Travel retail liquor sales to reach pre-crisis levels by 2024, says IWSR

By Charlotte Turner |

Whisky selection LHR T3 leadDuring an eye-opening presentation, IWSR Drinks Market Analysis revealed that though worldwide beverage alcohol volume increased slightly in 2019 – reversing declines from the year prior – it will be five years before the global industry rebounds from the ongoing Covid-19 crisis.

 

Global travel retail, severely affected by widespread travel restrictions, will see a particularly harsh decline in 2020 but is expected to reach pre-crisis levels by 2024.

 

Overall (all markets) total spirits dropped -2.5% in volume last year, due in part to steep volume losses in baijiu (a spirit consumed almost entirely in China). Excluding baijiu, however, global spirits volume grew +1.0% in 2019.

 

Amongst traditional spirits categories, gin was the fastest growing in 2019 (+6.1%), but that growth has slowed somewhat as consumers are beginning to show signs of ‘gin fatigue’, especially in some European markets (growth of gin globally was +9.6% in 2018).

 

Within the whisky category, Irish grew by +10.6% volume, Japanese increased +10.3%, and US whiskey posted +5.8%. The IWSR forecasts that whisky and gin will likely rebound fastest to pre-Covid-19 levels. Vodka volumes are not expected to recover to 2019 levels until after 2024.

 

Heineken 0.0 33cl BOTTLE April 2017

Ryanair listed Heineken’s alcohol-free beer in 2018.

ALCOHOL-FREE FOR TRAVEL RETAIL?

Interestingly, no-alcohol spirits were the fastest-growing spirits segment by volume in 2019, +25.5%, though still small in terms of market share (and of note, 2018-2019 was the first period that IWSR began tracking the no-alcohol spirits category).

 

When asked by TRBusiness if this trend was transferrable to travel retail, he said that it was unlikely.

 

When asked what was driving this growing trend to no-alcohol spirits, Meek said: “It’s people’s desire to be involved in drinking sessions, but choosing not to drink alcohol.

 

“Focus on health and wellness is also an influencing factor as well. Younger legal drinking age and Gen z will drink less than their parents. It is no longer the ‘social glue’ as it was once considered; social media is.”

 

However, Meek conceded that once economic implications become more apparent, this is likely to decline amongst young people who will be among the hardest hit financially by this pandemic.

 

Seedlip image Source Seedlipdrinks.com

Diageo acquired a majority shareholding in non-alcoholic spirit, Seedlip, in 2019. But what is the drinks giant’s intention with the brand in global travel retail?

READY-TO-DRINK PRODUCTS DRIVE GLOBAL CONSUMPTION

Total global alcohol consumption, led by increases in beer and ready-to-drink products, grew by +0.1% in volume and +3.6% in value in 2019, but losses in the months-long near complete shutdown of bars and restaurants across the world this year has not been offset by upticks in liquor retail and ecommerce.

 

“While we’re still assessing the full impact of the current Covid-19 situation, it’s very clear that the pandemic is set to cause a deeper and more long-lasting after-effect to the global drinks industry than anything we’ve experienced before,” said Mark Meek.

 

“Even the downturn following the 2008 financial crisis was less severe than what we are seeing now. In many ways, 2019 was perhaps the last ‘normal’ year for the drinks industry.”

 

The long-term global decreases in wine consumption continued in 2019, posting a -1.1% volume decline (though value was slightly up, at +0.6%). In the key consuming region of North West Europe, wine volumes have been slowing at a rate of -1.6% CAGR 2014-2019, and in the US, wine consumption last year declined for the first time in 25 years.

 

SPARKLING WINE GROWTH IN 2019

One bright spot in the category, however, is sparkling wine which posted growth of +1.4% volume, and +3.6% value in 2019, and is forecasted to rebound stronger than still wine by 2024, as consumers increasingly shift to year- round consumption of these products.

 

Lastly, liquor ecommerce posted gains last year, which should be welcome news to brands battling current challenges brought by Covid-19, said IWSR. Across 16 key markets studied by the IWSR, all beverage alcohol categories in 2019 grew in value faster online versus the total market.

Give Joy-wines-&-spirits-2019

Sparkling wine was described as a ‘bright spot’ for global consumption in 2019 (all markets).

 

“As restrictions ease, long term recovery is expected to be slower than the initial bounce back – driving a ‘Nike Swoosh’ rebound shape,” added Meek.

 

“Like many other industries, it’s incredible how a few months of lockdown will result in several years of recovery, but beverage alcohol has proven to be remarkably resilient in previous downturns, and this should be no different.

 

“A strong focus on innovation, premiumisation, and new routes to market such as ecommerce, are all factors which will help contribute to the industry’s rebound and future growth.”

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