The 2023 Beverage Industry Year in Review. And What Smart Founders Are Doing to Get Ahead of 2024.

Every year has its defining moments. But 2023 had more of them, and they landed harder, than most years in recent memory.

A single influencer partnership upended the best-selling beer brand in America for two decades and redistributed hundreds of millions of dollars in market share in a matter of months. Cognac, which had spent three years riding a post-pandemic demand wave, came off that wave fast enough to send the stocks of the companies that dominate the category down double digits in a single quarter. An Indian single malt walked away with best in show at a global whisky competition. Spirits-based RTDs quietly compounded into one of the most durable growth stories in the entire category while hard seltzer continued its structural retreat.

None of these things were entirely surprising to people who had been reading the data carefully. All of them were more consequential than most of the industry was prepared for.

Here is what 2023 actually taught us, and what smart founders are doing to position for 2024.

The Bud Light Story Was Never Just About Bud Light

The April 2023 backlash against Bud Light following a partnership with transgender influencer Dylan Mulvaney became the most analyzed brand crisis in beverage alcohol history. By August, US revenue at AB InBev had fallen more than 10 percent. Operating profit dropped nearly 30 percent. Ball Corporation, the world's largest can manufacturer, cited its overexposure to Bud Light as a primary driver of a 9.9 percent volume decline in its North and Central America business in the third quarter.

The surface story was about cultural politics and consumer boycotts. The deeper story was about what the crisis revealed that was already true.

Bud Light had held the number one position in American beer for over two decades through ubiquity, price, and comfortable familiarity. When that comfortable neutrality was disrupted, there was not enough brand equity underneath to hold the consumer. NBWA CEO Craig Purser stood in front of beer distributors in October and called it a five-alarm fire, noting that the industry had lost 2.2 million of its youngest legal drinking age consumers in just five years, with 21 to 24 year olds reporting beer in the last 30 days dropping from 46 percent in 2018 to 38 percent.

Modelo Especial, which had been building genuine consumer loyalty for years before Bud Light faltered, stepped into that vacuum and held an 8.7 percent share of total retail beer sales for the four weeks ended July 1, becoming the best-selling beer in America for the second consecutive month. Molson Coors posted record quarterly sales. Coors Light and Miller Lite together outsold Bud Light by 50 percent in Q2.

The lesson is not about boycotts. It is about the difference between market share that is earned and market share that is circumstantial. Brands built on genuine consumer identity hold under pressure. Brands built on default convenience do not.

Cognac's Hangover Was the Most Honest Signal of the Year

If Bud Light was the year's most dramatic brand story, Cognac was the year's most instructive market signal.

LVMH reported Wines and Spirits down 14 percent in Q3, with Cognac and Spirits specifically down 20 percent against a consensus estimate of negative 7 percent. Remy Cointreau was cut. The Financial Times ran a detailed piece in November quoting the UGVC with export volume declines of 18.9 percent between August 2022 and July 2023. Half of all Cognac in the United States is consumed by African Americans, a demographic disproportionately affected by the cost-of-living crisis. And in the clubs, tequila was taking over.

The deeper issue was structural. The pandemic had created a three-year super-cycle across premium spirits. Consumers at home with extra savings traded up. Distributors built inventory to service demand that felt durable. When the economic environment tightened and consumer discretionary spending compressed, the hangover arrived faster than most models had anticipated.

Wholesale inventory ratios across total beverage alcohol were running at 1.65 to 1.68 times sales through Q3, 21 to 24 percent above the seven-year average. Sell-in was running below sell-out across the category as the trade worked down excess stock. The digestion cycle will clear. But it compressed growth rates for some of the strongest brands in the world and exposed the difference between demand that was structurally earned and demand that was circumstantially delivered by an unusual three-year environment.

For founders building in 2024, the Cognac story is a direct warning about what happens when your growth projections are anchored to conditions that are not repeatable.

The RTD Category Finished Rotating. Now It Is Maturing.

The hard seltzer boom that defined the late 2010s and early 2020s completed its structural reset in 2023. Malt-based seltzer's share of the total RTD segment dropped from a 58 percent peak in 2021 toward 37 percent by 2026 projections. IWSR projected the overall US RTD market growing at just 1 percent CAGR through 2027.

