Global spending on alcohol drops
The Spirits Business
By Alice Brooker
April 13, 2023
New research has found alcohol spending is falling in many markets, yet spirits consumption was consistent with whisky coming out on top.
Global beverage alcohol data and insights specialist IWSR Drinks Market Analysis tracked 17 key markets, including Australia, Brazil, Canada, India, the US and the UK.
The findings showed that consumers are cutting back on their alcohol expenditure, as the price of necessities such as meat and fish increases.
This trend was discovered as most pronounced in the UK, as inflation has been rising at double-digit rates, but also seen in Germany, Australia, France and Canada.
In the latter two countries, the decision not to purchase alcohol was found to be the second most-popular strategy for saving money.
“To allay the impact of the cost-of-living crisis, beverage alcohol consumers are becoming more selective in how and when they spend on alcohol,” said Richard Halstead, IWSR’s chief operating officer consumer insights.
“After the pandemic, at-home drinking is still preferred, but there is a strong motivation to go out, just with less frequency and more mindfulness in alcohol consumption and spending.”
Consumer momentum for whisky remains more positive than other categories, however this is slower in Australia due to ‘adverse economic and tax conditions’.
Spirits momentum was found to be consistent across most markets.
Outside of whisky, the Tequila and mezcal category was found to be the top spirits performer.
Cognac retained momentum at a global level, with notable growth in its consumption rate in China, most likely connected with the reopening of China’s on-trade as Covid-19 restrictions came to an end.
Bitters and spirit apéritifs were seen to be performing well at a global level, led by the US and China.
Premium consumption growing
Premium consumption behaviour is continuing in many markets, the study found, but growing at a more ‘moderate rate’ than previously.
Premiumisation for certain categories is strongest in markets where more consumer confidence prevails, such as for Tequila and mezcal in the US and Mexico, and Champagne in China.
Among alcohol categories, spirits were especially shown to have an increase in ‘acceptable price ceiling’, with price ceilings having risen for most whiskies, as well as categories including gin, vodka, and pre-mixed drinks.
Yet, the price floor is lower than the ‘previous wave’ (based on consumer surveys conducted in October 2022), for categories including vodka, Irish whiskey, beer, Champagne, and still wine.
Also, the on-trade was found to be ‘holding up’ in Europe and the Americas, while the relaxation of Covid-19 restrictions in China, Japan, and Taiwan have boosted on-trade visiting intentions.
Across key markets, Millennials and Gen Z of legal drinking age are driving on-trade visits.
IWSR recently found that e-commerce spirits sales in the US are expected to rise by a compound annual growth rate (CAGR) of 17% in value between 2021 and 2026, driven by the expansion of the omnichannel.