1. Premiumisation
As the world enters a period of growing economic fragility, those with financial stability – typically consumers with lower levels of debt and secure employment – will provide increasing opportunities for premium-and-above spirits and wine brand owners.
This is a notable shift from the situation during the Covid-19 pandemic, when Millennials led the global consumption bounce-back in 2021 in key markets such as the US, the UK, France, Germany and Brazil.
This phenomenon was driven by their higher levels of disposable income and embracing of more sophisticated home consumption occasions – but this trend is now likely to be reversed by economic instability, leaving younger consumers of legal drinking age with less-secure finances and employment prospects in the years ahead.
In China, for example, IWSR consumer data shows that there has been a shift in the alcohol drinking population, with fewer 18−24s, possibly connected to 20% unemployment among graduates.
2. China’s risk profile grows
The US spirits market is forecast to add the most value of any individual market over the next five years, led by the continued boom in premium tequila, bringing it almost level with China.
A proposed government cut-down on conspicuous drinking, falling consumption rates among younger demographics and lower GDP expectations could dampen China’s spirits market. However, China has not yet experienced a proper post-Covid boom. When it does take place, it could help balance sales in the short term.
India, meanwhile, is poised to make strong spirits gains thanks to its booming economy with rising consumer incomes, market recovery and growth post-pandemic and strong consumer confidence.
3. Pockets of growth for beer
The most promising growth opportunities for beer in the coming years will be in India, Latin America, and Africa. According to its data, IWSR expects global volumes to rise at a CAGR of 1% between 2021 and 2026, driven by Brazil, Mexico, South Africa, Colombia and India. Beer is also well-positioned to grow in a number of Southeast Asian markets.
In Brazil, growth has been driven by investments in the on-trade and ecommerce. In line with this trend, Brazil’s on-trade will contribute the highest volumes to the beer category across the top 20 beverage alcohol volume markets by 2026.
4. Sparkling wines shine
The total wine category is in volume decline, in line with historical trends. However, prosecco and champagne continue to grow.
A backlog of celebrations following the Covid-19 pandemic has helped to accelerate growth of sparkling wine in many markets. A change of attitude is also a key driver, with the drink moving away from just special occasions to ones that can be enjoyed in more relaxed settings and more frequently.
5. Premiumisation carries RTDs
IWSR data shows that global RTD value will rise at a CAGR of 7% between 2022 and 2026, and the shift to premium products ends a period of dramatic volume growth for the category, particularly hard seltzers in the US.
