The Alcohol Industry Has a $3.8 Billion Can Problem

The alcohol industry spent decades convincing us that serious booze comes in glass. Heavy glass, preferably. A bottle that makes an authoritative thud when you set it on the table. A cork. Maybe a wooden box nobody asked for. Possibly a small booklet explaining that the barley was once serenaded by a retired Scottish fisherman. And after all that work, the fastest-moving part of American spirits now comes with a pull tab.

That is the alcohol industry’s $3.8 billion can problem. Not because canned cocktails are failing, quite the opposite: they’re becoming uncomfortably successful. According to the Distilled Spirits Council, premixed cocktails including spirits-based ready-to-drink drinks generated $3.8 billion in US supplier sales during 2025, up 16.4% in a single year. Meanwhile overall US spirits sales fell 2.2%. Vodka fell 3%. Tequila and mezcal fell 4.1%. American whiskey fell 0.9%. The thing in the brightly colored can by the swimming pool? Up 16.4%.

And that poses a rather awkward question for an industry that has spent the last decade talking endlessly about premiumization. What if the future of alcohol isn’t a more expensive bottle? What if it’s a smaller container?

This thing has become enormous

One caveat first. The $3.8 billion figure covers premixed cocktails including spirits RTDs; it isn’t literally $3.8 billion of aluminum cans. RTDs also show up in bottles, pouches and, in the case of BuzzBallz, something resembling a Christmas bauble that has made several poor life choices. But canned cocktails sit right in the middle of the revolution, and the speed of the change is extraordinary. US sales of premixed cocktails have climbed from around $489 million in 2020 to $3.8 billion last year. That is not a little consumer trend. That is a category being rebuilt in real time.

The $3.8 billion RTD business is already about three-quarters the size of American whiskey’s roughly $5.1 billion in annual US supplier revenue, which makes it the fourth-largest spirits category by revenue, behind vodka, tequila and mezcal, and American whiskey. And there’s an even more revealing number. Total US beverage-alcohol volume fell 5% in 2025, according to IWSR: beer down 6%, wine down 6%, spirits down 4%, and even RTDs as a whole slipping 1%. But buried inside that is the line everyone in the boardroom should have highlighted in yellow: spirits-based RTDs grew 14%, while malt-based RTDs fell 5%.

So this isn’t simply another White Claw moment. The category itself is evolving. People increasingly want an actual cocktail, tequila, vodka, rum, whiskey, without acquiring a cocktail shaker, three bottles of ingredients and an irritating friend called Sebastian who insists you’re using the wrong ice.

We spent years being told Gen Z had stopped drinking

This has also exposed how lazy some of the discussion around younger drinkers has become. The popular story runs like this: Gen Z discovered Pilates, bought an Oura Ring and collectively decided alcohol was over. Except the data are considerably messier. Gallup reported that only 54% of American adults say they drink alcohol, matching the record low set the year before, having fallen from 62% in 2023 to 58% in 2024 and 54% in 2025 before holding there. More than half of Americans now also believe that one or two drinks a day is bad for your health. That is clearly a serious structural problem for alcohol.

But it doesn’t mean young people have joined a monastery. IWSR’s latest research across 15 major markets found alcohol participation among legal-drinking-age Gen Z had actually risen from 66% three years ago to 74% in 2026, with Millennials still the highest at 81%. What’s changing isn’t simply whether people drink. It’s how: less ceremony, less commitment, more portability, more flavor, more portion control, and more occasions where opening a $60 bottle makes absolutely no sense. Which is, more or less, the entire sales pitch for a can.

The bottle has become inconvenient

Think about how the traditional spirits industry actually sells alcohol. Buy a 750ml bottle. Take it home. Store it. Buy mixers. Buy limes. Buy ice. Find a glass. Measure something. Discover the tonic went flat in February. Make the drink. Then spend three months staring at 40% of a bottle of coconut rum trying to work out which member of your family brought it into the house. A canned cocktail removes nearly all of that. Cold. Open. Drink. Done. It’s alcohol redesigned for the convenience economy, and consumers are building habits around it.

IWSR says RTDs accounted for about 6% of US beverage-alcohol servings in 2019, and 13% by 2024, more than doubling their share of the glass in five years. In 2025, 55% of American RTD drinkers described themselves as frequent consumers, at least once a week, up from 44% just two years earlier, and 57% of US RTD consumers are Millennials or Gen Z. This isn’t someone buying a novelty margarita once at an airport. It’s becoming behavior.

And beer should probably be more worried than whiskey

Here’s the bit I found most interesting. IWSR asked American RTD drinkers what they would have consumed before they started drinking RTDs. Among Gen Z, 40% said beer. Among Millennials, 39%. Gen X, 44%. That changes the whole conversation. RTDs aren’t necessarily persuading millions of abstainers to start drinking; they’re fighting for existing drinking occasions. The barbecue. The beach. The golf course. The concert. The hotel room. The train. The fridge after work. The party where nobody wants to hire a bartender. Those were historically glorious beer occasions, and now somebody can crack a tequila soda instead. No wonder the shelves suddenly look like a graphic designer swallowed a Pantone book.

