What is the actual impact of the cost of living crisis on premium spirit demand and consumer downtrading behaviour?

Members indicate mixed signals: **IWSR projects 10% CAGR for super-premium rum to 2027** (based on 2021 data), and several members report optimism about prospects for super-premium as a category, positioning it as "luxury rather than dispensable extravagance."

However, a **Jefferies US spirits de-premiumisation tracker (August 2022)** provides granular category-level evidence of selective downtrading:

**Evidence of downtrading:** - **Vodka** — clear downtrading visible; **Grey Goose** dropped from top-10 growth contributor to top-10 drainer, whilst cheaper brands grow - **Rum** — some downtrading pressure, with high-end growth (e.g. **Diplomatico**, **Bumbu**) offset by competition from flavoured vodkas and RTDs

**Categories holding strong (no systemic downtrading):** - **Tequila** — **Casa** and **Don Julio** seeing no signs of slowing; premium momentum continues - **Whiskey/Scotch** — premium offerings (**Woodford**, **Makers**, **Basil Hayden's**, **Elijah Craig**, **Johnnie Walker**, single malts, **Jameson** premium variants) performing well; **Jim Beam** and **Famous** not benefitting from downtrading - **RTDs** — driving lion's share of industry growth alongside tequila - **Cognac** — weakness attributed to inventory shortages rather than downtrading to brandy

**Key caveat:** The Jefferies tracker notes it was "too soon" in August 2022 to see systemic downtrading, and acknowledges changing market conditions with weaker consumer confidence. Members warned that 2021 IWSR projections predated fuel price impacts and current disposable income squeeze—suggesting short-term hunkering down over winter is likely despite long-term premiumisation trends.

**On-trade risk:** House pouring deals are not being premiumised, and smaller suppliers face disadvantage versus **Diageo**, **Bacardi**, and **Pernod** at pour level.