ALCOHOLIC DRINKS IN THE US - ANALYSIS

Country Report | May 2021

EXECUTIVE SUMMARY Market Sizes

COVID-19 impact on alcoholic drinks Sales of Alcoholic Drinks
Total Volume - million litres - 2006-2025
COVID-19 has had a profound impact on the US alcoholic drinks industry, shaping how
much Americans spend on alcohol as well as where they consume it and which products
they choose. Government-enforced lockdowns as well as voluntarily undertaken social 30,248 Forecast
distancing have drastically cut down on on-trade alcohol sales, with Americans 35,000
spending much less time in bars, restaurants and production locations like breweries
and vineyards. As a result, many consumption occasions have shifted towards the 30,000
home.
During the early stages of the pandemic in particular many Americans stockpiled 25,000
alcohol for at-home consumption, fearing supply shortages. This led to growth in off-
trade sales across categories, with familiar leading brands seeing the most 20,000
improvement. Despite increased at-home consumption, however, overall sales for
alcohol drinks were down in 2020, with the on-trade decline too steep to be offset by 15,000
the off-trade growth. At a main category level, overall sales also declined for beer,
wine and cider/perry, although RTDs recorded dynamic growth, thanks to the continued 10,000
success of hard seltzers.
5,000
Renewed interest in stalwart brands, which has driven off-trade sales, has also led to
less experimentation with new drinks in restaurants and has, to an extent, slowed the
premiumisation trend in US alcohol drinks, with price and value becoming pre-eminent 0
2006 2020 2025
concerns. In wine, this has meant an especially steep decline for rice wines, which
depended on consumers trying the beverage during meals at restaurants, and in beer
Americans favoured affordable lagers over the relatively premium ale category.
Sales Performance of Alcoholic Drinks
% Y-O-Y Total Volume Growth 2006-2025
COVID-19 country impact
As early as 31 January 2020, US health officials issued quarantine orders to US citizens
evacuated from Wuhan, China, amid the COVID-19 outbreak there. From 2 February,
-0.6% Forecast
4%
entry was restricted from China, with this later extended to virus-hit Iran and Italy.
From 13 March, travel restrictions were imposed on 26 European Schengen Area
countries, with this measure extended to the UK and Ireland from 16 March. Many 3%
work-from-home and remote learning mandates were subsequently passed across the
US, as well as horeca and non-essential retail closures. Many of these decisions were 2%
made at the state rather than at the national level.
While a number of states subsequently lifted many measures as part of a general 1%
easing of the lockdown, a number were forced to reintroduce them as cases spiked. On
the other hand, some of the worst-hit states in the earliest days of the pandemic
gradually eased measures put in place to combat the spread of COVID-19. The 0%
pandemic and measures taken to prevent its spread or to try to bring it under control
had extremely negative consequences on the economy, with unemployment soaring -1%
and GDP growth slipping into negative territory.
By October 2020, 33 states were requiring people to wear face coverings in public to -2%
2006 2020 2025
help curb the spread of COVID-19. State mandates vary in detail (for example,
exemptions for children ranged in cut-off ages from two to 12 years old), but, broadly,
the wearing of masks was required in indoor public spaces, such as restaurants and
shops, on public transportation, as well as outdoors when unable to maintain the Sales of Alcoholic Drinks by Category
required distance from others. There were general exceptions for people with Total Volume - million litres - 2020 Growth Performance
disabilities or medical conditions that prevent the use of face coverings, and
allowances for certain situations where wearing a mask is difficult, unnecessary or Beer
hinders communication, for example when swimming, eating, exercising alone, 22,690.2
receiving dental treatment or speaking with a hearing-impaired person. Some state Cider/Perry
rules also included exemptions for people attending religious services. 217,776.6

From mid-May 2021, the Centers for Disease Control and Prevention, in updated public RTDs
2,044,374.1
health guidance, announced that fully vaccinated people no longer needed to wear a
face mask or social distance from others in most settings. Exceptions when people Spirits
2,171,439.4
should still wear masks included in a healthcare setting or at a business that requires
them as well as on planes, buses, trains and other public transportation. Wine
3,124.3
From late 2020, vaccines were being approved and rolled out in the US. Although this -5% 25% 50%
process will take some time to complete, it is expected to help bring the virus under CURRENT % CAGR % CAGR
ALCOHOLIC DRINKS 30,248.1
increasingly better control during 2021. Many states began to reduce restrictions as a YEAR % 2015-2020 2020-2025
result. As of 23 May 2021, half of US citizens had received their first vaccination, with GROWTH
40% having received both vaccinations.