But the category itself was not declining. It was clarifying.

Spirits-based RTDs grew 47 percent in 2023 through the October data period, according to Bump Williams Consulting. High Noon, up 48 percent in dollar sales year to date, was the fifth-largest RTD brand family in the United States. Jack Daniel's and Coca-Cola was up 172 percent. Fresca Mixed grew 1,860 percent from a smaller base. The Truly Vodka Soda entered the top 25 with 3,084 percent growth.

The message from the data was consistent throughout the year: the consumer had not left the RTD occasion. They had migrated toward products with a credible spirits pedigree, a premium positioning, and a genuine occasion story. The brands that understood this early were compounding. The brands that doubled down on malt were continuing to lose.

Twisted Tea remained the standout in the beer RTD segment, up 37 percent and gaining 2.4 share points. Its durable performance is a case study in what brand identity looks like in the RTD space: a specific occasion, a specific consumer, a flavor truth that does not chase trends. Every founder building in RTD should study what Twisted Tea has done, not what Truly did.

Indian Single Malt Signaled Where the Next Category Disruption Is Coming

In November, Indri Diwali Collectors Edition 2023 won best in show at the Whiskies of the World Awards. Diageo India's chief innovation officer described Indian single malt as being at the same inflection point Japanese whisky occupied two decades ago.

That parallel deserves to be taken seriously. Japanese whisky went from regional curiosity to globally sought-after collectible in less than twenty years. Indian single malt has structural ingredients that may accelerate that trajectory: genuine production craft, a massive home market, a large and affluent diaspora in Western markets, and now credible international competition wins that give the global whisky community a reason to seek it out.

The Scotch industry is watching. The bourbon industry should be too. Category leadership in premium spirits is not permanent, and 2023 produced clear evidence that the map is still being drawn.

The Broader Normalization Story Nobody Wanted to Say Out Loud

Underneath each of these specific stories was a single macro theme that ran through 2023 in every category: the end of the COVID super-cycle.

The WSWA's SipSource Q1 2023 report showed spirits down 5.1 percent and wine down 7.4 percent for the first quarter, the first declines for both categories in recent memory. Premium spirits on-premise sales fell 3.3 percent by volume in the 52 weeks through early September, per CGA by NIQ. Value and mid-range spirits recorded the biggest drops at 8.6 and 6.4 percent respectively, while ultra-premium actually grew 3.5 percent.

That last data point is the one that matters most for founders. The normalization was not across the board. It was specific to the middle of the market, which had benefited most from pandemic-era trading up and was now giving back the most as consumers returned to more deliberate spending decisions. The top of the market held. The brands with genuine consumer relationships held.

The brands that were priced and positioned in the middle, relying on the category tailwind to carry them without the underlying brand equity to sustain them in a tightening environment, were the ones exposed.

What 2024 Actually Requires

The conversations we are having at Liquid Opportunities heading into 2024 are different from the ones we were having two years ago. Two years ago, founders were asking how to capture category growth. Now the question is how to build something durable in a normalizing environment.

The answers are the same answers they have always been. They are just more consequential now because the forgiving environment of the super-cycle is over.

Identity before distribution. A brand that knows exactly who it is for and what choosing it communicates to the person who chooses it has pricing power, consumer loyalty, and resilience when the market tightens. A brand that is still defining itself through distribution velocity does not.

Premium or genuine. The middle of the market is where the softness lives. Brands that earned their premium positioning through product quality and authentic cultural relevance are holding. Brands that performed premium without the underlying justification are being found out.

Demand before scale. The Modelo story, the Twisted Tea story, and the Indian single malt story all share the same structure. Build real consumer pull first. Scale into that pull rather than ahead of it. The brands that arrived in markets with demand already attached outperformed the brands that bought distribution and waited for demand to follow.

2023 was the year the beverage industry got its first clear look at what the post-pandemic market actually looks like. The founders who read that look honestly and built toward the durable version of the opportunity rather than the circumstantial one are the ones who will look back at 2024 as the year they separated from the field.