For the better part of two decades, premiumisation has been the beverage alcohol industry's favourite growth story: get consumers to drink less, but drink better, and watch margins climb even as volumes flatten.
It's been the strategic north star for wine, spirits, beer and RTD makers alike. But new analysis from IWSR suggests that story needs a serious rewrite — because a large share of the "premiumisation gains" recorded since 2022 may actually just be inflation wearing a nicer label.
The premiumisation illusion: inflation did the heavy lifting
The core problem is one of measurement. IWSR tracks a global price-per-litre (PPL) figure across beverage alcohol as a proxy for premiumisation — the logic being that if consumers are paying more per litre, they must be trading up to pricier products. But when that PPL growth is set against global inflation over the same period, the picture flips. Since 2022, inflation has outpaced PPL growth in every single year: alcohol pricing actually declined in 2022 even as inflation surged, and in each year since, price-per-litre gains have consistently trailed the general cost of living.
In other words, much of what the industry has been calling premiumisation was, in reality, just prices rising in line with everything else — not consumers deliberately choosing more expensive bottles. As IWSR's Global Head of Consulting, Luke Tegner, puts it, the industry's premiumisation "tailwind" has actually under-indexed against inflation, meaning brand owners need to strip inflation out of their numbers before declaring premiumisation a success.
This matters enormously for anyone building a commercial strategy around premiumisation, because it means headline value growth over the past four years is not, by itself, proof that shoppers are trading up. Layered on top of this is a simple affordability squeeze: with everyday costs rising across the board, consumers have less room to stretch for a "special" bottle, because both essential and discretionary spending are competing for the same shrinking pool of disposable income.
From "show it" to "live it": a changing definition of premium
Beyond the pricing distortion, there's a deeper shift happening in what premium even means to consumers. The old model of premiumisation was built around visible status markers — limited editions, luxury packaging, celebrity-endorsed labels, a price tag that signalled prestige. IWSR describes this as a "show it" mentality.
Today's drinkers are moving toward a "live it" mentality instead. They're still willing to spend more, but only when they can clearly justify why. A special bottle now needs to earn its premium through a genuine experience, a meaningful occasion, or a quality upgrade that actually feels tangible — not simply through packaging or a scarcity claim that may or may not be real. Consumers increasingly want authentic scarcity and traceable provenance, and are growing sceptical of vague marketing language like "limited edition" that isn't backed up by anything concrete.
This is compounded by what IWSR calls a K-shaped economic divide: at the top end, wealthy consumers remain happy to pay for genuinely prestige and ultra-premium products, largely undisturbed by the broader squeeze. But for lower-income consumers, cost has become the single biggest reason to cut back on drinking altogether. The middle ground — the everyday "treat yourself" premium purchase — is where the real strategic uncertainty lies.
Winners and losers: a category-by-category reality check
Not every category is experiencing this shift equally. When IWSR breaks the picture down by category for 2025, some clear divergences emerge:
- RTDs are the standout. Premium-plus RTD volumes climbed 15% year-on-year, with value up 21%. In the US specifically, the super-premium RTD segment posted a striking 37% volume gain, albeit from a small starting base.
- Beer also delivered a genuine bright spot in an otherwise tough year, with premium-plus volumes up 1% and value up 3%.
- Wine held up relatively well at the top end — premium-plus volumes dipped just 2% while value stayed flat — even as the category overall continues its structural decline.
- Spirits told a more troubling story. Premium-plus spirits (excluding national spirits like baijiu) saw volume and value both slip 1%. Including national spirits, the picture worsens sharply: volume down 6% and value down 7%, largely dragged down by steep declines in Chinese baijiu.
Strip out the China/baijiu effect, though, and the total picture for premium-plus beverage alcohol value actually turns positive, up 2% rather than the reported headline decline of 2%. That's an important nuance: the story isn't "premiumisation is collapsing everywhere," it's "one specific market distortion is dragging the average down."
Tegner suggests the spirits softness reflects consumers scrutinising expensive bottles more carefully than they scrutinise a beer or an RTD purchase — trading down within a category, for instance opting for a no-age-statement single malt from a trusted distillery rather than paying up for a 12-year-old expression.
The on-trade squeeze
The picture darkens further when you look at restaurants and bars. IWSR's on-trade value data across 20 markets shows on-trade value fell 4% in 2025 — and again, China accounts for much of that drop, with the rest of the world sitting closer to flat once it's excluded.
