Total global alcohol consumption, led by increases in beer and Ready-To-Drink products, grew by 0.1% in volume and 3.6% in value in 2019 but losses in the months-long shutdown of bars and restaurants across the world this year have not been offset by upticks in off-sales and e-commerce. IWSR expects this to lead to double-digit declines in 2020 and estimates that this will take until 2024 to reach 2019 pre-Covid-19 levels.
In the UK and US, however, IWSR forecasts that pre-Covid-19 beverage alcohol volume levels likely won’t return until after 2024.
Global travel retail, severely affected by widespread travel restrictions, will see a particularly harsh decline in 2020 but is expected to reach pre-crisis levels by 2024.
“While we’re still assessing the full impact of the current Covid-19 situation, it’s very clear that the pandemic is set to cause a deeper and more long-lasting after-effect to the global drinks industry than anything we’ve experienced before,” said Mark Meek, Chief Executive of IWSR Drinks Market Analysis, the leading authority on the global beverage alcohol market, “Even the downturn following the 2008 financial crisis was less severe than what we’re seeing now.
“In many ways, 2019 was perhaps the last ‘normal’ year for the drinks industry.”
Additional findings from recently-published IWSR data include:
Beer expected to rebound better than wine and spirits
Globally, beer (with the exception of flavoured malt beverages like hard seltzers) grew 0.3% in volume and 2.2% in value in 2019, led particularly by increases in non-alcoholic beer (up 15.2% in volume vs 2018). Though the beer category has taken a hit in 2020 the outlook for continued growth of no-alcohol beer remains positive, with a forecast 8.1% Category Annual Growth Rate for 2019-2024. In total, beer is expected to reach 2019 volumes by 2024, rebounding better than wine and spirits.
Increasingly less tied to celebratory moments, sparkling wine outshines still wine
The long-term global decreases in wine consumption continued in 2019, posting a 1.1% volume decline (though value, at 0.6%, was slightly up).
In the key consuming region of North West Europe, wine volumes have seen slowing, showing CAGR of -1.6% between 2014 and 2019. In the US sales of wine account for 11% of overall alcohol consumption. And last year consumption declined by nearly 1% for the first time in over 25 years.
One bright spot in the category, however, is sparkling wine which posted growth of 1.4% in volume and 3.6% in value in 2019 and is forecast to rebound more strongly than still wine by 2024 as consumers increasingly shift to year-round consumption of sparklers.
Spirits drop 2.5% in 2019; whisky and gin on pace to recover fastest
Overall, total spirits dropped 2.5% in volume last year due in part to steep volume losses in baijiu (a spirit consumed almost exclusively in the huge Chinese market). However, excluding baijiu, global spirits volumes grew 1.0% in 2019.
No-alcohol spirits were the fastest-growing segment of the spirits market by volume in 2019, up 25.5%, though still small in terms of market share. 2018-2019 was the first time that IWSR began tracking the no-alcohol spirits category.
Amongst traditional spirits categories, gin was the fastest growing in 2019 (up 6.1%) but that growth has slowed somewhat with consumers beginning to show signs of “gin fatigue”, especially in some European markets (growth of gin globally was 9.6% in 2018).
Within the whisky category, Irish grew by 10.6% in volume, Japanese increased volumes by 10.3% and US whiskey posted sales growth of 5.8%. The IWSR forecasts that whisky and gin will likely rebound fastest to pre-Covid-19 levels.
Vodka volumes, however, are not expected to recover to 2019 levels until after 2024.
Ready-To-Drink poised for continued growth with hard seltzers trending strongly in US
For the third consecutive year Ready-To-Drink products were the fastest-growing beverage alcohol category in 2019, up 19.6% in volume and 18.8% in value. Even though RTDs only represent a small slice of the beverage alcohol market they contributed more than double the value growth to the industry than wine in 2019. Much of the interest and growth in this category is fuelled by the innovation and convenience of hard seltzers in the US which last year grew by over 200% in volume. The global RTD category is forecast to grow by 7.2% in volume CAGR 2019- 2024.
e-commerce, already growing pre-Covid-19, becomes even more important
Beverage alcohol e-commerce posted gains last year which should be welcome news to brands battling current challenges brought by Covid-19. Across the 16 key markets studied by the IWSR, all beverage alcohol categories in 2019 grew in value faster online versus the total market. Beer e-commerce value grew 14% (vs 1% growth for the total market value), wine grew 18% (vs total market decline of 1%) and spirits grew 15% (vs total market growth of 6%).
Based on an IWSR e-commerce study published last year the value of the channel at the time was US$21bn (across 10 core markets), almost twice that of global travel retail, pre-Covid-19.
“As restrictions ease, long-term recovery is expected to be slower than the initial bounce back – driving a ‘Nike Swoosh’ rebound shape,” added Mark Meek, “Like many other industries, it’s incredible how a few months of lockdown will result in several years of recovery but beverage alcohol has proven to be remarkably resilient in previous downturns and this should be no different.
“A strong focus on innovation, premiumisation and new routes to market such as e-commerce are all factors which will help contribute to the industry’s rebound and future growth.”