© Euromonitor Interna onal 2022 Page 1 of 9

Company response
Competitive Landscape
Anheuser-Busch InBev remained the market leader, despite the upheaval of 2020. AB
InBev’s diverse product line-up allowed it to avoid drastic declines in market share, Company Shares of Alcoholic Drinks
despite the declining sales in most beer categories. The company’s hard seltzers saw % Share (NBO) - Total Volume - 2020
the greatest success in 2020, further cementing its position as market leader. 2020 also
saw Mark Anthony Brands greatly expand market share, moving from eighth place in Anheuser-Busch InBev NV 32.7%
2019 to sixth place as ranked by share of total volume sales. This growth was largely the
result of the White Claw brand’s continued dynamic performance. Despite bar closures, MillerCoors LLC 18.4%
Americans continued to buy this hard seltzer thanks to it being popular for at-home Crown Imports LLC 9.0%
consumption. All major players also worked hard in 2020 to maximise off-trade sales in
Heineken USA Inc 3.1%
order to compensate for lower sales in bars and restaurants. Improvement of e-
commerce distribution was especially important as stores enforced limits on in-person E&J Gallo Winery Inc 2.9%
shopping. Many major players invested in expanding distribution centres and Mike's Hard Beverage 2.7%
improving the online shopping experience.
Boston Beer Co Inc, The 2.5%
Smaller players tended to see bigger sales declines during 2020 due to increased
Pabst Brewing Co 2.0%
interest in mainstay brands, less premiumisation and experimentation as well as
drastically reduced visits to small wineries and craft brewers, which depended upon in- Diageo North America Inc 1.7%
person sales during tastings and tours. These producers have already shifted greater Constellation Brands US ... 1.3%
focus to not only sales through e-commerce platforms but also to online events that
could partially replace in-person tastings. As bars and restaurants reopen and retail Wine Group Inc, The 1.1%
restrictions recede, these smaller players should see improved chances of growth and Yuengling Brewery 0.9%
increased sales.
Sazerac Co Inc 0.7%