More striking is that on-trade premiumisation, rather than holding firm, appears to be stalling and even reversing in some markets: super-premium-plus value fell 6%, a steeper decline than the 3% drop seen in standard-tier drinks. Restaurants took the brunt of the pain, down 6%, while bars proved more resilient at down just 2% — suggesting lower-cost, casual bar occasions are weathering the downturn better than formal sit-down dining.
There's also a pricing-structure wrinkle worth noting: cheaper drinks tend to carry far higher markups than premium ones in the on-trade. IWSR's data shows value-tier drinks are marked up an average of 6.3 times their base cost, compared with just 2.3 times for super-premium-plus products — meaning venues have historically leaned on cheaper drinks for margin, not premium ones.
RTDs' curious price paradox
One of the more counterintuitive findings concerns RTDs. Despite having the highest average price per serve of any major category — ahead of wine, spirits and beer — RTDs are the only major beverage alcohol category still growing. IWSR calculates there's roughly a 74-cent gap between the average price of a spirits serve and an RTD serve, meaning spirits remain cheaper per serve even accounting for mixers.
That undercuts the simple narrative that consumers are turning away from spirits and wine purely because of price sensitivity. As Tegner frames it, what's really happening is that consumers are chasing value in the broadest sense — not just cheapness. A $5 RTD might represent a smaller overall outlay than a $20-30 bottle of spirits, even if its per-serve price is technically higher. RTDs earn their premium through convenience, flavour variety, portability, single-serve portioning, occasion-specific formats and flexible ABV — qualities that speak directly to how people want to drink today.
The long game: premiumisation still has real legs
Despite the near-term wobbles, IWSR's longer-range forecasts remain upbeat. Premium-plus servings across 16 major developed markets — including the US, UK, Germany, France and Japan — are forecast to grow 6% between 2025 and 2035. In 16 key developing markets, including India, China, Mexico and Brazil, that growth is expected to be even stronger, at 13% over the same period.
The dynamics differ by market type. In developed markets, people are drinking less overall, but protecting the spend they do make on products delivering genuine pleasure. In developing markets, aspirational trading-up continues in countries like India, Mexico, Türkiye and Brazil — a pattern IWSR characterises as authentic premiumisation rather than inflation dressed up as strategy.
Specific growth pockets worth watching through 2030 include tequila, no-alcohol wine (still and sparkling), US whiskey, and cocktails/ready-to-drink long drinks in the US; tequila in Mexico; Scotch whisky in Türkiye and India; still wine in Brazil; and Indian whisky in India, where domestically produced Indian single malt has now overtaken Scotch single malt on both volume and value — a notable milestone for national pride and category development. Traditional wine-producing nations such as Spain, France, Italy and Australia are also expected to see premium-plus wine growth, driven by domestic pride and the premiumisation of everyday wine-drinking occasions.
Travel retail: premiumisation with a ceiling
Global travel retail (GTR) stands out as something of an exception, with value growth clearly outpacing volume growth: +7% value versus +5% volume in 2025. Super-premium products led the charge with a 10% volume increase, but ultra-premium and prestige tiers both declined — a pattern IWSR describes as "premiumisation with a ceiling," where trading up is real but bounded.
Scotch whisky represents the single largest incremental value opportunity within GTR spirits through 2030, ahead of agave spirits, gin and Japanese whisky. In 2025, Scotch (+10%), Japanese whisky (+37%) and agave spirits (+10%) all posted strong volume growth in this channel, while Cognac (-11%) and flavoured gin (-7%) fell back.
IWSR's Charlotte Reid points to the unique nature of the travel-retail environment — extended dwell time, retail theatre, and brand ambassadors on hand to prompt purchases — as creating genuinely different conditions for premiumisation than the everyday on- or off-trade. The purchase motivation is different too: shoppers in airports are often buying something special for themselves or as a gift, rather than making a routine purchase decision.
What this means for brand owners
The strategic takeaway is blunt: brands built purely on the old definition of premiumisation — bigger price tags, flashier packaging, celebrity names — are at risk of missing where consumer demand is actually heading. The new premiumisation currency is meaningful moments, justifiable quality, and provenance that can actually be verified, not just claimed.
IWSR frames the central question every brand owner now needs to ask honestly: strip out inflation from the last four years of value growth, and what's left? Is the remaining growth a genuine consumer experience story, or was it a pricing story all along? Getting that answer right — category by category, market by market, brand by brand — will determine which players are actually positioned to capture premiumisation's next decade of growth, and which have simply been riding a wave of rising prices that's now running out of runway.
Source: IWSR