Long-term volume recovery is forecasted at +1.5% compound annual growth rate 2021 to 2025. The two fastest-growing categories, according to IWSR forecasts, are no-alcohol spirits (projected at +30.6% CAGR 2021-2025), and RTDs (+10.2%).
“Recovery will be boosted by the industry pivoting rapidly in key markets, the momentum of ecommerce and RTDs, and increasing sophistication of the at-home occasion in many markets,” says IWSR.
Total beverage alcohol volume decreased by 6.2% globally in 2020, with shutdown and restrictions for the on-trade around the world. Although unprecedented, this decline was less than previously forecast: thanks to the acceleration of ecommerce and strong at-home consumption.
Key industry drivers
Pre-pandemic trends have developed into pandemic trends; and these are likely to continue to impact the industry over the coming years.
“In many global markets, Covid-19 accelerated the impact and growth of key industry drivers, such as the development of ecommerce, premiumisation, the rise of the ‘home premise,’ moderation, and the need for convenience in product formats,” says 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.”
This disposable income is likely to boost premium options: 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.)
What to watch
Tequila overtakes rum: The global tequila category grew by +9.6% in 2020, driven by gains in the US (the world’s largest tequila market) where tequila is now the third-largest spirits category in the country (behind vodka and whisky).
Mezcal: thanks to the success of tequila, consumer awareness of mezcal has grown and the category is expected to grow 8.8% CAGR 2021-2025.
Whisky: Global whisky dropped 10.7% in volume in 2020, but is forecast to rebound with 5.5% growth this year, and 4.2% growth CAGR 2021-2025. Key markets are the US and India.
Beer: Beer lost 7.1% volume globally in 2020. But the category is expected to grow 2.5% this year and 1.2% CAGR 2021-2025. All of the top 10 global beer markets are expected to grow through 2025: with the exception of the US where RTDs are proving to be strong competition.