IWSR: status spirits sales to double in GTR

Global travel retail (GTR) is expected to become the leading market for status spirits by 2027, growing by triple digits over the next five years.

Data from IWSR Drinks Market Analysis revealed GTR is expected to become the most lucrative market for status spirits – products priced over US$100 – by 2027.

IWSR forecasts that sales of status spirits in the GTR channel will skyrocket by 115% between 2022 and 2027.

The US is also tipped to be a major market for these higher-priced products, with a sales forecast of 50% over the same period.

More than 80% of the value of the status spirits sector came from high-end baijiu sales in China during 2022, boosted by banqueting and gifting in the country.

Excluding the Chinese spirit, IWSR said status spirits remain heavily reliant on China, the US and duty free for more than two-thirds of their revenues.

“We continue to be broadly optimistic about the future of status spirits, but expectations were scaled back during 2023, reflecting a less stable economic outlook globally,” explained Guy Wolfe, head of status spirits insights, IWSR.

“Travel retail share will grow as the channel continues to recover post-pandemic, and this resurgence is expected to shape category growth in the short term, providing a boost to those with a bias towards the channel, such as Cognac and blended Scotch.”

Scotch and Cognac to soar

Cognac and Scotch whisky account for a combined 78% of global status spirits sales by value. This is despite large gains in recent years for agave spirits, and emerging segments such as Irish and American whiskey, IWSR noted.

IWSR predicts that blended Scotch revenue will soar by 83% between 2022 and 2027, ahead of agave spirits (set to grow by 77%), while Cognac’s sales are expected to rise by 28% over the same timescale.

“Nearly 60% of high-end Cognac growth will come from GTR between 2022 and 2027,” Wolfe said. “It’s expected that the channel will account for almost one-third of global status Cognac sales by 2027.”

Sales of mezcal priced over US$100 are forecast to double in five years, but from a small base. The US and Mexico will remain the leading markets for agave spirits.

Growth in China for status spirits is expected to rise by 10% over the next five years, as consumers return to travelling and shift away from domestic purchases.

GTR has a value share of more than 25% of the status spirits market, slightly ahead of China (24%) and the US (23%).

“In the US, the post-pandemic on-trade recovery has been less pronounced than expected, but consumers are instead upgrading to higher-end products to enhance at-home experiences,” said Adam Rogers, research director for North America. “Tequila remains very much in fashion at a status level, and will take more share in the next five years.”

Wolfe noted that the audience for luxury spirits is increasing and diversifying.

“Middle-class expansion continues in China, India and neighbouring markets in the APAC [Asia Pacific] region, increasing the pool of buyers,” he added.