Global Beverage Alcohol Market Eyes 2025 Rebound After Turbulent Years

After a rocky 2023 and ongoing hurdles in 2024, the global beverage alcohol market is eyeing a moderate rebound in 2025. According to the latest IWSR data, the industry is bracing for a slow yet steady recovery, with significant value growth anticipated in key markets like India, China, and the US. However, this road to recovery is paved with a myriad of challenges, from economic pressures to regulatory changes.

In 2023, the global beverage alcohol market faced its first significant setback in decades. Total beverage alcohol (TBA) saw a -1% decline in volume, though there was a slight +2% uptick in value. The US spirits market, in particular, recorded a -2% drop in volume – a first in nearly 30 years. Excluding national spirits such as baijiu and shochu, global volumes were down -1% while the value increased by +3%.

Cost-of-living pressures, inventory rebounds, and economic uncertainties weighed heavily on the market. Consumers tightened their belts, leading to a notable softening of demand across major markets. Despite these struggles, some positive signs began to emerge, setting the stage for a cautious recovery starting in 2025.

Key Markets Driving Growth

India, China, and the US are poised to be the powerhouses of the global beverage alcohol market. By 2028, these markets are expected to add a staggering US$30 billion in incremental value. This shift marks a significant realignment of the industry's growth axis towards developing economies.

India was a standout performer in 2023, with all major beverage alcohol categories (except rum and wine) posting volume increases. Scotch and US whiskies, for instance, saw impressive +7% gains. Meanwhile, in the US, despite an overall decline, tequila and certain US whiskey segments showed resilience and are expected to drive future growth.

China's market dynamics were more mixed. While international spirits grew by +2% as on-trade venues reopened, categories like Cognac and malt Scotch experienced declines. Economic concerns and rising unemployment among younger consumers contributed to these challenges.

Trends and Opportunities

• Premiumisation and its Evolution: The trend of premiumisation showed signs of slowing, particularly in the core premium price bands for both spirits and wine. However, super-premium-and-above tiers displayed more stability. Premium beer bucked the trend, gaining +2% in volume and +5% in value, highlighting a consumer shift towards balancing affordability and quality.
• Beer and Wine: The beer market held steady with a +4% value increase despite a -1% decline in volume. South Africa and Brazil emerged as key growth drivers, with the latter expected to add substantial incremental growth by 2028. The wine sector continued its structural decline, but premium rosé offered a bright spot, gaining popularity for its drinkability and association with social occasions.
• Ready-to-Drink (RTD) Beverages: RTDs were the star performers in 2023, recording +2% volume growth and a robust +6% increase in value. This category is expected to maintain its momentum, driven by consumers' preference for convenience and premium options.
• Agave Spirits: The agave spirits category, dominated by the US market, showed strong growth, particularly in premium price tiers. This trend is expanding globally, with markets like the UK, Spain, Canada, and Australia embracing agave spirits. India also saw a significant surge in agave spirit volumes.
• No-Alcohol Beverages: As moderation becomes mainstream, no-alcohol categories experienced impressive growth. No-alcohol beer, wine, and spirits all saw substantial volume increases, driven by health-conscious consumers and regulatory pressures promoting reduced alcohol consumption.

Navigating the Complex Landscape

The beverage alcohol market's future growth hinges on navigating a complex and uncertain macroeconomic environment. Companies must adapt their strategies to target new growth opportunities, focusing on both category expansion and geographical diversification. Innovation will be key to staying competitive and meeting evolving consumer preferences.

Emily Neill, COO Research and Operations at IWSR, highlights the need for agility in the industry: "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 reorient their global strategies to target new growth opportunities."

As we look towards 2025 and beyond, the beverage alcohol market is on a path to recovery. While the challenges are significant, the opportunities are equally promising. By embracing innovation, adapting to consumer trends, and navigating the economic landscape, the industry can look forward to a brighter, more resilient future.