The value of global alcoholic beverages in 2021 grew by more than 12% to reach US$ 1.17 trillion. The alcobev sector saw total alcohol volume grow by more than 3% in the same year, after losses of 6% the year before.
The data, which reinforces alcohol’s resilience and status as an affordable luxury, examined the industry from across 160 countries throughout the world. IWSR forecasts compound annual volume growth of just above 1% for total beverage alcohol over the next 5 years, as Covid-19-induced restrictions continue to ease.
According to IWSR CEO Mark Meek, “Our latest data shows encouraging signs for the continued recovery of beverage alcohol. The market rebounded far more quickly than expected and, in value terms, 2021 is now above 2019.
“Premiumisation continues unabated; beverage alcohol e-commerce also continues to grow, although at a more moderate rate; and the trend towards moderation continues, with no/low-alcohol products seeing ongoing growth from a relatively low base,” he added.
Despite the industry’s current and future challenges – supply chain disruptions, inflation, war in Ukraine, travel retail’s slow recovery, and China’s zero-Covid policy – beverage alcohol is in a strong position.
That growth will continue in whiskey’s largest global markets: India and the US. The whiskey category in India will see volume growth of 23% (2021–26). In the US, by the end of this year, whiskey will be bigger than vodka by volume.
Added to this, global volume growth will also continue in almost all other spirits sub-categories over the next 5 years, including gin (24%), Cognac (23%) and rum (13%).
The IWSR analysis reminded that premiumisation continues unabated for spirits and wines in the premium-and-above price tier. Premium-plus spirits (priced US$ 22.50 and above per unit) are forecast to grow by more than 50% in value in the Americas; 40% in Africa and West Asia; 20% in Europe, and just under 20% in the Asia-Pacific region.
For the spirits category, the growth was driven primarily by consumers continuing to treat themselves to higher-end products, while also becoming more comfortable with making cocktails at home during pandemic lockdowns.
The latter is a learned behaviour that, IWSR believes, consumers can quickly pivot to when inflation hits.
Whiskey, which commands about a quarter of all global spirits volume (excluding national spirits such as baijiu, soju and shochu), is expected to post volume growth of 23% and value growth of 29% over the next 5 years.
The data also showed that, while beer, cider and international spirits have not yet reached 2019 volumes, they have all met or surpassed 2019 levels in value terms.
Wine has also surpassed 2019 value levels, though overall global category volumes are expected to continue on a downward trajectory.
According to the IWSR, the beer category is forecast to add significant value to total beverage alcohol over the next 5 years, especially in Asia-Pacific and Africa, which combined will add close to US$ 20 billion to the beer category by 2026.
In terms of underpinning what is driving growth in the wine category, the data gave nods to trends for quality over quantity, admitting that despite global still wine volumes being down 2% last year, value was up by 5%, as the ‘less but better’ trend continues to underlie the trajectory of the still wine category.
However, over the next 5 years, the global wine category is forecast to continue on its trajectory of long-term volume decline (1%, 2021–26), but will see value gains of 5%.
Rise of RTDs
As drinking rituals adapted during the pandemic, ready-to-drink (RTD) beverage alcohol has been a stand-out category for at-home consumption, increasing in volume by 14% in 2021, on top of a 26% growth in 2020.
Globally, RTD products are expected to grow by 44% in volume and 51% in value over the next 5 years. By volume, the category is now about one-third of the size of the global spirits category, as well as the global wine category – so this is definitely one to watch!
Category growth will continue in the world’s largest RTD markets: the US and Japan. In Japan, the RTD category is expected to expand in volume by more than 30% over the next 5 years, driven particularly by flavoured alcoholic beverages.
In the US, propelled by the popularity of hard seltzers, the RTD category saw continued volume growth at 15% last year; RTD value growth (22% last year) will begin to outpace volume growth in the US, as the category matures and higher-priced spirit-based RTDs gain traction in the market.
IWSR highlighted how the no/low-alcohol category grew by over 10% last year, and will continue to grow over the next 5 years, albeit from a relatively low base.
Indeed, looking forward, no-alcohol beer will add the most volume to the global no/low segment over the next 5 years and this is the area to watch, says IWSR. It also points to looming challenges such as:
- whether bars and restaurants will continue to attract consumers who have grown comfortable with e-commerce and at-home consumption;
- whether consumers will accept price increases on their preferred brands;
- whether inflation and supply chain issues will lead to consumers down-trading;
- and whether inflation will see consumers gravitating towards local rather than imported products.