Retailing shift Beam Global Spirits & Wi... 0.7%

North American Breweries... 0.7%
Value was a top priority for many Americans when making alcoholic drinks purchases.
For example, in wine, this sentiment is reflected by mid-priced wines performing best, Bacardi USA 0.5%
as opposed to low-priced or premium wines. Warehouse clubs and discounters have Pernod Ricard USA 0.5%
taken advantage of not only this emphasis on value but also of the disregard for
tradition that was essential for older demographics when purchasing wine. Private Trinchero Family Estates 0.5%
label has shown an impressive performance in this price range, with many liquor stores Other Private Label 0.2%
and grocery chains introducing their own lines. Retailers like Costco and Aldi have
Others 17.9%
proved that private label lines can come to be associated with quality and not just low
prices and, for this reason, have contributed strongly to the growth of their respective
distribution channels within alcoholic drinks. Supermarkets and hypermarkets also saw
strong growth, due to stockpiling and availability. At the height of lockdowns, grocery
stores were deemed essential businesses, which directed much of consumer traffic
Brand Shares of Alcoholic Drinks
away from other retailers towards supermarkets and hypermarkets. There, consumers
% Share (LBN) - Total Volume - 2020
often opted for more mainstream brands with availability and larger multipacks,
through which they could save money and limit store visits, which was important to Bud Light 11.4%
them. This effect was especially evident within beer, where the largest brands saw the
biggest gains in the off-trade. Coors Light 5.9%
Miller Lite 4.9%
There has also been a surge in sales through e-commerce, with the spirits and RTDs
categories seeing the strongest growth. Alcoholic drinks have been historically Modelo Especial 4.2%
underrepresented in online shopping, but the pandemic has changed the trajectory of Michelob Ultra 4.1%
the channel as on-trade closures and lockdowns have led to a boom in online alcohol
buying and delivery. This has stretched across all areas of e-commerce, from kerbside Budweiser 4.1%
pick-up from grocery retailers to deliveries from alcohol e-commerce platforms. Prior Corona Extra 3.5%
to 2020, online alcohol sales were heavily and unevenly regulated across the US’s 50
Natural Light 2.6%
states, making it hard for retailers to navigate the space and sell efficiently. However,
as liquor stores were deemed essential businesses during the pandemic, regulation Busch Light 2.6%
loosened greatly and online sales subsequently surged. The question remains of White Claw Hard Seltzer 1.9%
whether the regulatory changes will be made permanent, but, with changing consumer
desires for more convenient alcohol purchasing and the undeniable success of the e- Busch 1.6%
commerce alcohol experiment, retailers and investors remain optimistic about the Heineken 1.4%
channel’s enduring success.
Miller High Life 1.2%
On-trade vs off-trade split Keystone Light 1.2%
Truly Spiked & Sparkling 1.0%
On-trade channels were hardest hit by the pandemic in 2020. While closures of bars and
restaurants only lasted about a month at a nationwide level, in subsequent regional Pabst Blue Ribbon 0.9%
and local lockdowns the required reduced capacity at establishments once reopened Stella Artois 0.9%
and the many permanent closures have meant that 2020 on-trade sales were almost
halved compared with 2019 in value and volume terms. While a portion of on-trade Bud Ice 0.9%
sales shifted towards the off-trade, in large part on-trade occasions proved Other Private Label 0.2%
irreplaceable to consumers, resulting in a net loss for the industry. While regulation
around alcohol delivery was loosened during the pandemic, allowing bars and Others 45.5%
restaurants to sell alcohol through takeout orders, this has also not been enough to 5-Year Trend
offset larger declines. Off-trade alcohol consumption per capita has seen a surge, but Increasing share Decreasing share No change
total market data shows that alcohol consumption in the US has actually gone down.
On-trade declines also had major repercussions on the value sales of alcohol and the
industry’s profitability. Alcohol is sold at a significant mark-up in bars, restaurants and
entertainment venues, with prices being three to four times higher than in the off-
trade. In addition to affecting the alcoholic drinks market itself, the dine-out industry’s
bottom line was significantly affected by lockdowns.
In 2021, the on-trade has begun to recover, even though the first half of the year has
still been marked by less consumer mobility. Nevertheless, enduring apprehension
about public spaces and permanent closures will continue to affect sales well into the

© Euromonitor Interna onal 2022 Page 2 of 9

forecast period. The pandemic’s lasting economic impact on the country will also
dissuade on-trade activity, as high rates of unemployment will leave little financial
room for going out for some consumers. The summer months of 2021 will likely see a
huge boom in bar and restaurant activity as the COVID-19 outlook becomes more
positive thanks to the vaccination programme and restless consumers will take the
opportunity to go out. On-trade growth will slow down from the major recovery in
2021, but it will remain higher than the historical average into 2022 and 2023 as the
market continues to readjust and recover.

What next for alcoholic drinks?

The alcoholic drinks industry faces a bumpy recovery from COVID-19. A summer full of
exuberant consumer spending in 2021 will be followed by an uncertain winter and an
uneven economic recovery. Strong consumer desires to celebrate their newfound
freedom will be matched with the realities of more limited consumer spending power
stemming from a “K-shaped” recovery without generous federal stimulus and
unemployment benefits to cushion its impact any longer. Premiumisation should
therefore continue but the affordable formats favoured during lockdowns should also
remain popular, with pressure falling primarily on the middle price tier. Other aspects
of pandemic buying patterns, above all the rise of e-commerce, will continue to be
seen in the long term as well and help reshape where consumers get their drinks. RTDs
will continue to be the bright spot in terms of categories, with seltzers increasingly
sharing the spotlight with a new wave of higher-quality pre-mixed cocktails as well as
emerging hard alternatives. Craft, weakened but not defeated, will return and take
advantage of new federal tax incentives to regain share lost during the pandemic.
Mindful drinking trends were less important in 2020, but, as consumer interest in
health and wellness reawakens, it should come back stronger as many consumers who
drank higher-than-usual levels during the pandemic reassess their relationship with
alcohol. This will combine with more widespread cannabis legalisation to put long-term
pressure on alcohol volumes.

