Unlocking Growth: The growing role of Price & Promo in Driving Germany’s Spirits Market Forward during uncertain times

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According to the IWSR 2023 report, German's spirits market has been navigating the dual pressures of high inflation and geopolitical uncertainties. These factors have significantly influenced consumer spending, with a growing emphasis on essential purchases. As a result, many consumers have become more price-sensitive, particularly when it comes to discretionary spending, including alcohol.

In 2023, the overall beverage alcohol market declined compared to 2022, driven by concerns over the cost of living and low consumer confidence. ?????????????? ?????? ???????? ???????? ?????????????????? ???????????????? ???? ???????? ?????? ????????. Wine (-4.1%), Spirits (-1%), and Beer (-4.1%) - all saw declines, only Ready-to-drink (RTD) category, which, though small, grew by 4%.

?????????????????? ?????? ?????? ???????????????????????? ?????????????? ???? ??????????, ?????????? ?????????????? ???? ??????-?????????? ???????????????? ???????? ???? ??????????????????????. These retailers have become central to the market, offering a broader range of products, including premium options, to meet demand. ???????????????????? ???? ??????-?????????? ???????????????? ?????? ?????????????? ?? ?????? ???????? ???? ?????????????? ?????????? ?????? ???????????????? ??????????????????????. One of the standout stories of the year was the impressive growth of Johnnie Walker, which pushed the whisky category into double-digit growth.

???????????????????????????? ???? ???????? ???? ????????: Given the current economic climate, premiumization has slowed, with forecasts suggesting it will not regain momentum until 2025 or later. Consumers are currently hesitant to invest in premium products until they feel more secure about their financial situation.

???????????? ?????????????????????????? ??????????????????????: Established brands are in a stronger position to thrive during periods of inflation and low consumer confidence. Large brands are growing even larger, with market consolidation speeding up. In 2023, the top eight spirits brands in Germany (Aperol, Gorbatschow, Nordbrand, J?germeister, Johnnie Walker, Jack Daniels, Chantre, Bacardi) increased their cumulative market share from 20% to 22%. This growth reflects consumer trust in well-known brands, particularly during economic uncertainty, as they tend to avoid experimenting with new products.

?????????????? ???? ?????????? ????????????: German consumers continue to show strong loyalty to local brands, especially in traditional spirits categories. Local distilleries and regional specialties have maintained solid performance, underscoring the deep-rooted preference for homegrown products despite broader market challenges.

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On-trade sector has not fully recovered to pre-pandemic levels, leading to product rationalization and a shift towards simpler, traditional long drinks.

?????????????????? trend is gaining popularity, particularly among younger consumers who value healthier lifestyles and a positive social media image. Aperol’s rise, closely tied to the daytime drinking occasion, exemplifies this trend, with the Aperol Spritz becoming a signature drink for social daytime events.

???????????? ???????????????????? Trend: The moderation trend is also reflected in the continued growth of the no-alcohol segment, which increased by 21% in 2023, driven by health-conscious consumers.

Convenience and RTDs: Convenience remains a key factor for consumers, with RTDs offering portability and variety without the need for mixing or preparation. RTD sales grew by 4% year-on-year, benefiting from their lower out-of-pocket cost compared to other alcoholic beverages.

?????? ???????????????????????? ?????????? ?????? ???? ???????? ???????????????????? ???????? 2023 ?????????????? ?????????????? ??????:

??. ???????????? ???????????????????? ???????????????? ???? ?????? ???????????? ?????? ?????????????? ?????? ????????-???????? ??????????????????????.

??. ?????????????????? ???? ?????????? ?????????? ?????? ?????????? ???????????????????? ???? ???????????????? ???????????????????????? ?????????????????? ???? ???????? ???? ?????? ?????????????????? ???????????????? ???????????????????????? ????????????????. Market winners (Retail and Brand owners) demonstrating resiliency by adopting agile Price and Promo strategies, which helps to accelerate purchases. There are number of big shifts on the market leveraging this trend – i.e. unprecedented growth of Johnnie Walker in Whisky, driving the whole Whisky success in 2023.

??. ???????????????????????????? ?????????? ???? ???????????????? ???? ???????????? ???????????????? as consumer disposable income grows or stabilizes.

4. S???????? ?????????????? ??????????????????????, ????????????????????, ?????? ????????????-?????????????????? ?????????????? ???? ??????????????????. These trends, particularly among younger consumers, have temporarily shifted focus from premium products to lower-priced alternatives.

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What is required to stay competitive?

1. Persistence in achieving your business and brand objective, focus on long term aspirational targets is paramount.
2. Short to med-term Price and Promo strategy adjustments

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As situation evolves, brands that can align with changing consumer expectations and adapt to these market shifts will win short and long term navigating through all challenges.