IWSR says inflation undercut the alcohol industry’s premiumization gains

A new report from drinks market analysis group IWSR says the global beverage alcohol industry needs to rethink how it measures “premiumization,” arguing that much of the value growth recorded in recent years has been weakened by inflation and does not always reflect a real consumer move toward higher-end products.

The report, published Thursday, examines global alcohol sales from 2022 through 2025 and finds that consumer price inflation rose faster than IWSR’s global price-per-liter measure in each of those years. In 2022, IWSR said its global price-per-liter measure fell 1% while global inflation rose 8%, based on Oxford Economics data. In 2023, price per liter increased 3% against 6% inflation. In 2024, it rose 2% while inflation gained 5%. In 2025, price per liter was up 1% compared with 4% inflation.

Luke Tegner, IWSR’s global head of consulting, said the numbers show that the industry’s long-running premiumization trend has not kept pace with broader inflation at the highest level. He said that means companies should revisit claims that value growth since 2022 proves premiumization strategies are working, and instead separate inflation from category, market and brand performance.

The report comes as alcohol companies face weaker demand in several mature markets and more cautious spending by households. IWSR said consumers are still willing to pay more for products tied to strong experiences or special occasions, but they now want clearer reasons to trade up. The report describes a shift in consumer thinking from buying expensive products to signal status toward buying them for more personal and meaningful moments.

It also points to a “K-shaped” pattern in the market. Wealthy consumers still have the ability and willingness to buy prestige bottles, the report said, while lower-income drinkers are reducing alcohol consumption largely because of cost pressures. That gap is affecting how different categories perform at the premium end.

At the category level, IWSR said premium-and-above price tiers generally performed better than standard and value products in 2025, but the clearest evidence of premiumization came in ready-to-drink products and beer. Premium-plus RTD volumes rose 15% from 2024 and value increased 21%. In the United States, super-premium RTD volumes climbed 37%, though IWSR said that increase came from a small base.

Premium-plus beer posted a 1% volume gain and a 3% increase in value in 2025, one of the more encouraging results in a category that has otherwise been under pressure. Wine held up better at higher price points than at lower ones, but the category remained weak overall. Premium-plus wine volumes fell 2% in 2025 while value was flat, which IWSR said was a better result than standard wine but still part of what appears to be a broader structural decline.

Spirits showed a softer picture. Premium-plus spirits volume and value, excluding national spirits, each fell 1% in 2025. When national spirits are included, volume dropped 6% and value fell 7%, a result IWSR said was driven mainly by sharp losses in baijiu in China. Tegner said the decline suggests consumers are examining expensive spirits purchases more closely than they are in beer or RTDs, and may be choosing lower-priced alternatives within well-known brands rather than trading up further.

IWSR said total premium-plus beverage alcohol value fell 2% in 2025, but rose 2% when national spirits were excluded. That, the report said, shows the headline decline was heavily shaped by China rather than signaling a broad collapse in premium demand across global alcohol markets.

The picture is also different in bars and restaurants. IWSR’s on-trade value data, which covers 20 markets, showed on-trade value falling 4% in 2025. Excluding China, the decline was much closer to flat, but the report said premiumization in the on-trade is stalling and in some cases reversing. Super-premium-plus value fell 6%, compared with a 3% decline for standard products.

Restaurants were hit harder than bars. IWSR said restaurant on-trade value fell 6% while bars were down 2%, suggesting that lower-ticket occasions are holding up better than sit-down dining. The report also noted that lower-priced drinks are usually marked up more than premium products, with value-tier multipliers averaging 6.3 times compared with 2.3 times for super-premium-plus offerings.

One of the report’s strongest arguments centers on RTDs. IWSR said RTDs now have the highest average price per serve globally among major beverage alcohol categories, ranking above wine, spirits and beer, yet they remain the only major category still showing growth. Its analysis found an average US$0.74 difference between the price of a typical spirits serve and a typical RTD serve, with spirits generally still cheaper per serve even after mixers are considered.

Tegner said that finding challenges the idea that falling spirits or wine volumes can be explained only by price sensitivity. He said consumers are looking for value in a broader sense, not simply lower prices. A single RTD may cost about US$5, he said, which can feel easier to justify than spending US$20-30 on a bottle of spirits in one purchase.

IWSR said RTDs have been able to support higher prices because they offer features that match current consumer preferences, including convenience, flavor variety, flexible alcohol levels, single-serve portions and clearer use in specific occasions. Those qualities, the report said, help explain why consumers are still willing to pay more for RTDs even as household budgets remain under pressure.

Despite the weaker recent backdrop, IWSR’s long-term outlook remains positive for premium-and-above alcohol in many markets. The group forecasts that premium-plus servings will grow 6% between 2025 and 2035 across 16 key developed markets, including the United States, Britain, Germany, France and Japan. Across 16 major developing markets, including India, China, Mexico and Brazil, premium-plus servings are expected to rise 13% over the same period.

Tegner said the dynamic differs by region. In developed markets, he said, consumers are drinking less overall but are protecting spending on products that deliver the most enjoyment. In developing markets, he said, aspirational trading up is continuing in countries such as India, Mexico, Türkiye and Brazil, which he described as genuine premiumization rather than inflation-driven value growth.

The United States remains the largest source of premium-plus volume growth opportunities through 2030, according to the report. IWSR identified tequila, non-alcohol still and sparkling wine, American whiskey, and cocktails and long drinks among the leading opportunities there. In developing markets, the report pointed to tequila in Mexico, Scotch whisky in Türkiye and India, still wine in Brazil, and Indian whisky in India. It said Indian single malt has now overtaken Scotch single malt in both volume and value in India.

Wine-producing countries including Spain, France, Italy and Australia are also expected to post growth in premium-plus wine tiers, helped by what IWSR described as domestic pride and a tendency to premiumize everyday wine occasions.

Travel retail was one of the clearest exceptions to the broader market caution. IWSR said global travel retail volume rose 5% in 2025 and value increased 7%, showing that value growth there is running ahead of volume growth. Super-premium was the strongest price tier, with volume up 10%, while ultra-premium and prestige both declined. IWSR said that points to a form of premiumization with limits, where shoppers are trading up but not without restraint.

Scotch whisky is expected to be the biggest incremental value opportunity in global travel retail spirits through 2030, with projected retail sales value gains of more than US$400m, ahead of agave spirits, gin and Japanese whisky. In 2025, travel retail volume grew 10% for Scotch, 37% for Japanese whisky and 10% for agave spirits, while Cognac fell 11% and flavored gin dropped 7%.

Charlotte Reid, IWSR’s senior insights manager for global travel retail, said the channel appears to be showing genuine premiumization rather than growth driven only by inflation. She said airports and other travel retail settings create conditions that encourage premium purchases, including more time to browse, stronger in-store presentation and brand staff who can influence buying decisions. She also said the occasion is different, with consumers often looking for something distinctive for themselves or as a gift.

The report says the gap between the industry’s definition of premiumization and the consumer’s definition is now widening. Companies have traditionally measured premiumization by generating more value than volume through higher prices, upscale packaging, limited editions and celebrity-backed labels. IWSR said consumers are increasingly focused instead on meaningful occasions, clear quality upgrades and products with real scarcity or provenance, rather than broad premium claims. Tegner said companies now need to separate inflation from recent value growth and ask whether their premiumization strategy is mainly about price or about delivering a consumer experience worth paying for.