Chart 1 Alcoholic Drinks Off-Trade Volume Sales Growth Scenarios: 2018-2025

Source: Euromonitor International

Chart 2 Alcoholic Drinks On-Trade Volume Sales Growth Scenarios: 2018-2025

Source: Euromonitor International

Chart 3 Alcoholic Drinks Impact of Soft Drivers on Off-Trade Volume Sales: 2018-2025

Source: Euromonitor International

Chart 4 Alcoholic Drinks Impact of Soft Drivers on On-Trade Volume Sales: 2018-2025

Source: Euromonitor International

MARKET BACKGROUND

Legislation
Legal purchasing age and legal drinking age

The legal purchasing age for alcohol in the US is set at 21 in all 50 states.
Establishments that serve alcohol to underage drinkers face stiff penalties, ranging
from fines to the loss of their selling licences. As a result, most establishments
enforce strict age verification policies for all consumers deemed to be 35 years old or
younger. However, youngsters frequently circumvent this practice by acquiring fake
identification, buying these documents on the black market, or by having older
individuals purchase their alcohol for them. The Centers for Disease Control and
Prevention (CDC) have estimated that a 10th of all alcohol consumed in the US is by
those under the age of 21.
All 50 states have set their legal purchasing age at 21, although nearly all have at
least some exemptions. They fall into eight major types: on private, non-alcohol-
selling premises, with parental consent (29 states); on private, non-alcohol-selling
premises without parental consent (six states); for religious purposes (26 states); for
medical purposes (16 states); for government work-related purposes (four states);
for educational purposes (11 states); when reporting medical need due to underage
drinking for another minor (17 states); and on alcohol-selling premises with parental
approval (10 states).
While any state is technically free to change its drinking age, since President Ronald
Reagan signed a law in 1984 threatening any state that moved its age lower than that
with a loss of federal highway funding none has done so. A movement known as the
Amethyst Initiative gained traction and headlines in 2008 for proposing moving the
drinking age back down to 18, but, after some initial publicity, it all but died out.
There is now no serious prospect of the drinking age moving below 21 in the near
future.

Drink driving

Drink-driving legislation is set at the state level so, as with most aspects of American

© Euromonitor Interna onal 2022 Page 3 of 9

 alcohol laws, it varies across the country. In most states, for example, no one in a
moving vehicle can have an open container of alcohol. In other states, however, this
restriction applies only to the driver, not the passengers, and, in some, drivers
themselves can have an open container as long as they are not actually drinking it. In
Mississippi it is even legal for the driver to be drinking alcohol while driving
provided their BAC remains below the legal limit.
The most standardised aspect of drink-driving law is the BAC level required to be
considered intoxicated. All states have moved their threshold to at least 0.08%.
Utah, home to many of the nation’s strictest alcohol laws, has recently moved even
further and dropped its level to 0.05%. All states also now have “Zero Tolerance”
laws for anyone under the legal drinking age having a level of even 0.01%.
The national trend is towards stricter laws against Driving Under the Influence (DUI).
Requirements are growing for the installation of interlock devices following lesser
DUI offences than in the past. New Jersey, for example, now requires such a device
to be installed after a first offence. Other DUI penalties, such as licence suspension
and fines, have also been increasing in recent years. With the loosening of marijuana
laws across the country, many state legislatures are looking to revise their DUI laws
to focus not just on alcohol, but cannabis as well, which should ensure than these
laws receive close scrutiny in the coming years. At the federal level, there is
proposed legislation that cars sold in the US in the future may be required to have
advanced alcohol-detection features installed.

