The IWSR’s 8 drivers of change for beverage alcohol in 2023 and beyond

At Wine Paris and Vinexpo Paris 2023, we took a closer look at the eight drivers expected to shape the future of drinking, according to the London-based company.

Premiumisation driven by ‘mass affluent’ consumers

The world is entering a period of economic fragility. Those who are financially stable – typically consumers with lower debt levels and secure jobs – will be targets for premium-and-above spirits and wine brand owners. This is a shift from pandemic times when Millennials led the global consumption bounce-back in 2021 in markets such as the US, UK, France, Germany, and Brazil.

China peaks, but the US and India are positioned well for spirits

China’s leadership in luxury spirits will be threatened by the US in the next few years. The US status spirits market, spearheaded by high-end agaves, is forecast by IWSR to add the most value to this category than any other market over the next five years. This will bring it almost level with China while India is also poised to make strong spirits gains.

Pockets of growth for beer

The best opportunities for beer will be in India, Latin America, and Africa. IWSR expects global volumes to rise at a CAGR of 1% between 2021 and 2026, driven by Brazil, Mexico, South Africa, Colombia and India. Beer is also well-positioned to grow in a number of Southeast Asian markets.

Sparkling wine to the rescue of wider wine category

The total wine category is in volume decline, in line with historical trends, but proseccos and champagnes continue to grow and the high-end is gaining across all sparkling wine segments. Pent-up demand to celebrate weddings, holiday gatherings and other personal milestones after the pandemic has accelerated demand for fizz.

Premiumisation drives RTDs

Globally, the value of the ready-to-drink (RTD) market will rise at a CAGR of 7% between 2022 and 2026, outpacing volumes. The value growth reflects recent strong performances of premium-plus RTD products across key markets.

E-commerce will moderate

Pandemic lockdowns drove rapid alcohol e-commerce growth of over 40% in 2020 alone – compared with value growth of 12% in 2019 and 16% in 2021, across 16 markets that IWSR focused on. But over the coming years, growth rates will moderate as the market enters a period of normalisation. The overall trajectory will still be upwards with alcohol e-commerce expected to contribute an additional $10 billion to the beverage alcohol sector between 2021 and 2026, reaching nearly $40 billion by 2026, across focus markets.

Home premise grows even stronger

Economic concerns are set to make the at-home occasion even more significant in the future, as shrinking disposable incomes force many people to cut back on visits to pubs and bars. IWSR expects the on-trade recovery to be slower than previously expected, although pre-pandemic volumes will likely return by 2026.

Moderation increasingly driven by economic worries

Previously driven by health and wellness concerns, moderation in alcohol consumption is now being spurred by a need to reduce household spending. Consumers are choosing to cut down rather than down-trade in many markets.