The U.S. spirits industry maintained its market share leadership over beer and wine for a third straight year in 2024, even as revenues slid, according to new data released Tuesday.

Spirits supplier sales in the U.S. fell 1.1% last year to a total of $37.2 billion, while volumes rose 1.1%, according to the annual U.S. economic report from the Distilled Spirits Council, a leading trade organization.

That is the first time revenue for the spirits category has fallen in more than two decades. Despite a return to more typical buying patterns after a pandemic boom, spirits revenues have grown an average 5.1% annually since 2019. Between 2003 and 2019, the average annual growth rate was 4.4%.

“While the spirits industry has proven to be resilient during tough times, it is certainly not immune to disruptive economic forces and marketplace challenges, and that was definitely the case in 2024,” said DISCUS President and CEO Chris Swonger.

Tequila and mezcal remained a bright spot for the year as the only spirits category showing sales growth, as revenue climbed 2.9% to $6.7 billion.

Premixed ready-to-drink cocktails grew double digits, but the category includes various types of mixed spirits including vodka, rum, whiskey and cordials.

Mexican spirits and beer have grown more popular with consumers for over two decades, and tequila and mezcal sales outpaced American whiskey for the first time in 2023.

The road ahead for the Mexico-based products remains uncertain. The Trump administration earlier this month delayed imposing tariffs on imports from Mexico — which would include distinctive products such as mezcal and tequila — by one month while tariff negotiations continue.

“These tariffs have wreaked havoc on our craft distilling community,” said Sonat Birnecker Hart, president and founder of KOVAL Distillery in Chicago. “Many craft distillers have expended great time, effort and resources to expand into international markets only to see their dreams shattered by tariffs that have absolutely nothing to do with our industry,” Hart added.

Swonger also noted that tariffs would be a “catastrophic blow” to distillers and only add to the pressure higher interest rates have put on the industry’s supply chain, as wholesalers and retailers continue to deplete inventory buildups and cautiously restock products.

“Consumers were contending with some of the highest prices and interest rates in decades, which put a strain on their wallets and forced many to reduce spending on little luxuries like distilled spirits,” said Swonger. 

“Our sales dipped slightly but consumers continued to choose spirits and enjoy a cocktail with family and friends,” he said.