In 2024, mature beverage alcohol markets are seeing dominant trends of moderation and downtrading, while brighter prospects are emerging in developing markets and among US Millennials.
These trends are highlighted in IWSR's Bevtrac 2024 Wave 1 consumer insights tracking, which compares consumer sentiment and attitudes to beverage alcohol in the first half of 2024 across 15 key markets.
Nastya Timofeeva, Senior Consumer Insights Manager at IWSR, notes a growing focus on health, at-home consumption, and economic pressures as key drivers behind the downtrading trend. The combination of health concerns and tighter household budgets has led many consumers to view alcohol as a luxury, prompting them to cut back on their alcohol spending and maintain these new habits.
Timofeeva comments, "This fundamental structural shift to moderation will continue, with volumes remaining under pressure throughout 2024. However, improving consumer finances are likely to reignite the 'less but better' premiumisation trend that has characterized the past five years."
Mature Markets Subdued
In established beverage alcohol markets, particularly in Europe, there is a notable recovery in sentiment and financial confidence year-on-year. However, recalled spending on alcohol remains subdued, reflecting the growing impact of the moderation trend. Consumers in these markets are increasingly focused on wellbeing, health benefits, and reducing alcohol intake.
The New Normal: Moderation
The moderation behaviors that emerged during the Covid-19 pandemic are now becoming entrenched. Many consumers are prioritizing general wellbeing and reducing their alcohol consumption. Bevtrac data indicates that 50% of those moderating their consumption are driven by wellbeing priorities, 30% by economic factors, and 20% by health concerns. This has led to a reduction in the frequency, intensity, and volume of alcohol consumption.
Shrinking Repertoires and Lighter Consumption
For the first time, Bevtrac data reveals a shrinking of drinking repertoires among younger LDA+ consumers, particularly in Brazil, South Africa, and the UK. This phenomenon is accompanied by the growth of light consumption of full-strength alcohol categories, especially spirits, outside the US market. In the US, Millennials have returned to on-trade and socializing, contributing to lighter consumption trends.
No-Alcohol Products Gain Popularity
The trend towards moderation is accelerating the adoption of no-alcohol products, especially no-alcohol beer. No-alcohol is the only category showing net positive recalled consumption in H1 2024 across the 15 Bevtrac markets. The number of no-alcohol drinkers has increased in the UK, India, China, and the US, with Millennials and higher-income consumers driving this trend.
IWSR market data forecasts a +5% Volume CAGR 2023-28 increase for all no-alcohol categories across the T15 markets, with beer growing by +6%, wine by +5%, and spirits by +10%.
US Millennials Spending Again
US Millennials are showing a significant improvement in financial confidence, leading to increased participation in spirits, particularly premium whiskies and no-alcohol options. This age cohort is returning to bars and restaurants, reviving their social habits and contributing to the popularity of higher-priced whiskies.
Contrasting Trends in India and China
Economic concerns continue to impact consumer confidence in China and Taiwan, with de-stocking and downtrading being prominent. In contrast, India is experiencing strong momentum in total beverage alcohol volumes, with premiumisation evident across most categories. IWSR market data forecasts robust volume and value growth in India, with premium+ TBA growing by a 2023-28 CAGR of +8% in volume and +9% in value.
Super-Premium Drives Premiumisation Evolution
The long-running premiumisation trend is expected to continue, with products at the higher end of the premium-and-above price segment showing greater resilience. Over the past 12 months, the share of drinkers consuming super-premium has risen in the US and China, although there were slight reductions in the UK and Taiwan. Financially secure consumers in the US and China are more likely to spend at super-premium levels, although even these consumers in China are showing a decline in overall alcohol spending.
Conclusion
The trends of moderation and downtrading are shaping the beverage alcohol markets in 2024. While mature markets continue to experience subdued spending, developing markets and key demographics like US Millennials are showing more promising trends. The increasing popularity of no-alcohol products and the ongoing premiumisation trend highlight the evolving consumer preferences in the global beverage alcohol industry.
Source: IWSR