How The Alcohol Industry Remains Resilient in 2025

Economically, the alcohol industry is in a tricky spot. Covid-19 boom times, fueled by customers stocking up during the pandemic and diving deep into trendy categories like bourbon and tequila, are now years in the rearview. Consumer preferences have shifted significantly.

For one, the youngest, newest LDA generation seems wary of alcohol. Generation Z, by any measure, does not currently drink much. Rather, they consume cannabis. Known broadly as an anxious generation, they prefer the mellowness of THC over the effects of alcohol, with its potential for anxiety-inducing hangovers. Gen Z is still early in their careers, too, and thus watches their wallets closely, choosing more-affordable cannabis products over pricier alcohol.

The youngest LDA generation is also health conscious. They see THC as a “healthier” alternative to alcohol. Moreover, Gen Z is far from the only cohort counting calories these days. One lasting effect from the Covid era is more consumers than ever focusing on their wellness. Dry January has exploded in popularity, with many people continuing the no-ABV habit beyond that sober month.

The rise of healthier lifestyles has also fueled the trend of GLP-1 drugs like Ozempic. Use of these products for everyday weight loss has become mainstream. Consumers on these drugs will drink significantly less, another modern issue affecting the alcohol industry’s bottom line.

On and off tariffs from the federal government have also complicated matters. Elsewhere, folks who bought into the bourbon boom during and right after the pandemic have filled up their basement bunkers and are now purchasing fewer bottles. The whiskey industry now seems in a spot where craft beer was about a decade ago, overexpanded as consumption levels head the wrong direction. Contraction is already happening as businesses pull back.

Retailers Take Stock

“Currently, the alcohol business has definitely shifted back gears after we saw the increase in the pandemic,” observes Gundeep “G” Singh, owner of Socialize, a perennial Top 100 Retailer located in Maryland. “At one point, the business was booming as nothing else, but now it has again become very challenging to maximize sales due to several independent variables. Market competition, changing trends, social economic factors to name a few.”

Some of the Socialize locations combine liquor stores with a next-door nightclub, meaning sees the full scope of current consumer alcohol trends.

“It is very evident that Gen Zs are becoming more health conscious,” he says. “Eating right, exercising and dieting is the new way of living a healthy lifestyle, completely opposite from binge-drinking at football games or crushing those 2-1 happy hour cocktails after a long day of work.”

“Along with diet and exercise, consumers obviously find it more beneficial to drink juices, protein shakes and other low-calorie drinks, which has resulted in the popularity of brands like GNC, RawJuice, Smoothie King and Jamba,” he adds.

On the topic of “Does Gen Z Drink?” Quinton Jay, founder and owner of Bacchus Wine & Spirits, a Top 100 Retailer based in Millbrae, CA, had this to say, during a recent episode of our industry podcast, On & Off:

“Younger people don’t have a drinking problem; they have a marketing problem. We’re not marketing to them correctly. It’s a bunch of old guys like me who are marketing to them, and they’re like, ‘I’m not buying that’. So how do we bridge that gap?”

“They’re still buying,” he added of Gen Z. “They definitely buy less. They buy better quality. They’re more informed. They’re very smart about fake brands. They like authentic. They like hearing the story, and why is this bottle on the shelf? This is what small retailers can do.”

The whiskey industry remains in its correction. Jay has a saying that $40 is the new $50 in the bourbon market. During the podcast episode, he further explained:

“When bourbon was coming up really hot, people were still exploring. And people used price as an indicator of quality, right or wrong. At that time, it was easier to sell a bottle of bourbon above $50 than it was below $50. But now in the economy, people are a little bit more careful with their dollars. And people have tried a lot of bourbons and they’re getting smarter, they’re getting their own taste. And when people start having their opinions about things, they start looking for a little bit of value. And I think that’s why we’re seeing a reset in that category.”

While whiskey has slipped, tequila remains popular, even with younger drinkers. But what agave products consumers buy has shifted.

