The U.S. beverage alcohol industry remains in a continued contraction across core spirits and wine, according to first quarter SipSource data from Wine & Spirits Wholesalers of America (WSWA). 

Cumulative inflation now including rising gas prices, tight inventories and consumer trade-down behavior continue to pressure all three tiers, although March 2026 provided a modest sign of improvement — particularly for wine revenue and on-premise channels — partially influenced by calendar timing and one additional shipping day compared with Q1 2025.

“The current environment reflects tighter portfolio management, ongoing SKU rationalization and more value-oriented consumer behavior,” said SipSource analyst Danny Brager in a statement. “At the same time, spirits-based ready-to-drink cocktails (RTDs) remain a bright spot — but in an increasingly crowded segment where innovation, positioning and disciplined execution matter more than ever.”

Core spirits closed Q1 -4.4% in volume and -5.7% in revenue on a 12-month basis, while wine closed the quarter -8.3% in volume and -5.3% in revenue. The data also points to premiumization pressure in key categories: spirits are de-premiumizing across price tiers and several key segments, such as tequila, with pressure in the $50-plus range. Although table wine’s volume decline continues to fall faster than its revenue trend, the higher end price tiers are only performing “relatively” better than the lower end but still not growing, and significant discounting is still apparent at the higher end, raising fresh questions about the strength of premiumization in wine.

“SipSource gives the industry a clear picture of where pressure is persistent, where trends may be stabilizing, and where pockets of growth are emerging across categories, channels and price tiers,” said Eric Schmidt, WSWA's Director of SipSource.

Spirits-based RTDs continue to significantly outperform broader beverage alcohol trends. The segment now represents a meaningful and growing share of the alcohol landscape, but with more than 750 spirit-based prepared cocktail brands in an increasingly crowded category, competition is intensifying as suppliers chase sustained consumer demand.

Points of distribution (POD) continued to decline in Q1, though the pace moderated from earlier periods. PODs were -3.2% in the most recent period, compared with a peak decline of -5% back in 2025, reflecting continued SKU rationalization and inventory adjustment across retail and on-premise accounts. Total accounts remain -0.5%.

Combined wine and spirits on-premise volume declined -3%, continuing to outperform off-premise, which declined -7.4%. Despite higher rates of inflation “away from home” compared with “at home,” on-premise trends have improved gradually over the past year, while off-premise softness has remained more persistent.

Total spirits ended Q1 -5.1% in volume and -5.9% in revenue. The 130-basis-point gap between core spirits volume (-4.4%) and revenue (-5.7%) represents the widest spread recorded in SipSource data and underscores continued consumer movement toward lower-priced products. The $50–$99.99 tier declined -8.8%, while the $100-plus tier declined -9.3%.

Tequila and agave spirits, which expanded from 9.4% to 13.3% of core spirits volume over the past six years, declined -3% in volume and -6.6% in revenue in Q1. One year ago, luxury tequila revenue trends grew at 4.2%.

Wine revenue trends improved 80 basis points from the end of 2025, closing March -5.3%, while volume was -8.3%. The sub-$5 tier, which represents 22.2% of all wine volume, declined -19.1%.

Wine segments posting positive revenue growth included wine-based cocktails (up 11.8%), Prosecco (up 6.1%), Champagne (up 2%), Sauvignon Blanc (up 1.1%), and Sake (up 1.3%)

On-premise wine revenue declined -2.3%, compared with -6% in off-premise channels.

Spirits-based RTDs increased 30% on dollars and now account for 28% of total spirits volume in the off-premise channel. Wine-based RTDs increased close to 14%, while malt-based RTD — still the largest segment of RTD dollars — continued to decline, according to NIQ.