According to new forecasts from IWSR Drinks Market Analysis, global beverage alcohol is showing positive signs of recovery and is projected to grow in volume by 2.9% by the end of 2021.
By 2023, IWSR expects total alcohol consumption to return to pre-Covid levels, with consumption steadily increasing through to 2025. Recovery will be boosted by the industry pivoting rapidly in key markets, the momentum of e-commerce and RTDs, and increasing sophistication of the at-home occasion in many markets.
In the longer term, volume sales are predicted to increase by a compound annual growth rate (CAGR) of 1.5% from 2021 to 2025. IWSR is forecasting that the two fastest-growing categories during this period will no-alcohol spirits (projected at +30.6% CAGR), and RTDs (+10.2%).
“In many global markets, Covid-19 accelerated the impact and growth of key industry drivers, such as the development of e-commerce, premiumisation, the rise of the ‘home premise,’ moderation, and the need for convenience in product formats,” said Mark Meek, CEO of IWSR Drinks Market Analysis.
“These are the trends that will also underpin the industry’s resilience as it pivots to meet consumers where they are in the years to come. Additionally, across many markets, some segments of the population now have significantly more disposable income than they did in 2019, some of which will be spent on beverage alcohol products.”
Based on IWSR’s examination of data from 160 countries across the globe, total beverage alcohol volume decreased by 6.2% globally in 2020, impacted by the near-complete shutdown of bars and restaurants around the world. Though an unprecedented downturn, the decline was less than previously forecast, as several factors ultimately helped the industry last year, such as: acceleration of e-commerce (up 45% from 2019, to reach US$29bn in 2020), growth of RTDs, strong at-home consumption in key markets, and resilience and growth in the US and China.
Another pre-Covid trend that IWSR expects will continue to accelerate the recovery of the alcohol market is product premiumisation. Though the economic impact of the crisis has led to restricted spending for some, alcohol is an affordable luxury for those willing to spend. IWSR forecasts that premium-and-above wine and spirits will increase by 25.6% in total volume 2020-2025 (compared to +0.8% volume growth over the same period for brands in lower price tiers).
NAM Implications:
- Key is recovery will be via different channels…
- (given Lockdown impact on hospitality)
- …with a marked emphasis on driving retail and off-trade sales.
