On-Trade Revival: Wine Trends and Market Analytics 2024

After years of disruption caused by the global pandemic and economic uncertainty, the on-trade channel is making a noteworthy comeback in key markets such as China, Germany, Italy, Mexico, the UK, and the US.

This revival is sparking optimism for the global beverage alcohol market. According to IWSR’s Bevtrac Wave 2 2024, a comprehensive longitudinal tracker of consumer behavior across 15 significant markets, there is a year-on-year increase in on-trade consumption during recent drinking occasions in several regions.

Signs of Recovery in On-Trade Consumption

The on-trade channel, which includes bars, restaurants, and similar venues, has historically been a critical driver of growth in the beverage alcohol market. Ivana Mitic, Senior Insights Manager for Bevtrac at IWSR, highlights that while the on-trade’s slowdown due to price increases and changing consumer habits posed challenges, its gradual revival is a much-needed boost for the industry. Consumers are returning to these venues with a renewed focus on premium experiences and diverse offerings, laying the groundwork for future growth.

One notable demographic driving this trend is American Millennials. This group shows a heightened propensity to dine and drink out as their financial circumstances improve, with Scotch, liqueurs, and sparkling wines emerging as key beneficiaries of their spending habits.

Moderation and Premiumisation Shape Market Dynamics

While the on-trade channel shows promising growth, the overall beverage alcohol market continues to face challenges from evolving consumer preferences. Moderation is a growing trend, with many drinkers opting to reduce their consumption rather than abstain entirely. In markets like Europe, consumers are the most likely to report cutting back. However, in China and India, moderation is less prevalent.

The IWSR report notes a shift towards lighter drinking behaviors across Europe, North America, and the Asia-Pacific (APAC) region, where light drinkers—characterized by low frequency and intensity of consumption—now form the largest group.

Emerging Markets as Growth Engines

Economic pressures continue to tighten alcohol budgets in developed markets, but emerging regions such as India, Brazil, and South Africa are showing robust growth. In the first half of 2024, India and Brazil experienced a 4% increase in total beverage alcohol (TBA) volumes compared to 2023, while South Africa posted a 5% rise. These gains are attributed to factors such as an increasingly confident urban middle class in India and improving economic sentiment in Brazil and South Africa.

No-Alcohol and Premium Categories on the Rise

The no-alcohol segment is also gaining traction globally. Over a quarter of TBA drinkers reported trying no-alcohol products in the past six months, with North America, India, and China leading the way in consumption growth. In Europe, countries like Germany and Spain have the highest penetration rates, with 40% of consumers engaging with no-alcohol offerings. However, the category remains price-sensitive, as increased competition has led to a trend of down-trading among consumers.

Meanwhile, premiumization persists as a defining trend in the industry. High-income consumers continue to drive demand for premium-and-above categories despite economic challenges. For example, single malt Scotch and Cognac are gaining traction in India, where average spending per bottle has increased by over 20% year-on-year.

Outlook for the Beverage Alcohol Market

The beverage alcohol market is navigating a period of profound transformation. As consumer habits evolve, understanding the interplay between moderation, premiumization, and no-alcohol trends is essential for adapting to an increasingly competitive environment. The cautious recovery of the on-trade channel and its renewed focus on premium and diversified experiences offer hope for sustainable growth. However, brands must remain agile to align with shifting consumer preferences and economic realities.

In summary, while challenges remain, the revival of the on-trade channel and the resilience of emerging markets are bright spots for the global beverage alcohol market. As the industry adapts to these changes, it is poised for a future marked by innovation, diversity, and a renewed focus on consumer-centric experiences.

Source: IWSR