Advertising

The alcohol industry largely regulates itself when it comes to advertising. The
Federal Trade Commission (FTC) has regulatory authority over the industry’s
marketing, but rarely steps in unless an advertisement makes an untruthful claim.
States have the ability to restrict alcohol advertisements, but a 1996 Supreme Court
case has set the precedent that states cannot restrict truthful advertising claims
made by the alcohol industry, which has kept their ability to do so in practice
limited. State-level attempts at regulation have been tried in the years since, but
federal courts have struck down laws in California and Missouri recently on First
Amendment grounds, showing the difficulty that states have in this area. That means
that the industry is mostly governed by the ethical standards set out by the Beer
Institute, Wine Institute or Distilled Spirits Council, depending on the product in
question.
Spirits marketing, for example, is based on the Distilled Spirit Council’s “Code of
Responsible Practices”, a detailed and regularly updated document regarding
permissible and impermissible advertising practices. A key theme is the “71.6%
standard”, which is the percentage of adults of legal drinking age who should be in
the intended audience of any advertisement, whether it be a television commercial,
print advertisement or at a public venue (this figure represents the percentage of
the US population that was of legal drinking age as of the most recent national
census). Marketing near schools, using cartoon characters or with actors not at least
25 years of age are also all forbidden.
Other generally taboo practices include associating alcohol consumption as
necessary for social inclusion, depiction of visibly intoxicated individuals, overly
sexual content, and any form of health claims. As these guidelines are somewhat
vague it is not unusual for advertisements to push the established boundaries.
The informal ban on making health claims is one that is coming under pressure from
changes in the industry. As health and wellness trends become more important to
consumers, brands are seeking to set themselves apart by positioning themselves as
healthier options. This has begun to generate some pushback. The US Alcohol and
Tobacco Tax and Trade Bureau (TTB) issued a newsletter in August 2020 expressing
concern with the rise in the number of health-linked alcohol advertisements. Hard
seltzers and so-called “clean wine” have been at the forefront of this issue, although
the problem touches on all major categories. The emerging hard kombucha space is
in a particularly difficult spot as brands try to position their products as a healthier
option at the bar without making any overt and specific health claims suggesting
their product is objectively healthy and therefore running afoul of any government
agencies.
The Food and Drug Administration (FDA) has also become involved. Consumer
groups also wrote a letter to the FDA in early 2021 accusing Molson Coors’ new hard
seltzer Vizzy of violating FDA guidance put out in 2015 that states alcoholic drinks
fortifying their products with added nutritional content is inappropriate
(advertisements for Vizzy prominently tout that the seltzer contains Vitamin C). The
FDA has not taken any action yet, but even if Vizzy does not have to modify its
advertisements it is unlikely to be the last brand to run into trouble.
Another issue that will grow in the coming years is a changing social media
landscape. The industry has largely worked out how to advertise on larger platforms
like Facebook and Instagram without infringing any standards, but the most
explosive growth of any major social media platform in recent years is TikTok, which
currently bans any alcohol marketing because of its young user base. The number of
adults on the platform is rising though and may eventually cross the 71.6% threshold,
potentially opening it up to alcohol marketing. Snapchat’s decision, another youth-
orientated platform that gradually became more mainstream, to open up to alcohol
advertising proved difficult to navigate. This experience may keep enthusiasm for

© Euromonitor Interna onal 2022 Page 4 of 9

 TikTok low in the industry, but at least some will undoubtedly jump at the chance to
advertise on this important new form of social media.

Smoking ban

Currently, 27 states have state-wide bans on smoking in public places that cover all
workplaces, including bars and restaurants, and all 50 have at least some level of
restrictions on indoor smoking. Only 12 states allow smoking in bars without any
significant restrictions and even fewer allow it in restaurants. These laws are
increasingly being updated to include e-cigarettes. A total of 16 states now include
these devices in their general smoking bans. This is one of the few updates being
made to these laws and no state has passed a new general ban on public smoking for
nearly a decade.
Federal regulations on public smoking in the US are limited primarily to a smoking
ban on flights. In addition, smoking is not permitted in federal buildings or in
childcare facilities that receive federal funds.

Opening hours

The decentralised nature of US alcohol regulation creates an assortment of local and

state rules with regard to sales in on- and off-trade establishments. Many of these
rules changed in the face of COVID-19 (often several times during the year), creating
a highly confusing situation for both consumers and the industry. During normal
times, on-trade closing hours range from 24.00hrs to 05.00hrs, with most
establishments discontinuing sales at 02.00hrs and many municipalities setting
earlier closing hours than states. Roughly half of states have some sort of “blue law”
restricting off-premise sales of alcohol on Sundays as well.
Many states and municipalities restricted these hours during COVID-19, although
few closed off-trade outlets entirely, even during the most severe lockdowns
(Pennsylvania’s state-operated stores being a notable exception). On-trade
restrictions were frequent during much of 2020 and early 2021 and most areas
restricted hours or required food purchases with alcohol for at least a portion of the
year.

