In this presentation from Bar Convent Berlin, Spiros Malandrakis, International Head of Research – Alcoholic Drinks at Euromonitor, discusses the top trends shaping the alcohol industry heading into 2024. Malandrakis touches on issues like premiumization, RTDs, and e-commerce and how they are affecting the alcohol industry moving forward.
In his presentation at Bar Convent Berlin, Graeme Loudon, IQ Managing Director – EMEA at CGA by Nielsen, dug into opportunities for the alcohol industry on-premise. Loudon discussed the emergence of younger consumers in the on-premise market, the importance of hospitality at venues, and more.
At Bar Convent Berlin, Jesse Cortes, Senior Manager, Business Development at Park Street Companies, discussed the state of the spirits industry heading into 2024. Jesse touched on the global beverage alcohol market, exports to and from the U.S., and spirits consumption in the U.S. and EU.
5 Alcohol Trends Shaping the Industry
Spiros Malandrakis (0:10)
Hello everyone, I hope not many of you are feeling too hungover today. I can see some smiles, most likely some are. My name is Spiros Malandrakis, and I am the head of alcoholic drinks research at Euromonitor International. I’ve been covering the alcohol industry for about the last 18 years, from beer to spirits to all the sub-segments within that, to RTDs, and of course to the rising non- and low-alcoholic drink trend that we will be talking about today. I decided to keep it a bit basic—just five slides talking about qualitative trends. I’m not going to give you too many charts because of the hour and the hangover, but if you have any questions or anything specific that you would like to know, I would be very happy to have a conversation afterwards.
Spiros Malandrakis (1:05)
My job—as I’ve described in the past when people ask me what I do—is quite interesting in the sense that I have to predict the future of drinking, but ultimately it’s predicting the future. Every year I have to distill all the information that Euromonitor gets from around the planet from 100 different markets into some actionable, big-picture trends—megatrends, if you wish—the directions of travel for the alcohol industry. We’re going to be talking about five of them today.
Spiros Malandrakis (1:37)
The first one is what we have already seen: all about the resilience of the industry in the face of what I call a state of “permacrisis,” which I’m sure everyone in this room is very familiar with. By that, I mean we’ve been going through the catastrophic, once-in-a-century events of the COVID pandemic to the revival after that—which I used to call the new Roaring ’20s or “revenge conviviality,” as you can call it in many different ways. This kind of need for consumers to go back out was followed by the massive inflationary pressures that we already discussed, and now wars everywhere and potentially further inflationary pressures—that is a state of permacrisis. But I think we have to remember that the industry in the face of all that is actually doing particularly well, and I think this story of resilience is very interesting in itself and gives us an idea about the future as well.
Spiros Malandrakis (2:31)
The second trend is the space beyond: beyond beer, beyond spirits, beyond wine. It’s basically RTDs (ready-to-drink), and we’re going to talk much more about RTDs in a bit. I think they are an extremely interesting and exciting category right now. Already there was a conversation about premiumization, and I think it is a very important trend. We need to put it in the context of what is happening around the world, what its limits are, and what could be the potential counter-forces derailing it for a little bit. In the long term, I also believe what was just discussed—that premiumization will continue being here to stay.
Spiros Malandrakis (3:09) Next is non-alcoholic and low-alcoholic drinks. I call it NextGen euphorics, and it’s important for me to not just discuss the negative—basically that we’re taking alcohol out of the equation—but how can we add value to the segment to make it more pioneering, more innovative, and actually add some additional functionality to these propositions. Finally, we have the importance of e-commerce, which historically in the industry has not been something that we have focused on. I think we will be seeing much more of it in the next couple of years as consumers are now very used to having everything at a click of a button following the years we spent stuck in our basements during COVID.
