Global volumes of beverage alcohol were up by 3% in 2021 following losses of 6% the previous year.
Examining the industry through 160 countries around the world IWSR, the leading authority on data and analysis of the global beverage alcohol market, forecasts that Compound Annual Growth Rate will be just above 1% by volume for total beverage alcohol over the next five years as Covid restrictions continue easing.
“Our latest data shows encouraging signs for the continued recovery of beverage alcohol,” said Mark Meek, Chief Executive at IWSR, “The market rebounded far more quickly than expected and in value terms 2021 is now above 2019.
“Premiumisation continues unabated; beverage alcohol e-commerce also continues to grow although at a more moderate rate and the trend towards moderation continues with no/low-alcohol products seeing ongoing growth from a relatively low base.
“Despite the industry’s current and future challenges – ongoing supply-chain disruptions, inflation, war in Ukraine, travel retail’s slow return to pre-2019 levels and China’s zero-Covid policy – beverage alcohol is in a strong position.”
IWSR expects the global beverage alcohol market to surpass 2019 volumes within the next two years. While beer, cider and spirits have not yet reached 2019 volumes internationally, they’ve all met or surpassed 2019 levels in terms of value.
Wine has also surpassed 2019 value levels ‘though overall, global category volumes are expected to continue on a downward trajectory.
Beer rebounded strongly in several major markets once Covid restrictions ended and is forecast to add significant value to total beverage alcohol over the next five years.
Total spirits volume grew 3% in 2021 and value increased by 15%. This growth was driven primarily by consumers continuing to treat themselves to higher-end products while also becoming more comfortable with making cocktails at home during the pandemic Lockdowns – a learned behaviour that consumers can quickly pivot to when inflation hits.
IWSR forecasts that spirits volume will grow by 5% and value by 15% between 2021 and 2026.
Global volume growth will continue in almost all spirits sub-categories over the next five years including gin (up 24%), Cognac (up 23%) and rum (up 13%).
Total whisky, which commands about a quarter of all global spirits volume (excluding national ‘local’ spirits such as baijiu, soju and shochu), is expected to post volume growth of 23% and value growth of 29% over the next five years.
Growth will continue in whisky’s largest global markets – India and the US. By the end of this year In the US whisky will be bigger than vodka by volume – for the first time in almost two decades.
Last year saw higher than expected growth in agave-based spirits, which are forecast to deliver significant global value increases from 2021 to 2026, at 67%.
In the US – the world’s most valuable market for agave-based spirits – the category will become larger by dollar value than US whiskey by the end of this year.
In the UK, the category’s most valuable market in Europe, agave-based spirits are forecast to grow by more than 88% in value between 2021 and 2026 albeit from a relatively low base.
Premiumisation continues unabated for spirits and wines in the Premium-and-above price tier. Premium-plus spirits (priced at over $22.50) are forecast to grow by more than 50% in value in the Americas between 2021 and 2026. by over 40% in Africa and the Middle East, by over 20% in Europe and by just under 20% in Asia-Pacific.
Millennials led the global consumption bounce-back last year, being the generation least affected by the pandemic’s restrictions; these consumers (now aged 25 to 40) are more adventurous than older generations and with their significant spending power and focus on ‘less but better’ they tend to purchase more Premium products.
Millennials – and in some cases Gen Zs – are amongst the highest spenders on wine in markets such as Australia, Sweden, the US and the UK. It remains to be seen if this trend continues, with governments withdrawing Covid support packages and a probable increase in unemployment rates in many markets.
Alcohol market drivers
The underlying consumer trends that continue to provide tailwinds for the global beverage alcohol market include: ‘better for me’ consumer drivers such as moderation, ingredient quality and functional benefits; ‘better for the world’ values including sustainability and social equality and online interaction, both via e-commerce and social media as well as new ways to engage through Non-Fungible Tokens and the metaverse.
Alcohol e-commerce continued to grow globally last year (up 16% in value between 2020 and 2021) although this was at a slower rate than in 2020 (when it rose 45% in value between 2019 and 2020).
“Challenges remain, including whether bars and restaurants will continue to attract consumers who’ve grown comfortable with e-commerce and at-home consumption” added Mark Meek, “whether consumers will accept price increases on their preferred brands and whether inflation and supply-chain issues will lead to consumers down-trading and gravitating towards local rather than imported products.
“We’re living in an age of uncertainty and these are uncharted waters for the industry. However, as we’ve seen in previous crises, this is a very resilient industry sector.”