For the first time in nearly 30 years, IWSR recorded a decline (-2% in 2023) in the volume of spirits sold in the key U.S. market. Meanwhile, global total beverage alcohol (TBA) declined -1% by volume and rose +2% by value (US$, variable exchange rate) in 2023. Excluding national spirits such as baijiu and shochu, global volumes were down -1% and value increased by +3%.
But according to comprehensive new data and forecasts from IWSR, global beverage alcohol is expected to begin its recovery in 2025.
While some more positive signs are starting to emerge in 2024, the global TBA market remains sub-dued after several years of above-trend growth, with challenges expected to continue until 2025 as household spending rebalances after strong inflationary pressures of the past 2 years.
TBA volumes are expected to edge up by only +0.4% this year.
When recovery comes, growth is expected to be relatively modest, with volume and value both rising at a CAGR of +1% between 2023 and 2028 – with the main value growth coming from India, China and the U.S., the latter the only mature market forecast to add substantial TBA value in the coming years.
Together, India, China (including national spirits) and the U.S. are expected to add US$30bn in incremental value (at 2023 prices) by 2028, as the TBA growth axis continues to shift towards developing economies.
The next two most value-adding markets are Brazil and Mexico.
Beverage alcohol’s 2023 difficulties were driven by a rapid softening of demand as cost-of-living pressures mounted across major consumption markets, combined with a strong rebound in inventories weighing on key categories.
The major volume growth market in 2023 was India. All major beverage alcohol categories (except rum and wine) increased their volumes here, with both Scotch and U.S. whiskies recording +7% volume gains.
Elsewhere, markets including Colombia, the Philippines and Thailand all posted volume and value increases.
The U.S. spirits market declined for the first time in nearly 30 years in 2023, and every major TBA category saw volume declines, except for tequila, some U.S. whiskey segments and RTDs. Looking forward, tequila is poised to add the most incremental value to the U.S. spirits market by 2028, driven by premium-and-above expressions.
International spirits grew by +2% as the on-trade reopened, but volumes of both Cognac (-3%) and malt Scotch (-11%) suffered falls
Agave broadens its horizons
The U.S. continues to dominate the global agave spirits market – posting growth of +4% (volume) and +7% (value) in 2023 – with solid growth in premium-plus price tiers. It will account for the vast majority of future value growth for the category, which is forecast to expand globally at a CAGR of +6% between 2023 and 2028.
But agave spirits are continuing to gain ground outside their U.S. and Mexican heartlands, rising +13% by volume and +25% by value in 2022-23. As well as taking shelf space from the declining gin category in markets such as the UK and Spain, agave is gaining share of spirits in other key destinations, including Canada and Australia.
Volumes in India nearly doubled during 2023 – and home-grown agave spirits are making a mark here.
Agave is also the fastest-growing major spirits category in global travel retail, rising by +37% (volume) and +58% (value) in 2022-23, says IWSR – the only major category to record volume growth (+2%), alongside a strong +6% uptick in value.
This growth is expected to continue, with both volume and value forecast to grow at a CAGR of +3% between 2023 and 2028.
No-alcohol buoyed as moderation goes mainstream
All no-alcohol categories recorded impressive gains in 2023: global no-alcohol beer volumes were up +6%, still/sparkling wine grew by +7%, and no-alcohol spirits continued their recent double-digit growth with a +15% volume surge. In value terms, growth was higher still.
The latest Bevtrac consumer data from IWSR indicates that no-alcohol is the only market segment with positive momentum, driven by year-on-year increases in the no-alcohol drinker population in several key markets, including India, China, the UK, and the U.S.
As moderation enters the mainstream, it is being embraced by consumers for financial as well as health reasons, leading to long-term lifestyle changes. Regulatory pressures in a number of global markets reinforce these trends, as does the influence of guidance on alcohol consumption from governments and world agencies.
