The forces behind the shift
Since 2010, global alcohol consumption has remained flat or declined across much of Europe2 and consumption has declined by more than 10 percent in Australia and Canada. Millennials are adopting a wellness approach to not drink as the “sober curious” movement gains popularity.
The decline in alcohol sales is reflective of a shift in consumer preferences across the beverage industry as healthier and higher-quality products continue to gain popularity. Beyond seeking healthier options, consumers are also looking for brands that offer sustainable sourcing, organic certification, and social responsibility. Many new entrants to the market are disrupting the traditional brands as they create drinks that align with these consumer preferences.
Premiumization continues to drive growth
While premium spirits continues to grow, so too are premium mixers and cocktails. In 2018, category dollars outpaced volume share in the overall distilled spirits3 industry, reflecting consumers’ preference for quality over quantity in the United States. With the amount spent on spirits annually continuing to increase year over year, it’s becoming clear that consumers are willing to pay more for the beverages they consume.
Spirits continue to outpace the sales of wine and beer in the United States for the ninth straight year.4 In particular, high-end premium and super-premium products saw volume growth of 8 and 7.5 percent in 2018. It’s predicted that premium-plus spirits will grow over the next five years3 internationally.
Beverage companies are seeking to align their product portfolios to this shift. Diageo’s divestiture of 19 non-premium brands5 portfolio strategy in 2018 reflects their desire to better align with consumer demand. Similarly, Pernot Ricard is considering the divesture of their low- and mid-price wine portfolio.6
Ab InBev has also entered into the spirits market with its first acquisition of a spirits company in Cutwater Spirits, which produces various spirits including seven premium mixers. This strategic acquisition is part of AB InBev’s focus on moving “beyond beer.”
2018–2023 Consumption Trends
Expected increase in consumption from 2018–2023
The IWSI, Worldwide Alcohol Consumption Declines - 1.6%, May 29, 2019