Economic pressures and geopolitical uncertainty have lead the long-running premiumisation trend in beverage alcohol to weaken significantly in the first half of 2023.
New data from IWSR shows that across the 20 key markets that make up over 75% of total global volumes, total beverage alcohol premium-plus volume consumption in the first half of 2023 was 11% higher than for the same period in 2019; however, this growth rate is slowing, with volumes only increasing by 1% between H1 2022 and 2023. A similar trend of slowing growth is evident across premium+ volumes for total beer and spirits as well.
“The growth rate of premium-and-above products weakened significantly across beer and spirits during the first half of 2023, although their share of overall category volumes broadly continued to increase,” said IWSR COO Research Emily Neill.
“Economic pressures did not relent, as inflation remained high – a backdrop that was more globally widespread than during the same period last year. Geopolitical uncertainty from the war in Ukraine heightened the pressures mounting on brand owners, which passed on increased costs to consumers.”
While hotspots such as China, India, the Philippines and Thailand are seeing strong performances, outside Asia, consumers are withdrawing from the on-premise as post-pandemic behaviours become entrenched and the cost-of-living crisis hampers a full recovery for the channel. Instead, many consumers say they are using home-premise consumption to maintain relationships with premium brands.
“Despite the overall downturn, there is still evidence of premiumisation in H1 2023, particularly in spirits and beer,” Neill said.
She also highlighted the resilience being exhibited by beer, particularly at higher price points and in Asia.
“Beer may be a category that benefits as consumers trade down from other categories,” Neill suggests. “Beer is generally more affordable, including premium variants.”
Neill concluded: “As premiumisation decelerates, careful consideration should be given to how it evolves across different categories and regions. Despite overall category declines, pockets of premiumisation still exist in many markets.
“In the longer term, the premiumisation trend looks to be structural in many parts of the beverage alcohol market – and it is likely to withstand shorter-term economic and geopolitical turbulence, as it has done in the past.”