Spiros Malandrakis (4:00)
To look closer at resilience, recovery, and realignment: as I said, the industry has proven to be extremely resilient. Total global volumes of alcoholic drinks are mostly where they were before the end of the world—they are largely where they were in 2019. Now, that’s the total number. The interesting bit comes when we start digging deeper into the data, and we see that while the total volumes are actually very close, breaking it down by off-trade and on-trade reveals that it is the off-trade that has made massive leaps forward. The on-trade—the bars, the restaurants, the clubs—are the ones that are still missing massive amounts of volume compared to where they used to be back in 2019. For me, that highlights a long-term issue: beyond what happened with COVID and the pandemic issues, it is a long-term transition away from home and away from the clubs into our home consumption. There are a number of reasons for that—economical, microeconomic, and the home becoming a central entertainment hub that wasn’t the case back in the ’90s or even the 2000s.
Spiros Malandrakis (5:49)
The space beyond—ready-to-drink—is an extremely interesting category. When I try to describe it to people, RTDs for some of us of a certain age here were witnessed back in the ’90s as very colorful bottles for certain high-energy occasions late at night, not necessarily with natural ingredients, but they were doing the job. In many cases, they were the stepping stone for many of us to then graduate into proper spirits or proper drinks or proper cocktails. They always change; that’s the nature of the beast. The best way to describe RTDs is that they are basically the David Bowie of alcoholic drinks: there is no one way to describe them, as they are always changing the way they are perceived, promoted, and described.
Spiros Malandrakis (7:38)
Premiumization was mentioned before, and because I’ve been covering the industry for 20 years now, premiumization is like a mantra—it seems like it has always been there. I still believe in the long-term potential of premiumization as a trend. Consumers will continue moving toward more aspirational products, more sophisticated consumption, lower volume, and higher value, especially in mature markets. At the same time, I have to ring the alarm bell in the context of the cost-of-living crisis right now. In the next one or two years, as inflation continues being so high, we have to be a little bit careful about a monolithic focus only on premium products. Differentiation—allowing consumers to trade down or trade across if times are tough—will be a very important way to keep them within a certain brand or company ecosystem.
Spiros Malandrakis (9:33)
NextGen euphorics, alcohol proxies, non-alcoholic drinks, moderation—whatever we call them—when I speak with alcohol companies in the last three or four years, they very rarely want to speak to me about alcoholic drinks; they mostly want to talk about non-alcoholic drinks. What I would like to stress is that we are moving beyond the non-alcohol positioning into added functionality. It’s all about adding ingredients that facilitate energizing occasions or ingredients that facilitate someone going to sleep earlier at night without having to have alcohol. The next wave of these products will be all about this added functionality, added value, and added ingredients.
Spiros Malandrakis (11:00)
Lastly, e-commerce historically accounted for less than 3% of the total overall volumes sold of alcoholic drinks, which is extremely low compared with all other FMCG industries, obviously because of legal reasons, age verification, and logistics problems, as well as an element of complacency. COVID massively disrupted and changed all that, and there is no way to put the genie back in the bottle. Convenience on the one hand, alongside the massive variety of products available online, means that thousands of brands are available at a click of a button. Combining this with the transition toward off-trade consumption, people will be staying more at home and expecting everything at the push of a button while sitting on their couch. That is more or less everything very briefly about the key trends. Hope you found it interesting!
Unlocking On-Premise Potential: Exploring Future Opportunities
Graeme Loudon (0:09)
Hello everyone. So I’m going to deep dive a little bit more into the key trends that we see specifically in the on-premise market. I’m going to start by talking about the overall health of the on-premise market today. Our data here is from a global study in April of 2023, taking a European lens on how things are going. Looking at frequency, the key trend versus last year through to April is that the status quo has very much been maintained—most consumers are still going out just as frequently as they were. Beyond that, we can see that more consumers in Europe tell us they’re going out more frequently compared to last year than those going out less frequently. While European positivity is slightly below the global average driven by strong growth in Asia and Africa, more recent September data shows frequency coming under a bit more pressure, with a bit more of a balance toward people going out less often.
Graeme Loudon (1:34)
However, that headline belies what is the true insight: changes in frequency are not uniform. We see different consumer groups acting differently. For example, the consumer going out less frequently than last year was a fairly infrequent visitor to the on-premise anyway, typically part of the Boomer generation. On the flip side, the consumer going out more frequently is typically a Gen Z consumer or someone who goes out frequently anyway. On a net level, this is a positive: we have an increase in frequency among the most valuable consumers and a decrease among the least valuable. Now more than ever, there’s never been a more important time to really understand who your consumer is—whether you’re a brand owner or a bar owner.
