Spirits to outpace beer and wine

The global spirits sector is expected to achieve a faster volume and value rise than all other beverage categories over the next five years, according to GlobalData.

GlobalData has released a new study, Next-Gen Beverages: Bridging Affordability, Sensory, and Gen Z Preferences, which explores premiumisation in the spirits sector.

From 2023 to 2028, GlobalData predicts a compound annual growth rate (CAGR) increase of 3.6% in volume for spirits and a value hike of 9.4%.

In comparison, beer and cider, and wine are both expected to post a 1.5% CAGR volume rise (2023-2028).

Beer and cider is forecast to have a 5.5% value rise, and wine is tipped for a 6.1% increase.

Soft drinks are estimated to grow its volume by 2.9% and its value by 5.8% over the same period.

Looking at specific alcohol subcategories, flavoured alcohol beverages (FABs) are predicted to achieve the fastest volume CAGR at 6.7% from 2023 to 2028. Just behind it are non-alcoholic ‘spirits’ at a growth rate of 6.4%, followed by whisky (4.9%), Tequila and mezcal (4.5%), brandy (4.3%) and rum (3.7%). Scotch whisky is predicted to rise by 5.2%.

FABs increased their global volume share of the spirits market by almost 1.6 times from 2018 (16.9%) to 2023 (24.1%), and sales of hard seltzers and alcoholic soft drinks are expected to continue FABs growth trajectory to 2028 (27.9%).

GlobalData noted that the growth of FABs is due to consumers, particularly younger demographics, seeking convenient formats.

Across the global beverages industry, GlobalData revealed that the premium and super-premium segments have grown strongly, by 1.8% in 2022 versus 2018, compared to the mainstream and discount tier which was down by 0.6% in 2022.

While pre-mixed spirits account for more than half of global FABs volume with Latin America, the Middle East and Africa making a significant contribution to sales, hard seltzers is the second largest segment with a 28.9% volume share in 2023 and is expected to grow at a CAGR of 12.9% in the five years to 2028.

Nisarga Save, senior consultant and beverages analyst, at GlobalData, said: “The study highlights that premiumisation is a growth catalyst in the spirits market and brand innovation is responding to this with premium ingredients, artisanal craftsmanship, and exclusive production techniques to appeal to consumers seeking luxury products.

“The convenience trend is leading to the growth of the FAB and RTD cocktail categories, which offer consumers premium, bar-quality drinks in inexpensive, pre-packaged formats, catering to socialising at home or independently.

“Gen Z’s growing presence in the workforce and rising income levels make them a lucrative target for spirits brands, and a significant challenge for alcoholic beverage marketers due to their different preferences and priorities compared to previous generations.”