Global alcohol consumption grew last year, although new research from IWSR suggests that the coronavirus outbreak will push 2019 volume gains back by up to five years.
Total global alcohol consumption, led by increases in beer and ready-to-drink products, grew by 0.1% in volume and 3.6% in value in 2019. However, losses from the near-complete shutdown of bars and restaurants across the world this year have not been offset by upticks in sales of alcohol in the retail and e-commerce channels.
IWSR expects this to lead to double-digit volume declines in 2020, with the market intelligence firm estimating that it will take until 2024 to reach last year’s levels again. This could take even longer in the UK and US.
Global travel retail, severely affected by widespread travel restrictions, will see a particularly harsh decline in 2020.
“While we’re still assessing the full impact of the current Covid-19 situation, it’s very clear that the pandemic is set to cause a deeper and more long-lasting after-effect to the global drinks industry than anything we’ve experienced before. Even the downturn following the 2008 financial crisis was less severe than what we are seeing now,” said Mark Meek, CEO of IWSR Drinks Market Analysis.
“In many ways, 2019 was perhaps the last ‘normal’ year for the drinks industry.”
IWSR suggests that beer may be among the first categories to return to some level of normality in terms of sales. Globally, beer grew 0.3% in volume and by 2.2% in value in 2019, led by increases in non-alcoholic beer (+15.2%). Though the beer category has taken a hit in 2020, the outlook for continued growth of non-alcohol beer remains positive, with a forecasted 8.1% CAGR up until 2024. In total, beer is expected to reach 2019 volumes by 2024, rebounding better than wine and spirits.
Meanwhile, the long-term global decreases in wine consumption continued in 2019, posting a 1.1% volume decline. However, one bright spot in the category was sparkling wine which posted volume growth of 1.4%. It is forecast to rebound stronger than still wine by 2024, as consumers increasingly shift to year-round consumption of these products.
Overall, total spirits dropped 2.5% in volume last year, due in part to steep volume losses in baijiu (a spirit consumed almost entirely in China). Non-alcohol spirits were the fastest-growing spirits segment by volume, growing 25.5%. IWSR forecasts that whisky and gin will likely rebound fastest to pre-coronavirus levels. Vodka volumes are not expected to recover to 2019 levels until after 2024.
For the third consecutive year, ready-to-drink (RTD) products were the fastest-growing beverage alcohol category in 2019, up 19.6% in volume. Much the growth in the category is fueled by the popularity of hard seltzers in the US, which last year grew by over by 200% in volume. The global RTD category is forecast to grow by 7.2% volume CAGR up until 2024.
“As restrictions ease, long term recovery is expected to be slower than the initial bounce back – driving a ‘Nike Swoosh’ rebound shape,” added Meek. “Like many other industries, it’s incredible how a few months of lockdown will result in several years of recovery, but beverage alcohol has proven to be remarkably resilient in previous downturns, and this should be no different.
“A strong focus on innovation, premiumisation, and new routes to market such as e-commerce, are all factors which will help contribute to the industry’s rebound and future growth.”
NAM Implications:
- Via a rebalancing of routes to market…
- Issue will be consumer ability to pay, medium and long-term…
