A Perfect Storm: 

Why the Spirited Drinks Industry Needs a Reset

By Christine & Dan Cooney

An Industry Under Pressure

The global alcohol industry is facing a convergence of pressures that has created what many insiders describe as a “perfect storm.” Once fueled by strong consumer demand, favorable economic conditions, and cultural enthusiasm, the market is now encountering a series of disruptive headwinds that threaten its long-term stability. From shifting drinking habits to unprecedented political and economic realities, the world of wine and spirits is being forced to confront challenges that can no longer be ignored.

Tariffs and the Cost Squeeze

One of the most immediate and painful issues are the recently imposed tariffs on imported goods. Most European wine and spirits importers to the United States now have a 15% tariff (tax) increase, which has disproportionately impacted small and medium-sized businesses, who already operate on thin margins. Producers, importers, and distributors are under severe strain as these increased costs squeeze profitability and limit competitiveness, especially for smaller companies. Far from protecting domestic markets, as some like to claim, these tariffs have weakened the industry’s structure at its most vulnerable points.

Currency Volatility and Market Disadvantage

Adding to the financial turbulence is the weakening of the U.S. dollar. On average, companies are now losing around 15% simply through currency exchange, a burden that multiplies across supply chains. When combined with tariffs, the financial strain becomes untenable. A product that once arrived competitively priced, now enters the market at an economic disadvantage to a consumer with ever-weakening spending power, even before it lands on store shelves.

Cultural Shifts and Changing Lifestyles

Cultural shifts further complicate the situation. CBD and THC beverage additives offer an alternative to traditional social drinking. Public health messaging, anti-alcohol campaigns, and legal cannabis options are becoming more prominent, challenging long-standing narratives and norms about the role of alcohol in one’s social life. This push toward moderation has accelerated the growth of no- and low-alcohol beverages, creating a fundamental confusion in consumer expectations. What was once a fringe movement has suddenly become commonplace, and the traditional drinks industry has struggled to keep pace.

Even historically strong categories are no longer immune. Cognac, a longtime symbol of craftsmanship, taste, and status, has lost some of its emotional luster with American consumers. Its relevance seems to have dimmed in a culture increasingly driven by novelty, perceived wellness, and politically biased experiences. The generational shift is undeniable: Gen Z, conscious of health and mental well-being, and raised with smart phones always at hand, drinks significantly less and socializes differently. Meanwhile, Baby Boomers, long the engine of premium spirits and social consumption have naturally been aging and cutting back. As both ends of the consumer base contract, the millennials in the middle alone cannot maintain the consumer growth that was once taken for granted.

Oversupply and the Battle for Relevance

At the same time, the world is producing more wine and spirits than it can consume. This global oversupply has led to fierce competition, discounting, and devaluation of products that once commanded prestige. Even well-known heritage brands are fighting to maintain relevance in an overcrowded, highly competitive marketplace.

Economic Strain and Shifting Priorities

All of this unfolds against the backdrop of an ever-challenging economy and an increasingly divided nation. Higher inflation continues to weaken purchasing power, forcing consumers to make tough choices. Premium alcohol, once seen as a small indulgence, is increasingly viewed as a luxury. And when wallets tighten, discretionary categories often feel the pain first.

Time for a True Reset

Taken together, these forces reveal an industry at a crossroads. The sales and distribution playbook that once guaranteed success, heritage, creative aspiration, and exclusivity, no longer aligns with today’s evolving and ever-changing priorities. This moment calls for more than minor adjustments; it demands a fundamental reset.

Reimagining the Future

Within every storm lies opportunity. The future of the spirited drinks sector will be defined not by how it resists change, but by how boldly it embraces it and adapts. The brands that thrive tomorrow will be those that listen closely to new generations, champion transparency and sustainability, and find creative ways to connect meaningfully with consumers’ values and lifestyles today.

There is room and reason for optimism. A renaissance in craft production, storytelling, and authenticity is already underway. Innovative producers are reimagining what “premium” means, emphasizing provenance, artistry, and purpose over presumptive status. The rise of mindful consumption doesn’t signal an end to the industry’s vitality; rather, it marks the beginning of a more thoughtful, and balanced era, one that celebrates quality, community, and genuine connection.

As industry veterans, who have experienced our own share of challenges, we strongly believe this current turbulence is not just a crisis to be feared, but a potential turning point to be seized. Those who adapt with courage and creativity will not only better their chances to weather the storm, but we are convinced they will help define the horizon beyond it. Cheers to what tomorrow might bring!