Alcohol Industry Enters Period of Uncertainty and Change

The beverage alcohol industry is facing a period of significant change, with new trends and challenges shaping its future. According to recent research from IWSR, six main drivers are influencing the direction of the sector as it moves through 2026 and beyond. These factors are affecting everything from consumer behavior to product innovation, and they are especially important as companies navigate ongoing financial pressures and global uncertainty.

One of the most notable shifts is in the attitudes of Generation Z toward alcohol. Rather than turning away from drinking altogether, Gen Z is becoming more selective about when and what they consume. Research conducted by IWSR in September 2025 shows that Gen Z’s participation in alcohol remains stable compared to the previous year and is higher than in 2023. However, this group is narrowing its choices, with the average number of categories consumed per occasion dropping from 2.8 to 1.8 over two years. Fewer young adults are taking “dry” days, and interest in temporary breaks from drinking appears to have peaked in most markets. Gen Z is also playing a key role in reviving on-premise consumption, showing higher engagement with bars and restaurants across regions including Europe, North America, Australia, South Africa, and Japan.

Affordability is another major factor shaping consumer choices. The trend toward premium products continues but is now influenced by greater price sensitivity as cost-of-living concerns persist. Consumers are not abandoning premium experiences but are more selective about when they choose to spend more, seeking clear value for their money. In the first half of 2025, alcohol budgets shrank in many markets, even among high earners who are usually less affected by economic pressures. While financial confidence is rising in some areas, actual spending on alcohol does not always reflect this optimism. Price consciousness has led to fewer visits to bars and restaurants compared to late 2024, with standard beer and ready-to-drink (RTD) beverages gaining popularity due to their perceived value.

Growth opportunities are increasingly found in developing markets as mature markets slow down. Countries such as India, Mexico, Nigeria, South Africa, Brazil, and Ethiopia are expected to add the most total beverage alcohol (TBA) volumes between 2024 and 2029. India stands out as a leading market for expansion. In contrast, China is projected to see a decline in overall volume despite growth in specific categories like RTDs, sparkling wine, imported still wine, gin, rum, whisky, and tequila. While developed markets face challenges, they remain important for future category growth opportunities—particularly the United States—even as TBA volumes decline there.

The global travel retail (GTR) channel is also evolving. Although passenger numbers are recovering unevenly across regions, GTR is shifting from a transactional model to one focused on experience and exploration. Storytelling and exclusivity are becoming more important for engaging consumers and driving sales. IWSR forecasts predict GTR growth of $4.2 billion and 10 billion nine-liter cases by 2034. However, volume growth still lags behind passenger traffic recovery in many areas, especially China and North America. The Middle East, India, and parts of Europe have seen rebounds but have not fully offset losses elsewhere. More GTR space is being allocated to emerging categories like agave spirits and bitters at the expense of traditional leaders such as Scotch whisky.

RTDs continue to be a strong driver of growth across multiple trends. Their appeal lies in their versatility—they fit various occasions and channels while attracting different consumer groups. RTDs connect with trends like flavor discovery, moderation, and convenience. According to IWSR’s RTDs Strategic Study, these beverages are outpacing TBA growth in eight of the top ten markets worldwide. Although growth has slowed recently, RTDs are expected to keep gaining market share where they already hold more than 5% of TBA volume share. While new consumer recruitment has slowed down, existing consumers—especially younger adults—are increasing their frequency of consumption. Growth is also being driven by gains in on-premise venues, on-the-go consumption, and ecommerce.

Innovation remains crucial for value creation within beverage alcohol brands. Over the past decade, innovation has contributed 55% of the $231 billion added to TBA value according to IWSR data. The number of new product launches continues to rise at a compound annual growth rate of 5%, led by RTDs but also including spirits and beer. However, companies are advised to focus on innovations that deliver incremental growth rather than cannibalizing existing products or categories. In a rapidly changing market environment, careful analysis of emerging trends or flavors is necessary to identify those with lasting potential.

These six drivers—Gen Z’s evolving behavior, affordability concerns reshaping premiumization, developing market expansion, changes in global travel retail dynamics, the continued rise of RTDs, and targeted innovation—are set to guide strategies for beverage alcohol brands as they seek growth amid ongoing economic challenges and shifting consumer preferences worldwide.