Beer Marketer's Insights - Fourth Category Now Nearly 1/10 of US Alcohol Consumption and Still Going Strong, Bernstein Finds

The wide-ranging "fourth category" now accounts for nearly a tenth of total US alcohol consumption, per a fascinating look from Bernstein published this morn. Defined here as flavored malt/sugar-based drinks (FMBs & hard seltzers) plus ready-to-drink wine and spirits, this growing collection of products sits at the "intersection of" beer, wine and spirits. And it's "uniquely large in the USA," notes Bernstein, "with the country accounting for almost half of the global RTD consumption." t's anything but static, however, morphing many times over a roughly 30-yr stretch to reach ~9% of total US alc consumption, Bernstein estimates. Over half as big as wine consumption (16%), tho a long way to go to catch beer (38%) and full-strength spirits (37%). Still, 4th category doubled from 4 share of total alcohol in 2019 to just under 8 share in 2024, up another point or so in 2025, report shows. It's consistently delivered high-single to low-double-digit growth over the past decade with gains "mainly" coming from beer and wine. Over the short-to-medium term, Bernstein believes the US 4th category "will continue to grow strongly, driven primarily by spirits-based RTDs (and to a lesser extent wine)."Spirits RTDs Grabbed the Growth Baton, Nearing 30 Share of 4th Category Ready-to-drink spirits "have taken the baton" as the primary growth driver in recent yrs. But the rapidly shifting fourth category is still mostly made up of malt bevs. FMBs/malt seltzers account for ~64% of total 4th category consumption in 2025, Bernstein estimates, compared to spirits-based products at 28% and wine RTDs at just 8%. "In our view, in this category, most consumers don't really care what the alcohol base is, as long as the product delivers the required functional benefit," notes Bernstein. And with over 100 new brands joining the fold this yr, "we suspect it is the bright colors of the drinks, packaging and price point that attract the consumers more than the alcohol base."Does Pace of Change Favor Private Cos? Mark Anthony Leads; Gallo, Sazerac Making Inroads At a company level, Mark Anthony continues to lead the way in flavor, followed by Boston Beer. But "more recently these two have run out of steam" as Gallo and Sazerac "have led the charge," report highlights, adding that the required pace of innovation, shorter life cycles and associated volatility have lent "an edge" to private companies thus far. Among large, publicly traded bev alc cos, ABI is "so far best positioned to benefit from the growth," Bernstein believes. Boston Beer also seeing "upside" from Sun Cruiser, tho Twisted/Truly yet to stabilize. Aside from those cos and Diageo's Smirnoff Ice, biggest beer and spirits suppliers are "largely notable by their absence." Crossover RTDs from full-strength spirits "have had very little impact," Bernstein adds, "accounting for less than 5% of the fourth category, with malt-based Smirnoff Ice approx another 5%."Incremental Waves of Innovation Create an "Apparently Inexorable" Tide From Seagram's Escapes and Zima back in the '90s to Mike's Hard, Smirnoff Ice, Four Loko, Bud Light Ritas and onto White Claw, Truly, Twisted Tea and RTDs, 4th category growth "has come in incremental waves of innovation. Each wave has crashed further up the beach, with the inward progress of the tide apparently inexorable," wrote Bernstein. The fourth category's morphing makeup has led to a "ceaseless internal rotation of winners & losers." (Editor's Note: INSIGHTS has written extensively about successive waves of premiumization that continue to reshape the US beer biz, specifically examining the fourth category in last year's RTD Report.)

Fourth Category Now Nearly 1/10 of US Alcohol Consumption and Still Going Strong, Bernstein Finds

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