Premiumisation redefined: from pricing to meaningful moments

The impact of premiumisation on beverage alcohol has been distorted by the effects of inflation in recent years, necessitating a rethink by the industry of what premiumisation really looks like today – and what consumers want from it.

Since 2022, global inflation has consistently outpaced the growth seen in IWSR’s global beverage alcohol price per litre (PPL) measure: in 2022, PPL declined by -1%, versus an +8% gain for global inflation^[1]; in 2023, PPL was up +3%, while inflation rose +6%; in 2024, PPL increased by +2%, but inflation was up +5%; and in 2025, PPL rose by +1%, versus a +4% gain for inflation.

“At the highest level, the industry’s premiumisation tailwind has in fact under-indexed versus inflation,” explains Luke Tegner, Global Head of Consulting at IWSR. “As a result, the idea that the value growth seen in 2022-25 is evidence of a successful premiumisation strategy needs to be revisited on a category, market and brand level, with inflation stripped out.”

In addition to this consumers’ willingness to stretch further and pay more for special bottles is increasingly limited – because there’s more choice on what to spend our money – both essentials and discretionary – and everything else now costs more as well.

Consumers’ view of what ‘premium’ looks like has also shifted, moving from ‘show it’ to ‘live it’. They will still pay more for a great experience, but they increasingly seek proper justification for trading up to a more expensive product.

Premiumisation is also affected by a K-shaped economy dynamic, while the very wealthy are still willing and able to pay for the most expensive prestige-plus products, cost remains the number one reason for lower-income consumers to drink less.

A category-level reality check

In 2025, the premium-and-above price tiers generally outperformed standard/value, but the strongest evidence of premiumisation occurred in RTDs and beer.

Premium-plus RTD volumes were up +15% on 2024^[2], while their value rose by +21%. In the US, super-premium RTD volumes recorded a +37% gain, but off a small base. Premium-plus beer’s +1% volume gain (alongside a +3% value increase) was one of the most encouraging data points in an otherwise difficult year for the category.

Wine held up better at higher price points relative to standard products, with premium-plus volumes down -2% in 2025, but value holding steady; however, the overall category remains in seemingly structural decline.

Premium-plus spirits volume and value (excluding national spirits) declined by -1% in 2025; including national spirits, volume fell -6% and value -7% – dragged down largely by big losses for baijiu in China.

“The premium-and-above decline for spirits is a sign that consumers are scrutinising expensive spirits lines more closely than they are for beer or RTDs,” says Tegner. “This might mean, for example, choosing a no-age-statement single malt from a known distillery over a 12-year-old expression.

“Overall, total beverage alcohol premium-plus value declined by -2% in 2025, but excluding national spirits it rose by +2%. So that headline decline is largely a China/baijiu distortion, not a wide-ranging premium-plus collapse.”

The picture looks different again at the on-trade level. According to IWSR’s on-trade value data, which provides pricing data in restaurants and bars for 20 markets, on-trade value fell -4% in 2025. Much of this, however, is again a China story; excluding China, the rest of the world looks far closer to flat. Still, contrary to the total market premium-plus resilience described above, on-trade premiumisation across the 20 markets is stalling, and by some measures reversing: Super-premium+ value fell hardest of all price bands, down -6%, compared with -3% for standard.

Pricing structure adds further nuance to this picture: lower-priced drinks are normally marked up more heavily than premium ones, with value-tier multipliers averaging 6.3x versus just 2.3x for super-premium+, according to IWSR’s On-Trade Value data.

Across the 20 markets, restaurants bore the brunt of the on-trade decline (-6%) while bars held up comparatively well (-2%), suggesting lower-ticket, bar-based occasions are proving more resilient than sit-down dining in the current environment.

RTDs’ price paradox

RTDs are interesting. They have the highest average price per serve^[3] globally. Above Wine, Spirits, Beer. Yet are the only major beverage alcohol category still experiencing growth,.

According to IWSR analysis, there is an average US$0.74 gap between the price of the average spirits serve and that of the average RTD serve. Even accounting for mixers, spirits are still typically cheaper per serve.

“This challenges the argument that volume decline of spirits or wine is purely a price sensitivity issue,” points out Tegner. “Consumers are looking for value in the truest sense, not cheapness. The outlay for an RTD may be say US$5, which means less money spent per purchase versus, for instance, US$20-30 for a bottle of spirits.”

