As the beverage alcohol industry heads into 2025, aged spirits brands are grappling with significant hurdles, including declining consumption among Gen Z and the rising popularity of weight-loss medications. These issues are compounded by broader economic uncertainties and trade tensions that threaten growth.
On Friday, CNBC’s investment expert Jim Cramer briefly addressed the state of beverage alcohol, reiterating his cautious stance on drinks company stocks. Earlier in the year, he had advised viewers to avoid these investments, and his outlook remains largely unchanged. Cramer cited the moderation trend among younger consumers and the potential impact of GLP-1 weight loss drugs, which may lead to reduced alcohol consumption. He remarked, “I’m too concerned about the long-term challenges to pound the table on any of these names, especially Brown-Forman or Diageo.” However, he also noted a willingness to reconsider his position if there are signs of increased drinking among younger demographics or if the effects of GLP-1 medications on alcohol consumption prove to be less significant than anticipated.
Cramer’s cautious perspective reflects a broader sentiment in the industry, where falling consumption among Gen Z and the influence of weight-loss drugs are just part of the picture. The spirits sector is also facing economic fragility in key markets, which adds to the uncertainty. Additionally, the looming threat of punitive tariffs amid escalating global trade tensions poses a serious risk to growth prospects.
Tequila and Mezcal: A Bright Spot Amid Challenges
While the overall spirits market in the US appears sluggish, tequila and mezcal sales have emerged as a relative bright spot. However, the explosive double-digit growth seen in previous years has softened, with more modest consumption increases reported in 2023 and 2024. This shift underscores the need for aged spirits brands to adapt to changing consumer preferences and market dynamics as they navigate a complex landscape heading into the new year.
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