On-trade establishments

Table 1 Number of On-trade Establishments by Type 2015-2020

2015 2016 2017 2018 2019 2020

Cafés/Bars 85,691 88,460 92,566 81,357 94,293 85,928
Full-Service Restaurants 238,495 238,833 241,429 243,063 244,981 224,550
Limited-Service Restaurants 290,795 294,433 297,138 299,275 300,271 291,603
Self-Service Cafeterias 1,331 1,305 1,281 1,278 1,244 1,140
Street Stalls/Kiosks 48,734 49,831 51,871 54,170 56,622 49,282
TOTAL 665,046 672,862 682,217 690,352 697,411 652,503

Source: Euromonitor Interna tiona l

TAXATION AND DUTY LEVIES

Taxation of alcoholic beverages is immensely complex in the US thanks to the need
to factor in federal, state and local taxes. All alcoholic beverages sold in the US are
subject to some sort of federal excise tax and all 50 states have their own tax rates
that must be calculated on top of already complicated federal regulations. Sales
taxes, which some states have and others do not, are also often factored into the
final retail price and some municipalities have their own additional liquor taxes that
are added on top of all the other taxes. Tax rates can therefore vary dramatically for
the same product, depending on what area it is purchased in.
Federal excise taxes on alcohol changed in late 2020 with the passage of the Craft
Beverage Modernization and Tax Reform Act (CBMA). The law was first passed in
2017 and had since been renewed annually for one-year periods, keeping the
industry in a constant state of uncertainty that was only finally resolved this year,
with the CBMA being made permanent. The CBMA grants special tax rates for smaller
producers and importers of beer, wine and spirits and was passed primarily to assist
a craft sector that was hit hard by the impact of COVID-19.
Under the CBMA, beer brewers producing fewer than two million barrels a year now
have excise rates of USD3.50/barrel on the first 60,000 barrels and USD16.00/barrel
for all barrels over that. For those domestic producers of more than two million
barrels annually, as well as importers, their excise tax is now at USD16.00/barrel on
the first six million barrels and then USD18.00/barrel after that.
Wine starts at a different excise tax rate based on ABV. Wine sold at 16% ABV or less
is taxed at USD1.07/gallon, 16-21% ABV has a rate of USD1.57/gallon and 21-24% ABV
has a rate of USD3.15/gallon. On top of this is then layered a tax credit from the
CBMA based on size of production or importation. The credit is currently set at
USD1.0/gallon for the first 30,000 gallons, USD0.90/gallon for the next 100,000, and
then USD0.54/gallon for the 620,000 gallons after that. Anything above those levels
does not qualify for a credit and is taxed at the full rate.

© Euromonitor Interna onal 2022 Page 5 of 9

 For spirits the first 100,000 proof gallons are now taxed at USD2.70/gallon. The next
22,130,000 gallons jump in rates to USD13.34/gallon, and everything above that is
taxed at USD13.50/gallon.
The exploding RTDs category falls somewhere in the middle of all of this. Currently,
taxation is based on the “base” of the RTD, making spirit-based RTDs more expensive
than any others, but the Distilled Spirits Council of the United States (DISCUS) is
lobbying for spirit-based RTDs to be treated like all others of their comparable ABV
level and therefore to be taxed at a lower rate. The beer industry, increasingly
reliant on malt-based RTDs as beer volumes slip, is fighting against these proposed
changes. This battle should be a key focus for the industry in 2021 and the years
beyond. Notably, despite popular perceptions that leading hard seltzers White Claw
Hard Seltzer and Truly Spiked & Sparkling are vodka-based they are taxed as beer
because they contain no spirits.
All states impose an excise tax on beer. The national average sales tax rate, usually
charged on top of the retail selling price, except in the case of some on-trade
purchases, is 5%. State excise tax rates range from USD0.02/gallon in Wyoming to
USD1.29/gallon in Tennessee.
All states impose an excise tax on wine except for a handful that only sell wine
directly through state-controlled liquor boards. Tax rates range from USD0.20/gallon
in Texas to USD2.50/gallon in Alaska.
Seventeen states only allow the sale of distilled spirits through their state-
controlled liquor boards as of 2021. All others impose some form of excise tax on
spirits sales. State tax rates range from USD1.50 per gallon in Maryland to USD14.27
per gallon in Washington.
All of this means that taxes from various authorities added together can add up to be
over half the selling price. This is particularly true of spirits, which are taxed at
considerably higher rates than beer and wine.
An additional concern for the industry recently has been import duties stemming
from trade wars with numerous other countries. The most serious issues had been
temporarily resolved as of early 2021, with the new Biden Administration reaching
tentative agreements with the EU and UK to suspend tariffs on a wide range of
European products, including single malt Scotch, cognac, Irish cream liqueurs and
many wines. There remains the possibility that these tariffs could return though, and
even significantly increase, if American and European negotiators are not able to
solve their wider issues (which are, at root, based on a dispute over aircraft
subsidies). These tariffs have been devastating to the affected categories, as well as
to American distillers, which were looking to Europe as a major future growth
market, but were met with huge retaliatory tariffs on the sales of their products
instead.