Graeme Loudon (3:09)
The consumer who is going to go out more is younger and more likely to live in a city center location. Interestingly, they are just as likely to be impacted by the cost-of-living crisis as the average visitor; they are not living in a bubble, but they continue to prioritize their on-premise visits regardless. It is critical to work out who your consumer is, see how exposed you are to macro market trends, understand what venues and occasions they will prioritize if they drop frequency, and determine how to pivot to another consumer group across demographics, repertoires, and occasions so you have a clear understanding of both where to play and how to win.
Graeme Loudon (4:39)
With cost pressures hitting consumers in their wallets, frequency is under pressure, but consumers are telling us that instead of making big purchases like major holidays, cars, or houses, they are looking for affordable treats. They see the on-premise as their affordable treat, and that mindset fuels continued prioritization within the channel. When asked if they would prefer fewer, higher-quality drinks or a higher volume of lower-quality drinks for the same total bill, the answer is clear: consumers much prefer “less, but better.” This premiumization idea is really coming through in their drinks choices, and cocktails have heavily benefited from this trend because consumers cannot easily replicate them at home and they offer a great theater of serve and experience.
Graeme Loudon (7:01)
To win in cocktails, we first need to understand that cocktail preferences vary across different parts of the market—what works in Asia or France won’t necessarily work in Germany or inside a restaurant versus a bar. For instance, Asia shows a preference for shorter, stronger drinks (like Whiskey Sours and Singapore Slings); the Americas prefer Latin spirits (with Margaritas over-indexing heavily, alongside Caipirinhas and Piña Coladas); while Europe prefers longer, sweeter drinks (leading with Aperol Spritz, Mojito, and Sex on the Beach). With 76% of on-premise consumers expecting to drink cocktails as or more frequently in the year ahead—outpacing any other individual spirits category—it is an essential market to capture.
Graeme Loudon (9:26)
Once you’ve built that serve strategy, the next challenge is getting that drink into the hands of a consumer. Looking at trade marketing and in-venue mechanics, price is seen as a secondary factor—including promotions and house options—which are decreasing in influence year-over-year due to the treat mindset. The two most important levers are information-based: providing detailed descriptions of flavor and taste on physical or digital menus, and most importantly, bar staff recommendations. Having bar staff recommend your brand or serve in-venue is the single most important lever to get a consumer to try your drink. Because bartenders differ by market, venue type, and experience, brand advocacy platforms must be tailored to stand out.
Graeme Loudon (12:40)
The on-premise is undoubtedly under pressure, but as the phrase goes, we are in a state of “permacrisis”—from smoking bans and licensing reforms to COVID and rising costs. However, the on-premise remains an integral part of European consumers’ lives, with 61% stating they would be either disappointed or lost without it. The on-premise isn’t just about shifting volumes to the off-premise; it is a place for us to build brands, engagement, excitement, margins, sales, and careers. Investing in the on-premise market today will help you win not only in the on-premise, but in the off-premise tomorrow as well.
Graeme Loudon (14:00)
To summarize the key steps to win in today’s European on-premise market:
- Target the Right Consumer: Understand who your consumer is, assess your exposure to macro factors, and pivot strategically.
- Fit the Treat Mindset: Tap into the “weekend millionaire” who goes out less frequently but spends more per visit on premium products.
- Win in Cocktails: Flex your serve strategy across different regional and venue preferences.
- Win with Bartenders: Engage staff with standout advocacy programs, as recommendations are the #1 driver of consumer choice.
- Lean In and Invest: Continue to invest in the channel today, because winning here today means winning across total trade tomorrow.
Global Beverage Alcohol Trends Heading into 2024
Jesse Cortes (0:03)
Welcome, and thanks for taking time out of this cool event that we’re all at to come to this presentation. I’m not nearly as smart as my co-panelists, but I’ll do my best. Park Street is not your traditional data company; we’re more of a very technology-focused importer and distributor both in the U.S. and the EU. For my part today, I’m just going to cover a little bit of global insights, primarily Europe and the U.S., as well as some of the trade relationship that we have.
