Premiumisation has been a trend in beverage alcohol for over a decade and according to leading drinks market analysts IWSR, post-pandemic pent-up demand and price increases saw value growth reach historic highs in the first half of 2022.
Although first-half total volume did not match pre-pandemic levels, IWSR’s latest findings show that volumes in premium-and-above price bands grew seven per cent in H1 2022 compared to H1 2019, across the 20 key markets.
Overall, the first half of 2022 was relatively positive for the drinks industry, however, IWSR’s recent consumer survey in October this year, indicates that consumer confidence is starting to weaken in many markets.
Early signs of down-trading in many categories and a focus on reducing quantity but maintaining quality are just some of what the IWSR data is showing. The analysts also suggest that the shift to at-home consumption will continue and the on-premise is there to provide experience-led drinking occasions.
IWSR said: “IWSR consumer data shows early signs of downtrading and category switching, with consumers primarily moving away from high volume, lower value beverages, such as wine and beer, and moving into lower volume, higher value categories such as whisky, tequila, gin and Cognac.
“Pockets of down-trading are especially evident in markets with neutral-to-negative levels of consumer confidence. In the UK, there are signs of decreases in net spend across most categories within premium-and-below price bands.
“The US shows a significant minority of super-high spenders who continue to drive spend in super premium+ segments.
Adding: “In addition to pockets of down-trading, consumer response to tougher economic times appears to be reducing quantity but maintaining quality. Drivers for the moderation trend have subsequently evolved from mostly health concerns to economic ones.
“Interest in no/low alternatives is particularly high among millennials and those on higher incomes in the US, Canada, UK, Australia and China.”
In terms of the on-premise growth, IWSR said the short-term economic environment will see growth muted, however in most markets on-premise growth rates will be higher than off-premise as it continues to recover from the pandemic.
IWSR said: “Rising costs of living will increasingly drive consumers back towards at-home consumption; the on-trade will need to focus on delivering experiences in order to compete.
“Online alcohol sales will continue to grow, although at a more moderate rate following the boost from pandemic lockdowns (+34 per cent value growth in ecommerce, 2021-26, across key markets). This follows alcohol ecommerce value growth of +12 per cent in 2019 and almost +43 per cent in 2020 during the height of the pandemic.”