TRENDS SHAPING THE GROWING GLOBAL ALCOHOL MARKET IN 2021
The worldwide alcoholic beverage market is set to grow by 3% (by volume) this year and return to pre-Covid levels by 2022, according to the latest forecasts from London-based drinks analyst IWSR.
The forecasts also show that CAGR volume growth will be +1.5% from 2021 to 2025, a relatively slow recovery. Within that however are some stronger segments. No-alcohol spirits will power ahead by 31% CAGR over the period, while RTDs will also make double-digit gains at 10%.
CEO of IWSR Mark Meek commented: “In many global markets, Covid-19 accelerated key industry drivers such as e-commerce, premiumisation, the rise of the ‘home premise’, and the need for convenient product formats.”
He added that across many markets, workers – who have saved on commuting costs and eating out during the pandemic – now have significantly more disposable income than they did in 2019. “Some of that will be spent on beverage alcohol products,” Meek said.
IWSR’s examination of data sets from 160 countries show that beverage alcohol volumes decreased by 6.2% globally in 2020, thanks to various shutdowns of bars and restaurants around the world.
While the decline was unprecedented it was less than previously forecast thanks to acceleration of e-commerce to $29 billion (up 45% versus 2019); the growth of RTDs; strong at-home consumption in several markets; and the resilience in the US and China. All these factors played their part in offsetting larger falls.
Alcohol premiumisation set to continue
The data from IWSR suggests the trend for premiumisation will also continue. While the economic impact of Covid-19 affected spending for some, alcohol remains a relatively affordable luxury. IWSR forecasts that premium-and-above wine and spirits will increase by 26% in total volume sales between 2020-2025. This compares to +0.8% volume growth over the same period for brands in lower price tiers.
Other key alcohol trends to watch out for include:
- Tequila overtakes rum in the US to become the third-largest spirit – The global tequila category grew by 9.6% in 2020, driven by gains in the US where it has pushed ahead of rum and now sits behind vodka and whisky. Tequila’s success is driving interest in mezcal and this category is projected to grow by 9% (volume CAGR 2021-2025).
- Whisky impacted by Covid-19 but has long-term resilience – Global whisky volumes declined by 11% in 2020 but the category is forecast to rebound by 5.5% this year, and post growth of 4.2% (volume CAGR 2021-2025), helped especially by the US and Indian markets. Within the category, among the biggest CAGR risers to 2025 will be Irish whiskey at 8% and Japanese whisky at 6%.
- Gin grows but vodka remains flat – Gin’s rise of 4.5% (CAGR 2021-2025) will be driven by Brazil, South Africa, and Russia, helped by premium-and-above brands which are set to grow by 11% (CAGR 2021-2025). This contrasts with vodka whose flat volumes of last year, are expected to continue to 2025. In Russia, the top market for vodka, consumers are trading down due to the impact of Covid-19.
- Wine remains popular at home – While wine drinking has been in decline, consumers in top markets like the UK, Australia, Brazil, Canada, and the US will lift wine’s volume growth to 0.4% (CAGR 2021-2025). In Brazil alone, wine grew by 28% in 2020, helped by a rise in higher-quality imports. On the other hand, imported wine in China has seen a steep decline, expected to be 8% by volume between 2021-2025.
- RTD volumes to rise by almost +27% this year – A star performer of the pandemic with growth of 26.4%, a trend that will continue in 2021, and grow 10% (CAGR 2021-2025). The market drivers will be the US (with 44% share of global RTD volumes in 2020), Japan (a 22% share), Australia, Canada, and China. In the US, where the hard seltzer sub-category grew by 130% in 2020, RTDs are already bigger than the total spirits category by volume. IWSR says that by the end of this year, RTD volume consumption there will be bigger than wine.
- Beer, the most exposed alcohol category during lockdown – Beer lost 7% volume sales globally in 2020. It will make some of that back in the coming years as volumes are forecast to grow by 2.5% this year and 1.2% (CAGR 2021-2025). All the top-10 global beer markets (by volume) are set for gains into 2025 except the US, where RTD competition has had a negative impact.