Glass of whisky on the rocks

Leading alcohol market analysts The IWSR is predicting significant opportunities will exist for premiumisation in key categories in the COVID-19 pandemic.

The company said that markets with high vaccination rates and substantial financial support structures will thrive in the short to medium term, but that brand owners should plan for a two-speed recovery.

IWSR Research Director Jose Luis Hermoso, said: “Covid restrictions have led consumers to appreciate the value of at-home treating through the purchase of premium products. The pandemic has put a lot of things into perspective, and ‘carpe diem’ is back on the agenda.”

IWSR expects premium-and-above price bands for spirits to more than regain 2020’s volume losses during 2021, in key markets, although less developed nations will be impacted harder.

“In many developing countries, mainstream premiumisation – trading up from local spirits to imported, for example, or from value to standard price bands – has suffered a blow and will take time to resume,” said Hermoso.

“But even in these economies, there is a small segment of the population less affected by economic hardship through Covid-19 who could embrace the very high end at even a faster pace than before,”

In terms of categories that can expect to bounce back strongly, IWSR director Alastair Smith, said Malt Scotch whisky and Cognac remain best placed to benefit from a greater appetite for high-end products, but other categories are closing in fast.

“Scotch and Cognac have been the prime drivers of international premium-plus consumption for years, but this has changed now, and that change will accelerate as many more whiskies – Irish, US and international – focus on the premium-plus space,” Smith said.

Hermoso added:  “On-trend categories such as tequila and mezcal could be the ones to watch. Agave-based spirits have trebled in volume in the prestige-and-above segments in the past five years, and we forecast them to grow at a CAGR of close to +40 per cent over the next five years.

“Rum also has potential – a lot of work is going into establishing dedicated high-end rum brands without lower-priced brand line extensions.”

In wine, consumption of premium-and-above products is not predicted to return to 2019 levels until 2022, with premium sparkling wines expected to see long-term recovery and growth as the on-premise re-opens and large-scale celebrations and weddings return.

Andy Young

Andy joined Intermedia as Editor of TheShout in 2015, writing news on a daily basis and also writing features for National Liquor News. Now Managing Editor of both TheShout and Bars and Clubs.

Leave a comment

Your email address will not be published. Required fields are marked *