“Years ago, tequila meant Patron,” says Singh. “But now consumers are looking for 100%-agave, organic tequilas that are usually carried by a micro wholesaler, such as Casa Azul, Lalo, or Tequila Ocho. This shows us that Gen Zs are not just drinking to get drunk. They are educated on these brands, which further motivates us to find these brands and provide them with an extensive variety to choose from at our establishments.”

“And as we grow our collection, social media is the quickest medium to inform the consumers on the availability of the products,” he adds. “We make sure we are constantly posting updates on social media and connect with our customers through advertisement and sales.”

Singh also believes the popularity of weight-loss drugs such as Ozempic has negatively affected the industry. That said, he takes a broader view when it comes to trends.

“I’ve been in this business for more than 20 years and I believe trends are never permanent, trends are meant to change or else nothing would be trending,” he says. “I have seen trends change about every four to five years from craft beer to seltzer, from cigarettes to vapes. Bourbon connoisseurs are now exploring agave tequila. So in another five years, tequila will probably be replaced by another category.”

In the meantime, an important method to promote sales in 2025 is the in-store tasting. This includes the rise of evening events and brand dinners hosted by beverage alcohol retailers.

“People taste, people buy,” says Jay. “You’re de-risking that purchase. That’s really big for people.”

“As an independent retailer, if it’s legal to taste your customers on it, you are missing a huge opportunity of connecting with the customers, connecting with your suppliers, and bridging that gap,” he adds. “That’s what the role of the retailer is now, more than anything else, is being a place of community. Being social. Especially in this electronic age, when it’s so easy to not to. But beverage is one of the common things that we all share together.”

Circling back, these fun, experiential events are a great way to reach Gen Z consumers.

“With younger consumers, where we’ve missed the boat, is that they feel like they’re being lectured to,” Jay says. “And that is a problem. And we’ve set it up that way, primarily because there’s these ‘experts’. The only expert is yourself. Do you like it? Would you pay X amount of dollars for it? That’s the expert I want to listen to. This generation does not want to be told [what to drink]. So I think having more demos, informal, easier events where they’re not being talked to. We’ve started making things a lot cheaper, a lot more informal; you taste, you buy.”

Producers Consider the Industry

The current challenges and industry resiliency extend to the first tier, as well.

“We continue to be in a challenging environment across the total beverage alcohol space with some signs of normalization and bright spots in key categories,” says Matt Blevins, chief marketing officer, Heaven Hill Brands. “As the post-Covid cycle continues to play out, we still believe the industry will emerge in a healthy and dynamic place and, at Heaven Hill, we are investing in our brands and staying agile to meet their needs in innovation, size mix, and exciting marketing platforms.”

This includes taking an honest look at generational trends.

“There is a lot of noise and unfair stereotypes placed on Gen Z and plenty of mixed signals in the data,” Blevins says. “By and large, we see a bifurcated market with some pockets of consumers (regardless of generation) enjoying affordable luxuries and premium brands in the category. Other consumer groups (especially Gen Z) are under more pressure and may consume less for economic reasons and as a result are trading down in package size or spending less in the on-premise.”

“By and large we see that spirits is holding up well and Gen Z is attracted to the category whether through RTD, cocktail culture (highly Instagrammable!), or just the transparency and authenticity of spirits (simple ingredients, clear standards, authentic terroir),” he adds. “The continued trend of health and wellness and new options like GLP-1s are empowering consumers to take control of their lifestyle, and most still want to enjoy our products. It just may look different, and the products and ways in which they enjoy it will shift, but we are not into blaming the consumer. We have confidence that we can meet their expectations and be a part of their lifestyles today.”

One example of that, he points out, is in an analysis of non-alcoholic beverage consumers, which showed these people overwhelmingly still drink alcohol. “So this is not a case of sustained abstinence, but lifestyle management,” Blevins says.

This is an opinion shared by others in the first tier.

“Whatever the generation, and whatever the trends like weight loss drugs and marijuana use, there always seems to be demand for exceptional spirits,” says Katharine Magliocco, Chatham Imports EVP, marketing. “When it comes to our brands, we focus on offering high-quality spirits like Michter’s Whiskey, Los Siete Misterios Mezcal, Farmer’s Gin and Crop Organic Vodka.”