How do RTDs justify this premium? Through a number of qualities that respond to current consumer needs, including convenience, flavour variety and flexibility, single-serve portions, occasion specificity and flexible ABV levels. And maybe they respond to a need for simple pleasures, that other categories don’t quite to the same extent.

Premiumisation: the long-term outlook

Many developed markets recorded overall beverage alcohol declines in 2025, but the prospects for premium-and-above growth over the next decade remain positive: IWSR is forecasting +6% growth in premium-plus servings between 2025 and 2035 in 16 key developed markets (including the US, UK, Germany, France, Japan and others).

Across 16 major developing markets (India, China, Mexico, Brazil and others), the predicted gains are broader-based, with premium-plus servings expected to expand by +13% over the same timescale.

“In developed markets, consumers are drinking less overall, but are also protecting their spend on products that deliver the most pleasure,” explains Tegner. “For developing markets, aspirational trading up is persisting in India, Mexico, Türkiye and Brazil. This is authentic premiumisation – not inflation in disguise.”

Where are the premium-plus growth opportunities?

In terms of the top premium-plus volume growth prospects between 2025 and 2030, the US market dominates, with opportunities such as tequila, no-alcohol still and sparkling wine, US whiskey, and cocktails and long drinks. Developing market highlights include tequila in Mexico, Scotch whisky in Türkiye and India, still wine in Brazil, and Indian whisky in India, where Indian Single Malt has now overtaken Scotch single malt in volume and value.

Wine-producing countries such as Spain, France, Italy and Australia are expected to see growth in premium-plus wine price tiers, as a result of what is described as “domestic pride” and the premiumisation of everyday wine occasions.

Global travel retail: the exception that proves the rule

Value is clearly outpacing volume in global travel retail (GTR), with the channel recording volume growth of +5% and a value gain of +7% in 2025, according to IWSR data.

Super-premium was the standout performer with a +10% volume increase, but ultra-premium and prestige both declined – indicating that GTR is experiencing “premiumisation with a ceiling”, where trading up is real, but has its limits.

Scotch whisky is the largest incremental value opportunity in GTR spirits to 2030 (with a projected RSV gain of more than US$400m), ahead of agave spirits, gin and Japanese whisky.

Categories recording strong volume growth in GTR in 2025 included Scotch (+10%), Japanese whisky (+37%) and agave spirits (+10%). However, Cognac declined by -11% and flavoured gin by -7%.

“It’s clear that GTR is experiencing genuine, rather than inflation-driven premiumisation; the GTR environment invites genuine premiumisation through dwell time, retail theatre or brand ambassadors giving a prompt to purchase,” explains Charlotte Reid, IWSR Senior Insights Manager – GTR. “The occasion is also different: in GTR, the consumer need is about buying something nice, different or unique for oneself or as a gift.”

Reframing what ‘premium’ means to consumers

Traditionally, the industry has defined premiumisation as growing value ahead of volume as part of a higher prices/margin strategy, encompassing, for instance, limited editions and luxury/prestige packaging, or celebrity backed brands that command a premium.

But the consumer’s definition of premiumisation is evolving to include meaningful moments and connection, delightful/selective occasions, and intentional and justifiable quality upgrades. This includes an appetite for true and measurable scarcity and provenance, rather than vague, manufactured and possibly ambiguous product claims, such as ‘limited edition’.

According to IWSR and WGSN, this represents a genuine divergence on what has gone before, meaning that brands that remain anchored to the old definition risk failing to identify the reasons why consumers trade up today.

“The task for the industry is to strip consumer price inflation out of the value growth experienced over the past four years, and then identify what is left of the premiumisation story,” says Tegner. “Brand owners then need to ask themselves: ‘is our premiumisation strategy a pricing story – or a genuine consumer experience story?’”

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[1] Source: Oxford Economics

[2] IWSR measures premium-plus RTDs across a defined subset of 14 markets: Argentina, Australia, Brazil, Canada, China, Germany, Japan, Mexico, Russia, South Africa, Spain, Ukraine, UK and US

[3] Serve sizes as measured by IWSR: beer/cider/RTDs: 330ml; wine: 150ml; spirits: 50ml