Alcoholic drinks market drops for first time in 15 years

This is due to inventory adjustments, pantry unloading in the US, geopolitical instability, inflation, and a slowdown in China.

The global market for alcoholic drinks dropped by 0.2% in 2023, marking its first total volume decline in 15 years, according to Euromonitor International.

The decrease reflects a confluence of factors including inventory adjustments, pantry unloading in the United States, geopolitical instability affecting consumer sentiment worldwide, inflationary pressures in Western markets, and a structural slowdown in China. 

“The industry entered negative territory, a rare occurrence, highlighting the severity of the perfect storm facing it,” said Spiros Malandrakis, head of Alcoholic Drinks Research at Euromonitor International.

Despite the overall decline, non-alcoholic beverages are experiencing significant growth. Euromonitor’s “World Market for Alcoholic Drinks 2024” report highlights that 'other ready-to-drinks (RTDs)', particularly Hard Seltzers, and cognac saw substantial volume drops of 16.6% and 9.5%, respectively. 

“As the no/lo alcohol aisles and bar shelves get increasingly more crowded, opportunities in this segment will shift towards functionality, moving beyond brand extensions to embrace unique compositions that push the limits of experimentation, resonating strongly with younger Millennial and Gen Z demographics,” noted Malandrakis.

In contrast, spirit-based RTDs achieved an 8% growth, while emerging non-alcoholic categories and sparkling wines benefitted from consumers trading down from champagne, indicating that some segments continue to thrive.

The report also noted a significant deceleration in both off-trade and on-trade performances, with off-trade declining by 0.7% and on-trade growth slowing to 1%.

“As the post-pandemic effervescence driving the industry fades, 2023 becomes reminiscent of a well-balanced Negroni. Decidedly bitter notes - as macroeconomic and geopolitical volatility take their toll - find equilibrium against the herbaceous hints of green shoots of cautious optimism,” said Malandrakis

“Whilst numerous short-term downside risks remain and most categories and markets are still under pressure, alcoholic drinks appear to be turning yet another corner and proving resilient in the face of a state of permacrisis. There are challenges ahead,” he said.