“At Chatham Imports and our wholly owned subsidiary Michter’s Distillery, business has been going well,” she adds. “Our whiskey business continues to expand, our mezcal continues to gain increased distribution and awareness, and our organic spirits have been trending quite well.”

This is in line with the long-held theory of why the alcohol industry weathers difficult economic times. “We definitely see consumers being thoughtful about how they spend their money. Unlike yachts and sports cars, spirits are an accessible luxury,” Magliocco says.

Where does Heaven Hill see growth?

“We are seeing our agave portfolio as a standout success with Lunazul and Tequila Ocho positioned in two distinct sweet spots for the category and really leading category growth,” Blevins explains. “Our premium bourbons, led by Elijah Craig, are performing well even as the category unwinds from the highs of the pandemic era, and our recent launch of Old Fitzgerald 7 Year is off to a fantastic start, though still somewhat limited by supply.”

“We launched Deep Eddy Pineapple this year and have seen that brand respond very well to its focus on real fruit and authentic vodka from Austin, TX,” he adds. “Our partnerships in the sports arena align our brands with key passion points for a broad audience with Evan Williams Bourbon Nation leading the way as we approach tailgate season with fans of college football and the most prominent teams. Hpnotiq has recently partnered with the UFC, which is not only a fast growing sport but also a lifestyle brand itself. We continue to believe that being ‘in real life’ and showing up for consumers and bartenders is important.”

Distributors Navigating the Economic Storm

After an extraordinary period of growth fueled by pandemic-era consumer habits, the middle tier of the beverage alcohol industry now faces a challenging economic reality. A combination of factors including persistent inflation, shifting consumer preferences and lingering supply chain issues has put significant pressure on distributors.

While the market for some categories, such as ready-to-drink cocktails and certain premium spirits, continues to grow, overall industry volume is declining. Wholesalers are grappling with overstocked inventories, rising operational costs and a fundamental change in how consumers choose to spend their money.

Despite the gloomy outlook, Southern Glazer’s Wine & Spirits continues to remain focused on its employees and deepening its relationship with both suppliers and customers.

“We’ve weathered many cycles in our company’s 5+ year history, and we know that a long-term perspective, backed by strong fundamentals, wins,” says Wayne E. Chaplin, president and CEO of Southern Glazer’s. “We have the scale and financial strength to maintain continuity of service, invest through the cycle and innovate in ways that help our partners succeed — whether the market is up or down.”

“We’ve weathered many cycles in our company’s 5+ year history, and we know that a long-term perspective, backed by strong fundamentals, wins,” says Wayne E. Chaplin, president and CEO of Southern Glazer’s.

Breakthru Beverage Group is another distributor that has choosen to power through the madness instead of letting the economic uncertainty shake them.

“We’re leveraging this moment not just to navigate headwinds, but to position ourselves for long-term growth, while continuing to deliver best-in-class service to our partners,” says Julian Burzynski, EVP and chief operating officer of Breakthru. “We are optimistic about the future of the industry and Breakthru has had a lot of recent momentum.”

Burzynski explains that Breakthru is responding to the current market conditions in the following ways:

1. Operations: Breakthru has been accelerating actions to streamline its operations, identify efficiencies, focus on safety and leverage data insights to inform its go-to-market strategy.

2. Supplier wins: Breakthru has a diverse portfolio and has had several recent supplier wins, with its team continuing to pursue opportunities for growth.

3. People: Breakthru is invested in employee growth and development, continuously expanding learning and development opportunities across all levels of associates so teams can stay educated and agile.

While both Southern Glazer’s’ and Breakthru’s robust distribution systems are keeping the companies alive, other wholesalers have not been so lucky. Republic National Distributing Company (RNDC), for example, closed its California operations on September 2, 2025.

Interim CEO Bob Hendrickson has issued a preliminary statement following a company town hall meeting held on June 2, 2025, stating: “We’ve made the difficult business decision to withdraw from California, which affects many of the roles in the state. We are complying with all regulatory obligations and are committed to handling every transition thoughtfully and smoothly and ensuring everyone is treated fairly and respectfully. We are grateful for the support of these employees and will do our best to support them during this time.”

