The long-running trend towards drinking less but better in many mature markets, alongside a corresponding reduction in consumption of low-priced wine and spirits will see the global beverage alcohol market moderate in coming years.
There is a growing trend toward mindful drinking or complete abstinence, particularly among the Millennial cohort. Low- and no-alcohol cocktails are one of the more dynamic areas on the global marketplace. This moderation has the potential to slow consumption and won’t be welcomed by shareholders of these companies, even if the drinks companies won’t say it themselves. Health consciousness will remain a challenge: in a city such as London the number of health clubs continues to expand while the number of pubs contract.
Of course, it isn’t all about the emerging market economies. Distilled spirits in the US continue to gain share at the expense of beer, and wine volume is also showing sustained volume and value growth. The growth of the craft sector has also helped to fuel this growing interest in spirits. Product innovation, particularly flavour innovation, is helping to entice new demographics into spirits, particularly women. Spirits manufacturers have undoubtedly done a better job of building in aspirational appeal to its products and this is contributing the broad-based consumer trade-up within the US and, to a lesser extent, other developed markets.
Global spirits consumption will see a moderate rise of 36.5m cases by 2022, equivalent to a CAGR of 0.2%. While low priced spirits will see their share of the global spirits market fall to just over 50% over the forecast period, premium-and-above spirits will see their share jump from 4.7% to 7.4% during this time, according to the latest IWSR Forecast Report. However, standard brands will record the largest volume gain, growing by 46.2m cases.
A reduction in consumption in traditional consumer markets throughout the CIS will continue to negatively impact vodka’s overall development. With the CIS region accounting for a loss of almost 46m cases, global volumes are forecast to fall below 400m cases by 2022, for the first time in over two decades. Over 5m cases of growth across the Americas and over 2m cases of growth in Africa will do little to reverse the category’s global performance. In a positive development for the category, standard-and above vodka consumption is forecast to grow by 7.4m cases, at a steady CAGR of 1.6%.
US whiskey is forecast to be one of the fastest growing spirits categories over the forecast period, growing with a CAGR of 4.8%. The category is expected to see the largest volume increase among international spirits as global consumption jumps from 46.4m cases to 58.6m cases, an increase of 12.2m cases by 2022; 9.1m cases of this growth will stem from the US alone. However, a growing global interest in brown spirits, the popularity of major US whiskey brands and increased exploration of craft brands are fuelling growth of US whiskey across the majority of markets, and notably in Japan, Poland and Russia.
Following US whiskey, the gin category is forecast to see the second-largest volume gain across all international spirits by 2022. Much of the category’s 10m-case growth will stem from Europe as the gin-and-tonic revolution continues to expand its reach and draw new consumers to the category. Globally, across the price bands only value gin is forecast to decline, with all other price segments in growth. Premium-and-above brands are growing at a faster rate than the standard segment as premiumisation continues to characterise the category’s development.
Rum is expected to record moderate decline over the forecast period, shedding just 1.6m cases by 2022, at a CAGR of -0.2%. Mixed fortunes for the category will see growth in Europe, the CIS and the Americas countered by declines in Asia and Australasia. The category’s gradual and belated premiumisation is set to continue, with standard-and-below brands declining with a CAGR of -0.4%, while the premium-and-above segment is forecast to grow with a CAGR of 6.3%, an increase of 1.1m cases. Key growth markets for the category will be France, the Philippines, Colombia and Czech Republic.
Mixed drinks, beer & cider
Mixed drinks, beer and cider are all projected to make incremental gains throughout the forecast period, with respective CAGRs of 1.3%, 0.02% and 1.3% between 2017 and 2022. Mixed drinks will experience the largest volume gains, with an additional 25.9m cases consumed annually by 2022. Much of this growth will be driven by just three markets – Japan, the US and Mexico. The beer category will see little change in total volumes, despite significant decline in Asia, the CIS and North America. Favourable demographics and increased investment by industry leaders in markets such as Vietnam, Mexico and Brazil are expected to offset these losses. Cider will make further headway in its top three markets – the UK (+1.8m cases), South Africa (+6.9m cases) and the US (+3.7m cases). Emerging consumer interest in less established markets throughout the rest of Africa, Asia and the CIS will ensure the category’s continued development throughout the forecast period. Key growth markets will be Vietnam, Mexico, Brazil and India.
The still wine category is forecast to grow to 2.4bn cases as global consumption increases by over 35m cases by 2022. Growth across the Americas, the CIS and Africa will be offset by significant losses in traditional producer countries in North-West Europe, resulting in a moderate 0.3% CAGR over this time. Key growth markets are set to be the US, Russia and Brazil, while rapid expansion of the category in Angola will see it become the fourth largest-growing still wine market, increasing by over 5m cases with a CAGR of 19.8% between 2017 and 2022.
Sparkling wine is set to outperform the rest of the wine market as the category records a 1.6% CAGR across the forecast period. The resulting increase of 21m cases will see total volumes rise to 283m cases by 2022. Prosecco will account for over half of this volume as the segment’s global popularity increases, although growth will be largely driven by three markets – Italy, the UK and the US. By 2022, Italy will have overtaken Germany to become the largest sparkling wine market globally. Champagne is also expected to perform solidly with a CAGR of 1.5%, recording volume growth across all major regions.
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- Irish Whiskey
- Mixed Drinks
- US Whiskey