Global beverage alcohol value grew by 12 per cent last year, making up for losses in 2020 driven by COVID-19, data from IWSR reveals.
And in another sign of the resilience of the global beverage alcohol market – according to IWSR Drinks Market Analysis – total alcohol volume grew by three per cent in 2021 after losses of six per cent the year prior.
The data reinforces alcohol’s status as an affordable luxury, IWSR says.
Examining the industry from across 160 countries throughout the world, IWSR forecasts compound annual volume growth of just above one per cent for total beverage alcohol over the next five years, as COVID-19 restrictions continue to ease.
Mark Meek, CEO at IWSR, says the alcohol market has rebounded more quickly than expected.
“Our latest data shows encouraging signs for the continued recovery of beverage alcohol.”
“In value terms, 2021 is now above 2019. Premiumisation continues unabated; beverage alcohol ecommerce also continues to grow, although at a more moderate rate. The trend towards moderation continues, with no- and 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,” Meek added.
Beverage alcohol market on the road to full recovery
According to IWSR, the global beverage alcohol market is expected to surpass 2019 volumes within the next two years. While beer, cider and international spirits have not yet reached 2019 volumes, they have all met or surpassed 2019 levels in value terms.
Wine has also surpassed 2019 value levels, though overall global category volumes are expected to continue on a downward trajectory.
Beer bounces back
IWSR says beer rebounded strongly in a number of major markets where COVID-19 restrictions had eased and is forecast to add “significant value” to total beverage alcohol over the next five years. Combined, the Asia-Pacific region and Africa are expected to add close to US$20 billion to the beer category by 2026.
Ongoing volume growth is tipped for Brazil, while the “strong rebound” in Mexico and Colombia is expected to continue. A more modest recovery in China has been forecast.
The outlook for the spirits category
According to IWSR, total spirits volume grew 3 per cent in 2021, and value increased by 15 per cent. The growth is said to be driven by consumers continuing to treat themselves to higher-end products, while also becoming more comfortable with making cocktails at home during lockdowns. IWSR says that spirits volume will grow by 5 per cent and value by 15 per cent from 2021 to 2026.
Total whisk(e)y is forecast to post volume growth of +23% and value growth of +29% over the next five years. Growth will continue in whisk(e)y’s two largest global markets, India and the US.
In India alone, IWSR expects whisk(e)y to see volume growth of 23 per cent. By the end of this year, whisk(e)y in the US may well be bigger than vodka by volume for the first time in almost two decades.
IWSR says global volume growth will continue in almost all other spirits sub-categories over the next five years, including gin (24 per cent), cognac (23 per cent) and rum (13 per cent).
Wine industry growth drivers identified
IWSR notes globall still wine volumes were down 2 per cent last year, but value was up by 5 per cent. This is attributed to the ‘less but better’ trend.
Gains in wine were identified in the sparkling category as consumers returned to celebratory occasions in full force. Champagne posted volume growth of 24 per cent last year, and other sparkling wines were up 7.5 per cent.
Over the next five years, the global wine category is forecast by IWSR to continue on its trajectory of long-term volume decline by 1 per cent, but will see value gains of 5 per cent.
Premiumisation in spirits and wines is expected to continue
IWSR predicts premium-plus spirits (priced at above US$22.50) will grow by more than 50 per cent in value in the Americas from 2021 to 2026. Premium-plus spirits are also expected to grow in Africa by more than 40 per cent, the Middle East by more than 20 per cent, over 20 per cent in Europe and just under 20 per cent in Asia-Pacific.
According to IWSR, the single largest driver of beverage alcohol value over the next five years will be the growth of premium-and-above national spirits in Asia-Pacific.
Globally, wine in the premium-and-above price band (US$10 and above) grew by 12 per cent in value last year, and is forecast to increase in value by 16 per cent from 2021 to 2026.
Post-pandemic prospects for RTD
RTDs have performed strongly during the pandemic, increasing in volume by 14 per cent in 2021, on top of 26 per cent growth 2020, according to IWSR.
By volume, the category is now about a third of the size of the global spirits category, as well as the global wine category. Globally, IWSR expects RTD products to grow by 44 per cent in volume and 51 per cent in value over the next five years.
This takes in the world’s largest RTD markets, the US and Japan, where the RTD category is expected to expand in volume by more than 30 per cent over the next five years, driven particularly by flavoured alcoholic beverages (FABs).
In the US, propelled by the popularity of hard seltzers, the RTD category saw continued volume growth at 15 per cent last year, according to IWSR. RTD value growth is expected to outpace volume growth in the US as the category matures and higher priced spirit-based RTDs gain traction in the market.
IWSR says hard seltzer volumes in the US are expected to overtake those of still wine within the next two years.
NOLO continues strong growth
While coming off a low base, the no- and low-alcohol category grew by over 10 per cent last year, and will continue to grow over the next five years, according to IWSR.
Notable growth came last year from the no-alcohol spirits segment in the UK, where volume increased by over 80 per cent after tripling in size in 2020.
IWSR predicts no-alcohol beer will add the most volume to the global no- and low-alcohol segment over the next five years.
The consumer trends driving future consumption
IWSR says millennials led the global consumption bounce-back last year, being the generation least affected by the pandemic’s restrictions. These consumers, now aged between 25 and 40, are said to hold significant spending power and 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 been seen if this trend continues, with governments withdrawing COVID-19 support packages.
Expected to provide tailwinds for the global beverage alcohol market are ‘better for me’ consumer drivers such as moderation and ingredient quality, and ‘better for the world’ values including sustainability and social equality.
So too, online interaction via ecommerce and social media, as well as news ways to engage through NFTs and the metaverse, are expected to boost the alcohol market.
On the whole, ecommerce continued its growth last year, up by 16 per cent, but at a slower rate than in 2020, according to IWSR.
Key takeaways
“Challenges remain, including whether bars and restaurants will continue to attract consumers who have grown comfortable with ecommerce and at-home consumption; 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,” Meek said.
“We’re living in an age of uncertainty, and these are uncharted waters for the industry. However, as we have seen in previous crises, this is a very resilient industry sector.”
NOTE: All value growth figures in this article are given at variable currency rates. At constant currency, the value growth rates show that global beverage alcohol value grew by nine per cent last year to reach about US$1.17 trillion, making up for COVID-19 impacted value losses of two per cent in 2020.