Hendrickson also mentioned that this decision was made as a result of “rising operational costs, industry headwinds and supplier changes that made the market unsustainable,” and not because of the California team’s lack of performance.

Using Technology as a Lifeline

Despite rising costs, Southern Glazer’s continues to make investments in the company to help drive value for both its customers and suppliers.

“On the technology front, we continue to refresh and add new features to our industry-leading Proof ecommerce platform, including improved log in, search and AI-powered recommendations, which are making it easier for customers to access Proof and build their orders,” notes Chaplin.

Technology has proven to be a smart investment opportunity for Southern Glazer’s, allowing the distributor to improve the effectiveness of its logistics and operations. Utilizing AI/ML in forecasting and replenishment processes, for example, has resulted in improvements in accuracy and fill rates.

“Our wholly owned subsidiary, ANKAA Global Logistics, is growing with additional 3PL services as we continue to drive opportunities for our suppliers,” Chaplin adds.

Breakthru has also made significant investments into technology, with Burzynski saying that the company has invested “more than $75 million into its operational capabilities across its footprint by expanding warehouse capacity, incorporating new technologies and bolstering automation.”

At the beginning of 2025, Breakthru appointed Glenn Remoreras as chief information officer, who has been making additional improvements to the company’s IT infrastructure and digital capabilities.

“We’ve invested in new data sources and analytics platforms that put the consumer at the heart of our operations,” explains Burzynski. “This has led to promising results, ensuring we have the right product in the right account ready for the right consumer. Our advanced analytics capabilities are also being utilized to enhance our execution in high-opportunity areas like no- and low-alcohol.”

Facility and Operations Expansions

Aside from technology, distributors have also made investments in warehouse operations to stay afloat during uncertain times.

RNDC, for example, recently invested in its Texas operations. With the distributor no longer operating in California, this has allowed for additional effort to go into expanding operations in different states.

“We’ve taken a close look at where we are — and more importantly, where we need to be,” says Taylor Sommer, chief sales and execution officer at RNDC. “After listening to our associates, customers and supplier partners, one thing is clear: We need to strengthen our presence and performance in the market. Texas is a critical part of our foundation, and we’re proud to reinvest here.”

Similarly, in early 2025, Breakthru added a new facility in Tampa, FL.

“We’re very excited about the investment,” notes Jeff Ortmeier, Breakthru’s EVP for Florida. “It’s important not only to the Breakthru system, but also to our suppliers, since Florida is typically at the top of their markets.”

The new Tampa facility includes upgraded spaces designed to enhance employee comfort, foster connection and support overall associate satisfaction. Breakthru also installed new equipment, adding nine palletizers and a high-speed dispenser, allowing the distributor to continue to grow without negatively impacting customer service.

“Breakthru made sure that there was a significant investment in building capacity for the future of the company,” explains Ortmeier. “Our goal is to increase customer expectations and make sure we are the distributor of choice, so we doubled the size of the facility to 100,000 square feet.”

On-premise Affected

While all sectors of the beverage alcohol industry have been feeling the pressure from inflation, the threat and implementation of tariffs and people drinking less overall, the on-premise is getting squeezed even harder for a number of reasons. One is that consumers tend to cut back on going out in times of economic uncertainty.

Restaurants also face rising costs of goods at a time when many guests are more price sensitive. And given the tight margins and the fact that they make most of their profit on alcoholic beverages, it hurts when on-premise operators have to pay more for products, and when customers aren’t consuming as much.

The full-service chains that have filed for Chapter 11 bankruptcy in just the past six months include On The Border, Bertucci’s, Bar Louie, Hooters of America and Bravo Brio Restaurants, the parent company of Bravo! Italian Kitchen and Brio Italian Grille. Then again, casual dining brands such as Chili’s and Texas Roadhouse have reported strong sales, and the upscale, experiential Cooper’s Hawk Winery & Restaurant concept is expanding.

So how do operators adjust to industry challenges and entice people to go out when consumer confidence is low? By keeping up on trends, listening to guests, offering value and providing experiences.

