The US beverage alcohol industry faces its most dramatic transformation in decades. Consumer participation hit record lows, major suppliers are slashing forecasts and workforces, yet clear winners emerge: non-alcoholic beverages up 22%, RTDs becoming the growth engine, and hemp-derived THC drinks creating new competition. We break down October 2025 market data to understand what's really happening.

THE CRISIS

• Only 54% of US adults drink alcohol (record low)
• Beer volumes down -4.5% YTD; wine sales back to 2011 levels
• Diageo cut forecast to +0.9%; Pernod Ricard to -10.4%
• Brown-Forman cut 650 jobs; Molson Coors cutting 400 roles
• Kentucky bourbon barrels at all-time high: 16.1 million (oversupply crisis)
• Primary driver: Cost-of-living pressure, not just wellness trends

THE WINNERS

Non-Alcoholic: $925M in sales, +22% YoY (Athletic Brewing +57%)

Mexican Imports: Constellation hit 20.56% beer share; Pacifico +25%

Spirit RTDs: Only growth category in 2024; now 8% of total servings (vs 4% in 2019). Boston Beer's Sun Cruiser hit ~3M cases in Q3; Surfside grew 362% and is suing AB InBev over trade dress

Hemp/THC Beverages: Minnesota stores report THC drinks offsetting wine/beer declines, especially with women 25-40 replacing weeknight alcohol

REGULATORY CHAOS

• 86% of federal TTB furloughed - label approvals suspended during peak season
• Previous shutdown created 5-month backlogs
• Congress may close Farm Bill loophole on hemp-derived THC beverages
• California DTC spirits pilot starts Jan 1, 2026

2026 OUTLOOK

Efficiency Over Growth: Heritage Distilling going asset-light; Eagle Rock using AI for +9% gross profit

Supply Challenges: California grape crush at 2.9M tons (20-year low), expected to drop another 400k tons

Innovation Focus: Higher ABV RTDs (12%+), Mexican import extensions, non-alc expansion

KEY TAKEAWAY

The industry is bifurcating: value brands and alternatives (non-alc, RTDs, THC) win while the premium middle collapses. The question: Is this permanent decline or transformation into "beverage" with alcohol as just one functional option?

Companies Mentioned: Diageo, Pernod Ricard, Brown-Forman, Molson Coors, AB InBev, Constellation Brands, Boston Beer, Athletic Brewing, Surfside, RNDC

Data Sources: Circana, Gallup, NABCA, IWSR, NIQ, Jefferies