Summary 1 Taxation and Duty Levies on Alcoholic Drinks 2020

Excise tax
Beer
Beer from a domestic Firs t 60,000 Over 60,000 up
brewer that brews hectolitres to 2,000,000
2,000,000 barrels or less hectolitres
per calendar year
USD2.98 USD13.64
Firs t 6,000,000 Over 6,000,000
hectolitres hectolitres

Other beer USD13.64 USD15.34

Still Wine Firs t 300 Over 300 up to 1,300 Over 1,300 up to Over 7,500
hectolitres hectolitres 7,500 hectolitres
hectolitres
16% and under alcohol by USD1.85 USD4.49 USD14.13 USD28.27
volume
16-21% alcohol by volume USD15.06 USD17.70 USD27.34 USD41.48
21-24% alcohol by volume USD56.80 USD59.44 USD69.08 USD83.21

Sparkling Wine Firs t 300 Over 300 up to 1,300 Over 1,300 up to Over 7,500
hectolitres hectolitres 7,500 hectolitres
hectolitres
Artificially Sparkling USD60.76 USD63.40 USD73.04 USD87.18
Naturally Sparkling USD63.40 USD66.04 USD75.69 USD89.82

Hard Cider Firs t 300 Over 300 up to 1,300 Over 1,300 up to Over 7,500
hectolitres hectolitres 7,500 hectolitres
hectolitres
Derived from apple/pear USD4.33 USD4.49 USD5.10 USD5.97

Spirits Firs t 1,000 Over 1,000 up to Over 222,300

proof 222,300 proof proof
hectolitres per hectolitres per hectolitres per
ca lenda r yea r ca lenda r yea r ca lenda r yea r
Distilled Spirits USD10.23 USD50.56 USD51.17

© Euromonitor Interna onal 2022 Page 6 of 9

Source: Euromonitor Interna tiona l

OPERATING ENVIRONMENT

Contraband/parallel trade
Contraband trade is virtually non-existent in the US. With the exception of
“moonshining” – illegal distilling which is still prevalent in the American Deep South
– the US government does not recognise or prosecute any significant contraband
alcohol trade. As of 2007, formerly illegal absinthe has been approved for sale in the
US if the product is classified as thujone-free, ie measuring less than 10ppm thujone.
COVID-19 has not resulted in any notable growth in contraband alcohol in the US.

Duty free
Duty-free sales of alcoholic drinks are minimal compared to total US sales of
alcoholic drinks. Duty-free purchases are limited primarily to duty-free shops in the
international terminals of large airports, or at border crossings. These retail spaces
are significantly smaller in both size and selection than those found in Europe, Asia
Pacific and Latin America. In addition, there are no large duty-free zones readily
available to Americans in the way that Andorra and various international ferry lines
are to Europeans. Due to decreased border crossings during the pandemic, many
duty-free stores in airports and at land border crossings experienced closures. Duty-
free sales fell as a result.

Cross-border/private imports
Parallel trade in the US is negligible due to fairly similar tax and price levels across
the country. Some parallel trade occurs on a private level between neighbouring
states, where one state has a restricted distribution environment, and between
Mexico – where prices are generally lower – and border states.

