Whiskey and tequila prices drop for the holidays despite 2024 alcohol inflation

Prices for a festive tipple this holiday season are slightly higher than last year, but some spirits, such as whiskey and tequila, are seeing price drops.

According to data from the U.S. Bureau of Labor Statistics whiskey for at-home consumption is nearly 2 percent cheaper than a year ago, while beer served in bars and restaurants is about 4 percent more expensive.

Drinking at home remains cheaper than going out, and beer remains the most affordable option compared to spirits.

Federal data shows alcohol prices have risen nearly 15 percent from 2019 to mid-2024, compared to a 23 percent increase in overall consumer prices. Alcohol costs rose 1.8 percent in November compared to a year earlier, while inflation for all goods increased 2.7 percent.

Sluggish alcohol sales have contributed to these modest price increases. “It’s been a pretty rough year for alcohol sales,” Marten Lodewijks – president of the U.S. division of beverage data firm IWSR – told NBC.

Tequila, often viewed as a high-end splurge, has become more affordable due to falling agave prices. In 2022, agave peaked at 32 Mexican pesos per kilogram at $1.60, but by February 2024, it had dropped to just 5 pesos per kilogram at $0.30. This decline has allowed tequila producers to offer high-quality brands at competitive prices.

Meanwhile, whiskey prices have also declined slightly for at-home consumption, making it the only category to see outright price drops. Whiskey distillers have faced softer demand in key markets like California and Florida, which may have encouraged more efficient production to offset costs.

While retail liquor prices have remained relatively stable, beer costs at bars and restaurants have climbed. Data suggests this indicates brewers are passing on higher costs to customers and focusing on premium products.

The beer industry also faces long-standing challenges, such as the decline in craft beer sales after its boom in the 2010s. According to data from transaction processor Toast, beer remains the cheapest and most popular alcoholic beverage in restaurants, accounting for more than half of alcohol sales in full-service settings this year.

Adding to industry challenges, the Federal Trade Commission (FTC) recently accused a major liquor distributor Southern Glazer’s Wine and Spirits, the largest U.S. liquor distributor, of discriminatory pricing practices that disadvantage small and independent retailers.

According to Reuters, the lawsuit alleges that Southern Glazer’s violated the Robinson-Patman Act by offering exclusive discounts and rebates to large chains such as Costco, Kroger, and Total Wine & More while denying similar benefits to smaller stores.

The FTC’s decision to pursue this case reflects a broader initiative to address market abuses and ensure a level playing field for businesses of all sizes. By invoking the Robinson-Patman Act, the commission aims to prevent suppliers from favoring large retailers through discriminatory pricing, thereby protecting the interests of smaller competitors and consumers alike.

Beyond price shifts, changing consumer habits are reshaping the alcohol market. Data shows that there’s growing interest in nonalcoholic options and a decline in casual drinking among younger consumers. Canned cocktails remain a bright spot, with manufacturers heavily promoting them as a convenient alternative to traditional spirits.