Over the last 40 years, IWSR has built up the world’s largest database on the beverage alcohol market. It claims to understand the market, category and brand performances of products in 157 countries across the world using local market input. Occasionally, IWSR releases market reports, and occasionally we run those market reports because we find them interesting and insightful. Here’s one right now!
Though worldwide beverage alcohol volume increased slightly in 2019, reversing declines from the year prior, it will be five years before the global industry rebounds from the ongoing COVID-19 crisis, according to comprehensive new research from IWSR Drinks Market Analysis.
Total global alcohol consumption, led by increases in beer and ready-to-drink products, grew by +0.1 percent in volume and +3.6 percent in value in 2019, but losses in the months-long near complete shutdown of bars and restaurants across the world this year has not been offset by upticks in liquor retail and ecommerce. IWSR expects this to lead to double-digit declines in 2020, which IWSR estimates will take until 2024 to reach 2019 pre-COVID-19 levels (though in the UK and United States, IWSR forecasts that pre-COVID-19 beverage alcohol volume levels likely won’t return until after 2024.) Global travel retail, severely affected by widespread travel restrictions, will see a particularly harsh decline in 2020 but is expected to reach pre-crisis levels by 2024.
“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, the leading authority on the global beverage alcohol market. “In many ways, 2019 was perhaps the last normal year for the drinks industry.”
Additional findings from newly published IWSR data include:
Beer expected to rebound better than wine and spirits
Globally, beer (not including flavored malt beverages like hard seltzers) grew 0.3 percent in volume and +2.2 percent in value in 2019, led particularly by increases in non-alcoholic beer (+15.2 percent in volume, vs. 2018). Though the beer category has taken a hit in 2020, the outlook for continued growth of noalcohol beer remains positive, with a forecasted +8.1 percent CAGR 2019-2024. In total, beer is expected to reach 2019 volumes by 2024, rebounding better than wine and spirits.
Increasingly less tied to celebratory moments, sparkling wine outshines still wine
The long-term global decreases in wine consumption continued in 2019, posting a -1.1 percent volume decline (though value was slightly up, at +0.6 percent). In the key consuming region of North West Europe, wine volumes have been slowing at a rate of -1.6 percent CAGR 2014-2019, and in the United States, wine consumption last year declined for the first time in 25 years. One bright spot in the category, however, is sparkling wine which posted growth of +1.4 percent volume, and +3.6 percent value in 2019, and is forecasted to rebound stronger than still wine by 2024, as consumers increasingly shift to year-round consumption of these products.
Spirits drop -2.5 percent in 2019, whisky and gin on pace to recover fastest
Overall, total spirits dropped -2.5 percent in volume last year, due in part to steep volume losses in baijiu (a spirit consumed almost entirely in China). Excluding baijiu, however, global spirits volume grew +1.0 percent in 2019. No-alcohol spirits were the fastest-growing spirits segment by volume in 2019, +25.5 percent, though still small in terms of market share (and of note, 2018-2019 was the first period that IWSR began tracking the no-alcohol spirits category). Among traditional spirits categories, gin was the fastest growing in 2019 (+6.1 percent), but that growth has slowed somewhat as consumers are beginning to show signs of “gin fatigue,” especially in some European markets (growth of gin globally was +9.6 percent in 2018).
Within the whisky category, Irish grew by +10.6 percent volume, Japanese increased +10.3 percent and U.S. whiskey posted +5.8 percent. The IWSR forecasts that whisky and gin will likely rebound fastest to pre-COVID-19 levels. Vodka volumes are not expected to recover to 2019 levels until after 2024.
Ready-to-drink poised for continued grow with hard seltzers trending strongly
For the third consecutive year, ready-to-drink (RTD) products in 2019 were the fastest growing beverage alcohol category, up +19.6 percent in volume and +18.8 percent in value. Even though RTDs only represent a small slice of beverage alcohol market share, they contributed more than double the value growth to the industry than wine in 2019. Much of this interest and growth in the category is fueled by the innovation and convenience of hard seltzers in the United States, which last year grew by over +200 percent in volume. The global RTD category is forecasted to grow by +7.2 percent volume CAGR 2019-2024.
Ecommerce, already growing pre-COVID-19, becomes even more important
Beverage alcohol ecommerce posted gains last year, which should be welcome news to brands battling current challenges brought by COVID-19. Across 16 key markets studied by the IWSR, all beverage alcohol categories in 2019 grew in value faster online versus the total market. Beer ecommerce value grew +14 percent (vs. +1 percent growth for the total market value), wine grew +18 percent (vs. total market decline of -1 percent), and spirits grew +15 percent (vs. total market growth of +6 percent). Based on an ecommerce study published last year by IWSR, the value of the channel at the time was U.S. $21B (across 10 core markets), which is almost twice that of global travel retail, pre-COVID-19.
“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 ecommerce, are all factors which will help contribute to the industry’s rebound and future growth.”