Drinks market analysts IWSR has said that premium, or status, spirits (those priced above US$100 per bottle) are continuing to outperform the global spirits category and will be boosted further as the travel retail category returns and resurges.

IWSR data says that in 2022 more than 80 per cent of the value in the status spirits category was accounted for by high-end baijiu sales in China. If baijiu is excluded, the premium spirits category remains heavily reliant on China, the US and travel retail for more than two-thirds of its revenues.

Cognac and Scotch whisky continue to dominate the higher price tiers, with those two segments accounting for 78 per cent of global spirits sales by value. There has been some big gains made by agave spirits over the past few years, plus there are promising signs for Irish and US whiskies especially as the appetite for high-priced spirits gains momentum in new territories.

Guy Wolfe, Head of Status Spirits Insights, IWSR said: “We continue to be broadly optimistic about the future of status spirits, but expectations were scaled back during 2023, reflecting a less stable economic outlook globally.

“Travel retail share will grow as the channel continues to recover post-pandemic, and this resurgence is expected to shape category growth in the short term, providing a boost to those with a bias towards the channel, such as Cognac and blended Scotch.”

IWSR forecasts that global travel retail and the US market will spearhead status spirits growth, claiming that between 2022 and 2027 the duty free market will more than double, growing by 115 per cent. Over the same timeframe IWSR says that the US market will grow by 50 per cent and China will grow by just 10 per cent as affluent Chinese consumers start travelling again in greater numbers.

That would make travel retail the most lucrative market for status spirits by 2027, with a value share of more than 25 per cent, slightly ahead of China (24 per cent) and the US (23 per cent).

“In the US, the post-pandemic on-trade recovery has been less pronounced than expected, but consumers are instead upgrading to higher-end products to enhance at-home experiences. Tequila remains very much in fashion at a status level, and will take more share in the next five years,” said Adam Rogers, IWSR’s Research Director for North America.

The resurgence of travel retail will have a knock-on effect on category growth, boosting the fortunes of channel staples Cognac and blended Scotch. IWSR forecasts show that status-level blended Scotch revenues will grow by +83 per cent in absolute terms between 2022 and 2027, ahead of agave (+77 per cent), while Cognac’s sales are expected to rise by +28 per cent over the same timescale.

Wolfe added: “Nearly 60 per cent of high-end Cognac growth will come from GTR between 2022 and 2027. It’s expected that the channel will account for almost one-third of global status Cognac sales by 2027.

IWSR’s upbeat outlook illustrates the long-term potential of status spirits, despite immediate economic headwinds and a much tougher trading environment during 2023, impacted by inflation, and economic and geopolitical uncertainty.

Wolfe said: “The traditional maxim of ‘the higher the price point, the higher the growth’ is no longer a given, as auction prices start softening and some reserve prices go unmet. But, in the longer term, there is optimism that the direction of the market will continue upward.

“The pockets of growth we see among buyers and collectors in Tier 1 cities in developing markets indicate that the audience for high-end products is both growing and broadening. Middle-class expansion continues in China, India and neighbouring markets in the APAC region, increasing the pool of buyers.”

The IWSR said that in western markets, the tendency to buy ‘less but better’ is widely embedded and, coupled with the evolution of premium at-home drinking and entertaining, is encouraging consumers generally to upgrade their choices.

Andy Young

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

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