Global alcohol sales declined by 1% in volume last year with spirits reporting its first drop in the US market in nearly 30 years.
Data from IWSR Drinks Market Analysis revealed that while alcohol volumes declined, global total beverage alcohol (TBA) sales were up by 2% in value in 2023, compared with 2022 (when sales rose by 1%).
Excluding national spirits such as Chinese baijiu and Japanese shōchū, global alcohol volumes were down by 1% and value increased by 3%.
The IWSR attributed alcohol’s decline in 2023 to a ‘rapid softening of demand’ due to cost-of-living pressures and a ‘strong rebound in inventories weighing on key categories’.
TBA volumes are expected to post a slight increase of 0.4% this year.
The IWSR said the global alcohol sector is expected to begin its recovery in 2025.
Between 2023 and 2028, alcohol sales are predicted to rise by a compound annual growth rate (CAGR) of 1%, led by India, China and the US.
India was a major volume growth market for alcohol in 2023, with all categories except rum and wine growing. Scotch and American whiskey each rose by 7% in volume in India.
The US is the only mature market forecast to add ‘substantial’ TBA value in the coming years, the IWSR said.
Together, India, China and the US are expected to add US$30 billion in value to TBA by 2028, followed by Brazil and Mexico.
IWSR recorded a 2% decline in the volume of spirits sold in the US, the category’s first decrease in nearly 30 years. Every major alcohol category declined in the market, apart from Tequila, some US whiskey segments and ready-to-drink (RTD) products.
Tequila is poised to add the most incremental value to the US spirits market by 2028, boosted by the premium-and-above segment.
China saw volume declines across a number of categories due to ‘slowing economic growth’ and a rise in unemployment among younger consumers. Within China, international spirits rose by 2% as the on-trade reopened, but volumes of Cognac declined by 3% and single malt Scotch suffered an 11% drop.
“The ongoing shift in the TBA growth axis, with gains now coming increasingly from developing markets, entails a greater exposure to business risk. Companies need to reorientate their global strategies to target new growth opportunities,” said Emily Neill, chief operating officer, research and operations, IWSR.
“Expansion across categories as well as geographic footprint will be increasingly important. In today’s global TBA marketplace, companies need to continue to innovate in order to succeed.”
RTDs were the only major alcohol category to record volume growth (up by 2%), alongside a 6% rise in value. Both volume and value for the sector are forecast to grow at a CAGR of 3% between 2023 and 2028.
Spirits vs wine and beer
Global spirits volumes were flat last year with ‘subdued growth’ expected for the coming years.
The IWSR predicts 2023-28 CAGR increases of 1% by volume and 2% by value, excluding national spirits.
Including local spirits (such as baijiu and shōchū), volumes are expected to be flat, with value rising by a 1% CAGR over the same period.
The gin boom ‘ended even more quickly than anticipated’, the IWSR said, with major volume declines in key markets such as the UK (down by 14%) and Spain (down 11%) in 2023.
Wine saw a 4% volume decline last year and is expected to post a CAGR drop of 1% to 2028.
Despite a 1% decline in global beer volumes in 2023, the category posted a 4% value increase, and is expected to record 1% CAGR growth in both volume and value in the five years to 2028.
Within the premium price bracket, both spirits and wine declined by 3% last year. Super-premium-and-above price tiers reported stagnant sales for spirits and a 2% drop for wine.
Premium beer, on the other hand, rose by 2% in volume and by 5% in value.
Agave spirits soar
Agave was the key driver of premium-and-above spirits growth across a wide range of markets in 2023.
The US continues to be the leading market for agave spirits with volume growth of 4% and a value rise of 7% in 2023.
The premium-plus segment will account for the vast majority of future value growth for the category, which is forecast to expand globally at a CAGR of 6% (2023-2028).
Outside of the US and Mexico, agave spirits rose by 14% in volume and by 25% in value in 2023. Volumes in India nearly doubled during 2023.
Agave spirits have also increased its share of spirits in key destinations – including Canada and Australia – and taken shelf space from the declining gin sector in the UK and Spain.
Agave is also the fastest-growing major spirits category in global travel retail, skyrocketing by 37% by volume and by 58% in value last year.
Meanwhile, non-alcoholic ‘spirits’ soared by 15% in volume last year, while wine and beer posted smaller gains of 6% and 7% respectively.
IWSR noted that no-alcohol is the only category with positive momentum, led by an increase in no-alcohol drinkers in markets, including India, China, the UK, and the US.
