IWSR's recent market analysis reveals that India, China, and the US are set to drive significant growth in the global alcohol market, adding $30 billion in value by 2028. Despite a 1% decline in global beverage alcohol volume in 2023, the sector experienced a 2% increase in value, highlighting the influence of premiumization trends in these key markets.
Market Trends
The global beverage alcohol market experienced a post-pandemic surge, but recent cost-of-living pressures have tempered demand. IWSR forecasts a challenging 2024, with volumes expected to increase by just 0.4%. However, a moderate recovery is anticipated in 2025, with a compound annual growth rate (CAGR) of 1% from 2023 to 2028, driven primarily by developing economies such as India, China, Brazil, and Mexico. Among mature markets, only the US is expected to make a substantial contribution to value growth.
India: A Powerhouse of Volume Growth
India led global volume growth in 2023, with a 5% increase, significantly outpacing the global 1% rise. Key drivers include:
Spirits: 12% growth
Beer: 38% growth
Wine: 19% growth
Ready-to-Drink (RTD): 40% growth
Factors fueling this growth include India’s large and youthful population (median age below 30), sophisticated retail channels, and an adventurous consumer base. Premiumization plays a crucial role, with local brands increasingly offering premium-quality spirits at accessible prices. The rising popularity of cocktails has driven substantial growth in white spirits, including vodka and gin, which saw double-digit increases, and agave-based spirits, which surged by 80%.
China: Challenges and Opportunities
China faced volume declines across several alcohol categories due to economic slowdown and rising unemployment among young consumers. Despite this, premiumization remains a strong trend, with the market value projected to grow by $41.7 billion from 2022 to 2027. International spirits grew by 2% as on-trade venues reopened, though volumes of Cognac and malt Scotch fell by 3% and 11%, respectively. Baijiu's decline also impacted both Chinese and global growth figures.
China continues to be an attractive market due to its large population and financial prosperity. Alcohol consumption remains popular among China’s Gen Z, with only 15% abstaining, which is lower compared to other key markets.
The US: Navigating Decline and Growth
In 2023, the US spirits market saw its first volume decline in nearly 30 years, down 2%. Key factors include:
Imbalanced inventory levels in wholesale and retail
Challenging economic conditions
Increased consumer focus on health and wellness, leading to more moderate alcohol consumption
However, bright spots remain in the market, particularly for tequila, certain whiskey segments, and RTDs. Tequila is expected to add the most incremental value to the US spirits market by 2028, driven by premium and above expressions.
Strategic Implications and Future Outlook
The evolving global alcohol market reflects a complex macroeconomic landscape, with households under financial pressure and increasing government regulatory pressures in key markets. The shift towards growth in developing markets like India and China involves greater business risk, necessitating a reorientation of global strategies. Companies must expand their geographic footprint and product categories to capture new growth opportunities. Continuous innovation will be crucial for success in the global Total Beverage Alcohol (TBA) market.
Emily Neill, COO of Research and Operations at IWSR, emphasizes the need for companies to innovate and adapt their strategies to target new growth opportunities in developing markets. The focus on premiumization, consumer preferences for rich flavours and visual appeal, and the increasing demand for health-conscious and bite-sized formats will drive the future of the global alcohol market.
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