnoff ($15 a 750-ml. in Pennsylvania), the No. 2 spirits brand in control states by volume, decreased 5.1% to 1.89 million cases, No. 6 brand New Amsterdam vodka ($15) inched up 0.8% to 1.09 million cases.

RTDs posted the highest growth rates in volume at 15.1% to 3.4 million cases and in value at 22.4% to $293.86 million. Competition is escalating with brand proliferation and battles for retail shelf space. Leading RTD brand High Noon ($21 an 8-pack of 355-ml. cans in Pennsylvania) posted the highest growth rate among the top ten spirits brands in control states at 43% to 1.09 million 9-liter cases. In January, Spirit of Gallo launched the High Noon Snowbird variety pack. “High Noon is leading the segment by a long shot and has an incredible market share,” Jackson says. “High Noon’s sales are across all demographics.”

Tequila had the second highest growth rate among spirits categories in control states at 9.9% to 6.53 million cases. Jose Cuervo ($21 a 750-ml. in Pennsylvania), the No. 9 spirit brand by volume and top-selling Tequila in control states, had the third highest growth rate among the top ten control states spirits brands by volume at 2.7% to 998,000 cases.

Long-term control state trends favor vodka, Bourbons and Tennessee whiskies, and Tequila. Since 2000, new brands, flavored and upscale line extensions, and changing consumer purchasing habits have contributed to major shifts in the spirits category market shares in control states. In 2000, vodka (24.7% share), Canadian whisky (13%), and cordials and liqueurs (12.6%) held the largest shares of the 35.5 million case spirits market in control states. Fast-forward two-plus decades, and vodka, Bourbons and Tennessee whiskeys, and Tequila have each gained more than 6 percentage points apiece of category market share.

Vodka remains the spirits category leader in control states with a market share gain of 6.6 percentage points, from 24.7% in 2000 to 31.3% in 2023. Even though the number of control states reduced from 18 to 17 with Washington’s privatization in 2012, vodka gained about 10.57 million cases in volume, from 8.77 million cases in 2000 to 19.36 million cases last year. Tito’s contributed significantly to these gains. Launched in 1997, Tito’s was still a relatively small micro-distillery brand in 2000. Now, the brand’s 3.38 million volume accounts for 32% of vodka’s growth in control states since 2000.

Bourbon and Tennessee whiskeys have improved from the No. 6 control states spirits category by volume to No. 2, with share essentially doubling from 7.1% in 2000 to 14% in 2023. Flavored and super-premium line extensions and the surge of high-end single barrel expression have contributed to this tremendous gain. The volume of Bourbons and Tennessee whiskeys has more than tripled from 2.52 million cases in 2000 to 8.64 million cases in 2023. Tequila, meanwhile, jumped from the No. 9 control states spirits category in 2000 to No. 3 last year. Tequila has more than doubled its share from 3.9% in 2000 to 10.6% last year. Tequila’s control state volume has more than quadrupled from 1.38 million cases in 2000 to 6.53 million cases in 2023.

In 2000, RTDs had a 2.9% control states spirits market share and ranked No. 11. Last year, RTDs ranked No. 7 by volume with a 5.5% share. Cordials and liqueurs grew 1.3% to 4.56 million cases in control states last year, but their category share dropped from 12.6% in 2000 to 7.4% in 2023. All other spirits categories also lost share over the same time period. If growth trends continue over the next few years, Tequila is on track to become the No. 2 spirits category in control states, and RTDs may become the No. 5 spirits.

Control Leaders

Spirits’ volume in Pennsylvania posted the highest growth rate among control states at 4.7% to 9.42 million cases, and it leapfrogged Michigan to become No. 1 by spirits volume. Michigan’s spirits volume decreased 1.4% to 9.04 million cases. While the Wolverine State’s dollar sales decreased 0.6% to $2.1 billion last year, it remained the No. 1 control state in spirits sales, according to NABCA. Michigan’s top spirits brand, Tito’s, grew 8.3% to 614,000 cases. Among Michigan’s top ten spirits brands, No. 7 Jack Daniel’s posted the second highest growth rate at 4.4% to 225,000 cases. Spirits’ sales trends in Michigan are mixed. “For the first four months of fiscal year 2024, gross sales are up 1% in Michigan,” says Kristin Beltzer, chair of the Michigan Liquor Control Commission. “For case sales, Michigan is down 1%.”

