How the credit crunch has influenced European drinking habits
IWSR figures show that alcohol consumption in Europe has yet to recover more than ten years on from the 2008 financial crisis, with wine and spirits being hit the hardest.
Source: IWSR
September 29, 2019
The upheaval that the credit crunch triggered has prompted a change in the drinking habits of consumers in the European Union. Many European consumers appear to have moved past their ‘pre-crash’ drinking rituals and adopted newer ones. Evolving trends are also an endorsement of the industry’s responsible drinking campaigns.
More than ten years on from the fiscal crisis that reformed financial markets across the world, IWSR figures show that alcohol consumption in the European Union has remained below pre-crisis levels ever since. Between 1998 and 2007, alcohol volumes increased by 4.2% but in the ten years since 2009, consumption has fallen nearly 1%.
In the post-crash era, many countries utilised tax on alcoholic drinks as a means of rebalancing the books, and this inevitably pushed demand downwards. Added to this, the collective tightening of consumer belts meant that luxuries like ‘drinking’ were cut back and the popularity of pubs, bars and restaurants was considerably lowered, restricting alcohol consumption further.
IWSR numbers show that the average price for wines & spirits in the EU have increased sharply in the last ten years. The average price of a bottle of wine has increased by 16.5% and a litre of spirits has jumped by +27%. These sharp price rises are an influential factor behind the drop in wines & spirits consumption of more than 6% since 2009.
Taxes based on ABV strength will hit wines and spirits harder than beer, and average beer price rises have, as a result, been less pronounced. This has encouraged a shift from wines & spirits to beer in the EU. While wines and spirits have dropped back, beer consumption has subsequently increased by a little over 1% since 2009. This shift to beer could also be a contributing factor to the decrease in wine and spirit consumption.
As the economy began to recover in the European Union, many consumers have chosen not to return to their previous drinking levels but opted to upgrade to better quality products instead.
Tax rises may have contributed to the average price rises for wines and spirits, but so has a change in purchasing habits to higher end products: premium and above wines had been falling in the EU before the fiscal crisis, but in the ten years afterwards they have enjoyed double digit growth. Premium plus spirits, meanwhile, had been progressing well; but after the crisis, growth rates have more than doubled. As the economy began to recover in the European Union, many consumers have chosen not to return to their previous drinking levels but opted to upgrade to better quality products instead.
No market is the same, and there are different dynamics at play in each European country, but overall trends point toward a post-crash change in consumer attitudes to alcohol; it was not until 2015 that we have seen a modest but sustained return to volume growth for the alcoholic drinks sector. Despite the return to growth, IWSR projections suggest that it will not be until 2021 that the EU’s consumption of alcohol will return to 2009’s level, and it will be some time after that before the market reaches 2007’s peak again.