KEY NEW PRODUCT LAUNCHES

Outlook
The US alcoholic drinks industry has seen widespread innovation driven by consumer
desire for new flavours, the rising importance of health and wellness, and a
premium craft positioning. One of the most dynamic categories is RTDs, with hard
seltzers in particular absorbing increasing share within the market. 2020 saw further
adoption of the trend by major manufacturers. Some of the most popular brands
within this product area have been standalone offerings, but, with hard seltzers
encroaching on light beer sales, major manufacturers have come out with seltzer
brand extensions of popular beers such as Coors Light and Bud Light.
A similar trend can be seen within non-alcoholic beer. This category has also seen
high growth rates, attracting consumer interest as a health-focused alternative that
does not compromise on flavour. Non-alcoholic beer was revitalised as a category by
smaller producers and recently popularised by the launch of Heineken 0.0. Now,
major manufacturers are catching onto the trend, with Budweiser and Sam Adams
releasing non-alcoholic brews.
In spirits, most new product launches rely on premium position and a story-based
advertising campaign. Celebrity endorsements have also proved a popular tactic to
drive a brand’s story. In 2020, Dwayne “The Rock” Johnson launched Teremana
tequila with great success.

DISCLAIMER
Forecast and scenario closing date: 3 May 2021
Report closing date: 25 May 2021
Analysis and data in this report give full consideration to the impact of COVID-19 on
consumer behaviour and market performance in 2021 and beyond. However, the
situation continues to develop rapidly, and the influence and severity of the pandemic
are constantly evolving. For the very latest insight on COVID-19 and its impact on
industries and consumers, at both global and national level, readers can access strategic
analysis and updates on www.euromonitor.com and via the Passport system, where
new content is being added on a systematic basis.

SOURCES
Sources used during the research included the following:

Summary 2 Research Sources

Official Sources Alcohol & Tobacco Tax & Trade Bureau

Dis tilled Spirits Council of the United Sta tes
EU Tra de Ma rket Acces s Da ta ba s e
Na tiona l Alcohol Bevera ge Control As s ocia tion

© Euromonitor Interna onal 2022 Page 7 of 9

Official Sources Alcohol & Tobacco Tax & Trade Bureau
United Sta tes Burea u of Economic Ana lys is
United Sta tes Depa rtment of Agriculture (USDA) Economic Res ea rch Service
(ERS)
United Sta tes Depa rtment of Agriculture (USDA) Foreign Agricultura l Service
(FAS)
United Sta tes Depa rtment of Commerce
United Sta tes Depa rtment of La bor Burea u of La bour Sta tis tics
United Sta tes Depa rtment of Trea s ury Alcohol & Toba cco Ta x & Tra de Burea u
United Sta tes Interna tiona l Tra de Commis s ion
United Sta tes Securities & Excha nge Commis s ion
Trade Beer Ins titute, The
Associations
Brewers As s ocia tion
Burea u Na tiona l Interprofes s ionnel du Cogna c (BNIC)
Cá ma ra Na ciona l de la Indus tria Tequilera
Comité Interprofes s ionnel du Vin de Cha mpa gne (CIVC)
Drinks Irela nd
Na tiona l As s ocia tion of Convenience Stores
Na tiona l Beer Wholes a lers As s ocia tion
Na tiona l Licens ed Bevera ge As s ocia tion
Office Interna tiona l de la Vigne et du Vin
Priva te La bel Ma nufa cturers As s ocia tion
Scotch Whis ky As s ocia tion
United Sta tes As s ocia tion of Cider Ma kers
US As s ocia tion of Cider Ma kers
Wine Ins titute, The
Trade Press Advertis ing Age
As s ocia ted Pres s , The
Beer Ma rketers Ins ights
Bevera ge Ais le
Bevera ge Dyna mics
Bevera ge Indus try News
Bevera ge World
BevNet
Bra ndweek
Brewbound
Bus ines s Week
BW166
Cha in Drug Review
Chica go Tribune
CSP
Drinks Interna tiona l
Drug Store News
Fina ncia l Times
Forbes
Globe News Wire
Good Beer Hunting
Los Angeles Times
Ma rket Wa tch
Ma rketing Da ily
MMR
Modern Brewery Age
Na tion's Res ta ura nt News
New York Times
PR News wire
Product Alert
Progres s ive Grocer
Reuters
Sha nken Impa ct Da ta ba nk
Superma rket Guru
Superma rket News
Wa rehous e Club Focus
Wine & Spirits Interna tiona l
Wine Bus ines s Monthly
Wine Indus try Ins ight
Wine Specta tor

© Euromonitor Interna onal 2022 Page 8 of 9

 Official Sources Alcohol & Tobacco Tax & Trade Bureau
World Drink Trends

Source: Euromonitor Interna tiona l

© Euromonitor Interna onal 2022 Page 9 of 9