The embarrassing part is who spotted it

You’d assume the enormous global spirits companies built this future. They own the vodka. They own the tequila. They have the distributors and hundreds of millions in marketing budget and entire departments capable of producing a 91-page deck explaining why people enjoy lime. But some of the biggest RTD winners came from elsewhere. High Noon became an American monster under Gallo, at around 24 million nine-liter cases in 2025. Surfside leapt to roughly 10.5 million cases, up about 124% in a year. And BuzzBallz, created by Merrilee Kick from a master’s-degree project in 2009, grew big enough that Sazerac bought the company in 2024.

That is perhaps the most embarrassing thing about the boom. The big drinks companies weren’t incapable of making vodka lemonade. They were culturally optimized to sell something else entirely: premium bottles, prestige, heritage, age statements, craft, origin, higher price points. The can asks for almost the opposite skill set, speed, flavor, convenience, packaging, retail visibility, constant innovation, and a consumer who may have zero interest in hearing what year your distillery was founded.

Diageo has noticed

Very much so. Diageo’s chief executive is trying to turn around one of the world’s biggest drinks companies while the traditional spirits market struggles, and canned cocktails are now part of the plan. Diageo reported more than 10% organic net-sales growth in US RTDs during the first half of fiscal 2026, driven by Smirnoff RTDs and Casamigos Margaritas, while simultaneously taking a machete to costs, cutting close to 2,000 jobs over its latest financial year and targeting $1 billion in savings, with investment steered toward areas including Guinness and canned cocktails. There is something wonderfully symbolic about that. The company behind Johnnie Walker, Don Julio, Casamigos and Tanqueray is hunting for growth partly inside a ring-pull. Twenty years of premiumization just met the refrigerator aisle.

But there’s another problem hidden inside the can

Alcohol regulation in America was not designed for this. A 5% vodka soda and a 5% malt-based hard seltzer can look identical in the hand: same-size can, similar strength, similar calories, similar occasion. Yet because one begins life as distilled spirits and the other doesn’t, they can face wildly different tax and distribution treatment. DISCUS has therefore been lobbying states to give low-ABV spirits RTDs access to more grocery and convenience stores, and lower tax treatment. The beer industry, unsurprisingly, thinks this is a dreadful idea, with the Brewers Association arguing that beer-like treatment for spirits-based cans would hand an advantage to the big global spirits players and erode state tax revenue. This is not a minor footnote: distribution decides whether your tequila soda sits in 1,500 liquor stores or tens of thousands of supermarkets and gas stations. In RTDs, shelf access is strategy. The next great alcohol war might not be vodka versus tequila. It could be over which refrigerator they’re legally allowed to sit inside.

Oh, and then there’s the actual can

Because apparently this story wasn’t complicated enough, the beverage industry has also been wrestling with sharply higher aluminum costs and a shifting US tariff regime. The Brewers Association said earlier this year that the aluminum price component known as the Midwest Premium had jumped roughly 240% over the previous year, noting that while US cans contain a lot of recycled domestic aluminum, the country still leans on imported primary aluminum for the rest. Molson Coors later warned that commodity inflation could knock about $125 million off its 2026 profit, aluminum a major factor. So yes: the alcohol industry’s can problem is now also an actual can problem. You couldn’t write it.

Not cheaper, necessarily. Not weaker. Not less sophisticated. Just easier.

Premiumization hasn’t died. But it has met its opposite.

I don’t think $100 tequila is disappearing. Fine whiskey isn’t disappearing. Champagne certainly isn’t disappearing, unless I’ve made some catastrophic personal miscalculation. There will always be occasions when people want theatre: a beautiful bottle, a cork, a bartender, a proper glass, something expensive enough that you pretend to detect sandalwood. But alcohol spent years assuming the direction of travel was relentlessly upward, better bottle, higher price, more prestige, more provenance, more luxury. The RTD boom points to another direction entirely. Easier.

That may be the most important word in alcohol right now. Not cheaper, necessarily. Not weaker. Not less sophisticated. Just easier. A single serving rather than a bottle. A recognizable margarita rather than three ingredients and a technique. A drink that travels, that works at a stadium, that fits beside the Diet Coke, that asks almost nothing of you except the ability to operate a ring-pull. And in a year when Americans drank less alcohol overall, that proposition grew 14% in spirits-based RTDs.

That’s why the industry’s $3.8 billion can problem isn’t really about cans. It’s about what the can represents. For generations the alcohol business sold us bottles and told us the liquid inside was the product. Consumers may now be telling them that convenience is part of the product too, and judging by the numbers, they’re saying it rather loudly. The industry that spent a decade perfecting the ceremony of the pour may have to learn the harder trick: making the whole thing effortless.

Written by Vim, Editor of 12×75.