Pennsylvania also posted the highest percentage increase in dollar sales of spirits at 8.7% to $1.91 billion. If trends continue, Pennsylvania will eclipse $2 billion in spirits sales this year and become the No. 1 control state in dollar value. While High Noon grew 25.5% to 561,000 cases to become the No. 2 spirits brand in Pennsylvania last year, Philadelphia-based RTD Stateside vodka iced tea and lemonade products ($10 a 4-pack of 355-ml. cans) nearly tripled volume to 261,000 cases from 91,000 cases in 2022 to become Pennsylvania’s No. 4 spirits brand by volume last year. “Their standard vodka and iced tea four-pack became the top choice for retail customers in the second and third quarters of 2023, outpacing the High Noon variety pack in unit sales for several weeks,” says Tim Holden, chairman of the Pennsylvania Liquor Control Board. “That encourages us to expand our selections.”

RTDs sales grew 38.9%, or $29.9 million, overall in Pennsylvania last year to $106.9 million. Canned RTDs increased 52%, while RTDs in packages other than cans increased 8.4%. “Prepared co*cktails grew across multiple price segments, while Tequila and American whiskey continued to premiumize, and vodka buyers maintained or traded down,” Holden says.

Tito’s remained the No. 1 spirits brand in Pennsylvania last year with 8.3% growth to 626,000 cases. In 2023, the state’s Tequila sales increased 16.5% to $234.5 million, and Bourbon sales grew 8.6% to $195.7 million. “We are analyzing our current shelf and space allocations for spirits and plan to reallocate space away from wine to lean into our role as the sole retailer of spirits in Pennsylvania,” Holden says. “Data analytics are informing space allocation by merchandising category and by store, to optimize space based on sales and unit movement. This will expand on-shelf space for spirit categories while right-sizing wine categories.”

North Carolina, the No. 3 control state by spirits volume, experienced a 1.3% category gain to 7.65 million cases. Spirits brands posting the highest growth rates in the Tar Heel State were No. 4 High Noon (up 62.1%), No. 6 Lunazul Tequila (up 27%), and No. 1 Tito’s (up 7.6%). Spirits’ dollar sales in the state increased 4.1% last year to $1.83 billion. RTDs, Tequilas, and allocated Bourbons led overall category growth trends. Proposed legislation to allow Sunday spirits sales at local ABC boards could lead to a projected revenue increase of $65-$100 million, depending on the number of municipalities allowing that option, according to Jeff Strickland, public affairs director for the North Carolina ABC Commission. “Additionally, the potential removal of the mixed-beverage tax on RTDs would lead to increased sales volume and revenue,” he says.

Spirits’ volume decreased 1.3% in Ohio, the No. 3 control state by sales, to 7.07 million cases, but dollar sales rose 1.6% to $1.79 billion. Among the top ten spirits brands in the Buckeye State, No. 1 Tito’s (up 5.2%) and No. 7 Jose Cuervo Especial (up 5.4%) were the only to grow. “Premiumization continues to be a trend we are seeing in Ohio,” says Paul Kulwinski, interim superintendent of the Division of Liquor Control. “We seek out rare, premium, and small-batch bottles, so we carry the sought-after products Ohioans want. We also work to make Ohio a preferred market for suppliers, allowing us to purchase products at lower prices and buy larger amounts of rare and exclusive products.”

Virginia, the No. 5 control state by spirits volume, saw a 0.2% category decrease to 5.83 million cases, but sales increased 4.8% to $1.45 billion last year. Top brands posting double-digit dollar sales growth included No. 6 Jameson ($33 a 750-ml.), up 17% to $21.5 million; No. 9 Grey Goose ($30), up 12.1% to $18.2 million; No. 11 Casamigos Blanco ($56), up 66.5% to $15.6 million; and, No. 12 Woodford Reserve ($40), up 15% to $15.5 million. The Virginia ABC has plans to open several stores this year in Norfolk, Alexandria, Leesburg, Lovettsville, and Hanover County. “Tequila continues to show exceptional growth at nearly 14% year-over-year. The growth is coming from all varieties—blanco, reposado, and añejo—and price points,” says Tom Kirby, interim CEO at the Virginia ABC. “RTDs and hard seltzers are showing strong growth at 28% year-over-year.”

Looking ahead, modest volume growth and premiumization trends in control states are encouraging. “We are still seeing dollars sales growth above volume growth,” Jackson says. “Things are reasonably positive. Bourbons will keep on going and RTDs will remain strong with new players coming in.”