The global beverage alcohol market is navigating through a period of significant challenges and transformations.
According to comprehensive new data and forecasts from IWSR, the leading authority on beverage alcohol data and intelligence, the market is poised for a recovery starting in 2025 after experiencing declines in 2023 and continued challenges in 2024.
The data reveals that key markets such as India, China, and the United States will drive substantial value growth, adding an incremental USD 30 billion by 2028.
Current Market Performance
2023 marked a pivotal year for the beverage alcohol industry, with notable declines and mixed performances across different regions and categories:
- United States: For the first time in nearly 30 years, the volume of spirits sold declined by 2%, reflecting a broader trend where total beverage alcohol (TBA) volumes fell by 1% globally. However, the value rose by 2% in 2023 due to variable exchange rates and other factors.
- India: Emerged as a major growth market, with significant volume increases across most alcohol categories, except rum and wine. Scotch and US whiskies saw a notable 7% volume growth.
- China: Faced volume declines in several categories amid economic slowdown concerns. However, international spirits showed resilience with a 2% growth as the on-trade sector reopened.
Future Growth Projections
The anticipated recovery from 2025 onwards is expected to be modest, with both volume and value projected to grow at a compound annual growth rate (CAGR) of 1% between 2023 and 2028. India, China, and the US are set to be the primary value growth drivers, collectively adding USD 30 billion in incremental value at 2023 prices by 2028. Brazil and Mexico are also highlighted as significant contributors to future value growth.
Key Market Insights and Trends
- Premiumisation: Premiumisation trends decelerated, with core premium spirits and wine experiencing volume declines. However, super-premium-and-above segments displayed more resilience. Premium beer outperformed with a 2% volume increase and a 5% value gain, as consumers balanced affordability with quality.
- Spirits Market: Spirits had a flat growth year in 2023, but a modest resurgence is anticipated with a projected CAGR of 1% in volume and 2% in value (excluding national spirits) from 2023 to 2028. The agave spirits category, particularly tequila, is expected to drive substantial value growth, especially in the US market.
- Beer Market: Despite a 1% decline in global beer volumes in 2023, the category posted a 4% value increase. Countries like South Africa and Brazil are expected to be key growth markets with promising volume and value gains.
- Wine Market: The global wine market continued its structural decline in 2023 with a 4% volume drop. However, premium rosé wine remains a bright spot, gaining popularity in key markets like the US, UK, and Australia.
- Ready-to-Drink (RTD) Beverages: RTDs were the standout category in 2023, with a 2% volume growth and a 6% value increase. This trend is expected to continue with a CAGR of 3% for both volume and value through 2028.
- No-Alcohol Beverages: No-alcohol categories experienced impressive gains in 2023, with significant volume increases in no-alcohol beer, still/sparkling wine, and no-alcohol spirits. The moderation trend, driven by health and financial considerations, is expected to sustain this growth.
Navigating the Complex Macroeconomic and Regulatory Landscape
The beverage alcohol market is facing an increasingly complex macroeconomic and regulatory environment. Economic pressures such as inflation and rising living costs are impacting consumer spending habits. Additionally, regulatory pressures in key markets are intensifying, requiring brand owners to adapt their strategies accordingly.
Emily Neill, COO Research and Operations at IWSR, emphasizes the need for companies to reorient their global strategies to target new growth opportunities in developing markets. This includes expanding across categories and geographical footprints and continuing to innovate to meet evolving consumer preferences and regulatory demands.
Conclusion
The global beverage alcohol market is at a crossroads, with significant challenges and opportunities lying ahead. While the immediate future may see modest growth, the long-term prospects are buoyed by the dynamic and emerging markets of India, China, and the US. Brand owners must navigate an intricate landscape, balancing economic pressures with the need for innovation and strategic expansion to capitalize on the anticipated recovery and growth in the coming years.
Source: IWSR