Classics, Colors and No/low

There’s no denying that overall alcohol consumption appears to be decreasing this year, says Shannon Hall, vice president of beverage innovation for SPB Hospitality, which owns Logan’s Roadhouse, among other concepts. “However, I’ve noticed that guests are still seeking out the dining experience that includes wine and a variety of alcoholic beverages, alongside a selection of zero-proof cocktails or mocktails.”

It’s interesting to see how many people want to capture these moments, sharing their drinks and dining experiences on social media, she adds. “This trend highlights a shift towards enjoying the social aspects of drinking, regardless of the alcohol content.”

Thompson Restaurants, which owns and operates more than 70 restaurants in Maryland, Virginia, Washington DC, Ohio and South Florida, continues to see the growth of low- and no-alcohol cocktail and beer requests, as well as demand for premium liquors, says Enterprise Beverage Director Jennifer Jackson. “Guests know the brands and styles of drinks they prefer, which is exciting. Cocktail culture is taking off with guests exploring new and innovative cocktails,” she notes.

The Espresso Martini remains one of the most popular cocktails, Jackson says. Upgrades to the standard recipe include using nitro espresso machines, which add some flair and flavors for the season.

“The Margarita also continues to dominate in every flavor, with guests choosing to enhance their Margarita with premium spirits like Patron cristalino,” an añeo tequila, aged and then charcoal filtered for extra smoothness, she adds. “And of course, Tito’s and soda, which is always a popular and easy go-to for guests.”

Thompson has noticed a resurgence in classic cocktails and favorites such as Lemon Drop Martinis and brightly colored drinks, Jackson notes. “We joke that ‘the phone drinks first,’ as guests want a fantastic picture for their social media, so presentation and garnish are key factors in helping them choose what to drink.”

For Seattle-based Yes Parade Restaurant Group, which includes Bastille, Poquitos, Macleod’s Scottish Pub, Rhein Haus, Stoneburner, Wally’s Wisconsin Tavern and Sabine Café, “the classic Martini remains popular, the Espresso Martini is still going strong, and gin is making an impressive comeback,” says Beverage Director Justin Fox. “Our gin and tonic offerings at Sabine are, in my opinion, the most innovative cocktails with endless possibilities, and guests are enjoying them.”

Price Pressures On-Premise

As people become more budget conscious, some guests are consuming more expensive spirits, but are not having as many drinks. “We are seeing guests will enjoy one, really fantastic cocktail vs. three or four average cocktails,” Jackson says. “However, there are also budget-conscious guests searching for a bargain or a special who actively seek out those great deals.”

Some operators have taken steps to address changes in cost of goods, customer behavior and increased price sensitivity. Yes Parade Restaurant Group has focused on lowering prices where it could, says Fox. “We had to adjust some prices here and there, but we looked at core items that people loved and asked ourselves, can we lower the prices? So we can at least offer our guests something of great value,” he says.

“We get it; everything is getting more and more expensive,” Fox adds. “We have two locations with $8 Happy Hours, and all the items are great.”

Providing value is key, especially when the price of a cocktail — good or bad — tends to be about the same in most metro areas, Fox says. “I know what’s good or bad is subjective, but I believe guests are more educated now, and they can and should be angry about a well whiskey Manhattan for $18. That pains me to say, because we are all struggling and need to get by.”

Logan’s Roadhouse has not seen a significant trend in price-driven decision-making from customers, Hall says. But its hottest cocktail right now is its signature Margarita, the Rancher ’Rita. “It’s served in a distinctive Margarita glass accompanied by a shaker that holds the remaining cocktail,” she explains. “Guests love it because it feels like a two-for-one deal, enhancing their dining experience. The unique presentation and value really resonate with our guests, driving its popularity.”

The Experience Economy

The on-premise beverage pros we spoke to agreed that more people now seek experiences when they go out, not just food and drinks. “In some areas, the dining experience alone isn’t enough to justify the trip, especially with ride-share prices being so high,” Fox says.

“It all comes down to the experience. I love the pop-ups popping up around town; their uniqueness and often nostalgic feel speak to me, and I believe that resonates with many people who want to go out as well.”