Jesse Cortes (0:49)
By the end of 2023, global beverage alcohol is forecast to reach over $21 billion. Premiumization is a long-term trend, especially in more developed countries—maybe not at the rate of the spike we saw in 2020 and 2021, but still a solidified trend. China has been a leader in the luxury spirits market, but we’re seeing the U.S. quickly catching up, really spearheaded by the Agave spirits industry (tequila and mezcal). That category is forecast to add the most growth in the luxury or super-premium-plus categories by any individual market in the next five years.
Jesse Cortes (1:42)
As we all know, spirits have been outperforming wine and beer in some of the major markets or taking share from them. In terms of evolving brand portfolios, that’s why larger suppliers that were traditionally wine- or beer-focused are getting involved in the spirits industry through spirit-based RTDs (ready-to-drink), while spirit suppliers are creating their own RTDs as well. There is a lot of innovation in building out portfolios to include spirits. Regarding cost of goods, suppliers are finding it hard to keep their prices down, which is a reality in 2023.
Jesse Cortes (2:48)
EU spirits exports to the U.S. saw a 16% growth rate last year. Global exports for EU spirits worldwide almost reached 10 billion in 2022. Part of that growth was due to the temporary removal of tariffs. Top categories include grape-based spirits like Cognac, whiskies, cordials, liqueurs, and vodka. U.S. exports to the EU almost doubled that, reaching over 700 million in 2022 (and over 2 billion worldwide), primarily driven by the removal of tariffs. Top U.S. export categories include whiskey, cordials, vodka, and rum. There is deep integration across the Atlantic, with U.S. companies owning European spirit brands and vice versa.
Jesse Cortes (4:15)
Looking at consumption growth rates, Agave-based spirits have seen remarkable growth here in Europe. Seeing it firsthand at this event’s Agave bar was quite surprising. Gin continues to grow over the past five years. Cognac shows a negative trend, but that is primarily due to large export markets like China and the U.S. High-growth markets across all spirits since 2020 include Spain, Greece, Portugal, Italy, Croatia, Austria, and Turkey.
Jesse Cortes (5:38)
In the U.S., Agave growth is almost double what it is in Europe. Growth in whiskey, liqueurs, and cordials is also higher in the U.S. All of these categories—with the unique exception of vodka—are growing in the premium-plus price segments. While overall volume in categories like rum or gin has been stagnant, the premium-plus segment continues to grow. In whiskey, top-growing subcategories include American, Irish, and Japanese whiskey, alongside up-and-coming categories like Soju and non-alcoholic spirits.
Jesse Cortes (7:39)
Moving away from data to sustainability and regulatory trends, Park Street works with companies involved in sustainability initiatives and regulatory compliance in the U.S. and EU. Major suppliers like Diageo have goals to use 100% renewable energy by 2030. In sustainable farming, the Tequila Regulatory Council aims for 100% deforestation-free certification by 2027, Beam Suntory launched a regenerative Agave program for Casa Sauza, and smaller suppliers like Brother’s Bond Bourbon are also championing regenerative agriculture. We are also seeing packaging innovation, such as Frugal Pack paper bottles, Meili Vodka’s post-consumer recycled glass, ecoSPIRITS’ circular economy initiatives, and the reuse of Agave fibers in tequila production.
Jesse Cortes (10:04)
Regarding regulatory changes, new labeling requirements for wine start in the EU this December, and we expect those to apply to spirits and beer in the near future. Looking ahead to the 2024 industry outlook, we expect the U.S., Europe, and China to continue as value drivers, while Mexico, Brazil, and India act as volume drivers. Agave spirits will continue to lead, though trade relations and tariffs around aluminum and steel will significantly impact imports and exports. Finally, the “better for you” movement will drive increased demand for no- and low-alcohol beverages, leaving plenty of room for category growth among the general public.
More Resources on Beverage Alcohol Trends
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