AMERICAS SET TO BOOST $155 BILLION SPIRITS MARKET BY 7% ANNUALLY OVER COMING YEARS
The Americas spirits market which was valued at $155.35 billion in 2021 by GlobalData, is projected to grow at a CAGR of more than 7% between 2021 and 2026. During this forecast period, Canada, Chile, Panama and the United States have been shortlisted as “high-potential countries” by the London-based analyst.
Last year, the Americas was the second-largest region for global spirits in terms of both value sales and volumes, led by the US which was the largest country market in terms of value sales last year. GlobalData said that its growth shortlist was based on the relative performance of countries using multiple metrics including projections of high-value products and rising per capita value growth.
Of the four countries with the most potential in the Americas, the US is, by far, the biggest market. Last week, we reported beverage alcohol data from analyst IWSR which pinpointed the US (and India) as the key drivers across the globe. According to IWSR – also based in London – the continuing trend for brown spirits means that whisky will be bigger than vodka in the US by volume this year, the first time that has happened in almost two decades.
GlobalData’s report covers all the main categories in the Americas spirits market from vodka, rum, gin and whisky/whiskey, to liqueurs, speciality spirits, tequila and mezcal, and brandy. The analyst says that in 2021, the whiskey category accounted for the largest value share in the whole Americas, followed by flavoured alcoholic beverages. The latter category is set to register the fastest value and volume growth rates in the forecast period says GlobalData.
In 2021, among off-premise distribution, hypermarkets and supermarkets together were the leading channel in the Americas spirits sector said GlobalData, ahead of others including food and drinks specialist retailers, convenience shops, department stores and online players such as Uber-owned Drizly.
IWSR: e-commerce a big driver for the US
Specifically in the US market, e-commerce will become a much bigger channel and will grow faster than in other markets worldwide according to IWSR. A tipping point proved to be the pandemic when the highest proportion of online buyers who made their first purchase during this time were in the US markets (at 54%). This trend is expected to continue even as closed distribution channels reopen and as conditions normalise.
From a packaging perspective, GlobalData says that rigid metal was the most used pack material in the Americas last year, followed by glass, rigid plastics, flexible packaging, and paper and board. But players in the market studied in the report – for example Anheuser-Busch InBev, Bacardi, Diageo, Pernod Ricard, and Mark Anthony Brands – are increasingly looking for environmentally friendly packaging options, so paper and board are likely to become more popular.
Overall, GlobalData’s Americas spirits market research brings together multiple data sources to offer a clean overview of the western hemisphere spirits sector. As well as a market overview, and high-growth country analysis, it includes several case studies.
Zero-for-zero tariffs between the US and UK return
Possibly not factored into the report is the return to zero-for-zero tariffs between the US and UK trade relationship that came into effect this month. Both the Distilled Spirits Council of the US (DISCUS) and the Scotch Whisky Association (SWA) have toasted the end of retaliatory tariffs on American whiskey and Scotch whisky which had been affected by trade disputes unrelated to the distilling sector.
The upshot of the zero tariffs will be a reset and strengthening of this trans-Atlantic trade relationship and enhanced importation of Scotch whisky into the US, and a boost for bourbon, and Tennessee whiskey the other way. Between 1997-2017, when there were no tariffs on distilled spirits between the US and UK, bilateral trade in whiskies increased 212% (from $453 million to $1.41 billion). The retaliatory tariffs resulted in a 35% decrease in bilateral trade between 2018-2021 (from $1.51 billion to $982 million) so both DISCUS and the SWA will be looking to see the numbers rebounding once again.
Another positive for the US market is that per capita consumption of distilled spirits in the country has been on a steady rise from 2010 to 2020. According to Statista (see chart above), 1.81 gallons per person were consumed in 2020. While this is still some way off the 1980 peak of almost two litres per person, it is well ahead of 2000’s trough year of 1.25 litres per capita consumption in 2000.