That’s why Fox is focusing on the guest experience. “I believe in nostalgia and plan to continue down this path of connecting amazing beverages with things I loved as a kid and still love today, he says. “For instance, “our Lord of the Rings menu was about sharing a great moment with people who want to relive memories of maybe being at a movie theater or opening Christmas gifts. In nostalgia, we can have fun, make it memorable again and be ourselves, and that to me feels like the direction to move in.”

Guests at Logan’s Roadhouse “tend to be very intentional about their dining experiences, seeking to enhance them with quality cocktails and beverages,” Hall says. “It appears they prioritize the overall experience and select drinks that complement their meals, whether it’s a carefully crafted cocktail, a fine glass of wine or other nonalcoholic options. This focus on experience rather than price reflects a desire for quality and enjoyment that goes beyond mere cost considerations.”

Looking ahead for the rest of the year, “we will certainly be attentive to the economy and the evolving drinking habits of our guests,” Hall adds. “Understanding that these trends are dynamic and ever changing, our approach will focus on creating new and exciting beverages that captivate our guests. By leaning into innovative flavors and trends, we aim to provide unique offerings that enhance their meal at Logan’s Roadhouse. Our commitment is to keep the beverage program vibrant and aligned with our guests’ preferences while adapting to the market landscape.”

Thompson Hospitality stays on top of the current data, trends, cost of goods and customer behaviors in the beverage industry, Jackson says. “We keep our finger on the pulse of what is happening so we can be agile and pivot to meet our guests needs.” The company aims to create a stellar experience for everyone who visits its restaurants, she adds. “We listen and we ask them often what they would like to see more of and how we can make their experience with us incredible.”

 Whatever happens this year, Fox says, “I’m going to try to have fun and hope for the best. I hope that as a society, we can find community and more ways to help us all stay afloat. If everything falls apart, maybe it won’t be so miserable to get a nice whiskey without some idiot buying it just to resell on the secondary market.”

Things are evolving, and it’s a strange time, but the habits remain, he notes. “People who want a good time are still going out, even if they aren’t ordering as many Daiquiris and Manhattans as before.”

What’s Next?

Technology will continue to play a major role as all three tiers adapt with modern times.

“In coming years, I see AI playing a vital role in our industry,” says Singh of Socialize. “Just the other day I came across a social media advertisement on this product called ‘Stellabots’. Store owners can now hire robots for $3 per hour. Although I’m not sure about the extent to which these bots can replace an actual employee, but it will be interesting to see.”

As the industry perseveres through this challenging year, the question remains: For how much longer will these economic troubles persist?

“I believe it may be the last of the more challenging years,” says Blevins, of Heaven Hill, “though the industry has more to go to see the light and negative trends have lasted longer than expected. The U.S. market is incredibly resilient, and many of our categories are healthy even if growth has been harder to come by after years of outperformance.”

“The recent uncertainty from tariffs, policy changes, the interest rate environment may have caused some consumers to retreat with a wait and see approach to spending these first few quarters,” he adds. “Some of this may settle with time and clarity with the recent legislative actions coming to a close.”

What will customers reach for on the retail shelves?

“I believe the consumer will continue to lean into spirits, seek innovation and premiumization, and will continue to respond to brands that meet them with a compelling value proposition,” Blevins says. “We may have to be sharper in communicating and educating about our products in relevant ways, but history shows our industry doesn’t stay down long when bouncing back from disruption.”

Kyle Swartz is editor of Beverage Dynamics. Reach him at kswartz@epgacceleration.com. Read his recent piece, The State of U.S. Whiskey at Kentucky Bourbon Fest 2025.

Krystina Skibo is the Trade Managing Editor at Beverage Dynamics. Reach her at kskibo@epgacceleration.com. Read her recent piece, Liquor Stores Make Room for Cannabis and CBD Beverages.

Melissa Dowling is editor of Cheers magazine, our on-premise sister publication. Contact her at mdowling@epgacceleration.com, and read her recent pieces, Our 2025 Wine Growth Brands Awards Winners.

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