Alarm bells are sounding among industry analysts as sales decline for premium drinks and consumer survey results point to a shift in social attitudes.

Among the hard-hit categories globally are cognac and Champagne. French companies LVMH, Rémy Cointreau and Pernod Ricard each reported declining sales in their third-quarter earnings, while IWSR consumer research from November 2023 shows alcoholic products are one of the top FMCG categories where Australians are spending less.

Union Générale des Viticulteurs pour l’AOC Cognac President Anthony Brun noted that the drop in cognac sales was consistent with other drinks categories. 

“There is no disenchantment with the cognac as a product or existential questions to be asked there,” he said.

“We are suffering, like others, the consequences of the end of COVID-19, the war in Ukraine, inflation, which have all had an impact on the world economy.”

IWSR notes: “Across 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 Emily Neill, COO Research, IWSR.

“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.”

The Financial Times recently reported: “Premium alcohol sales rocketed during COVID-19 lockdowns as bored consumers stuck at home with extra savings splashed out on pricier spirits. This continued as bars reopened. But drinkers are now dialling back on spending amid worries about the economic outlook with aspirational spirit brands becoming one of the first luxury categories to moderate.”

Meanwhile, new data released by the Comité Champagne shows global Champagne shipments fell 8.2% in 2023 compared to 2022, dropping to 299 million bottles.

Champagne sales went through the roof during “Roaring ’20s” celebrations that followed pandemic lockdowns ending, but overstocking by distributors in response to the fear of shortages in 2022 together with Champagne sales went through the roof during “Roaring ’20s” celebrations that followed pandemic lockdowns ending, but overstocking by distributors in response to the fear of shortages in 2022 and the consumer spending slowdown have taken their toll.

“We are crossing into territory where the savings are gone, the support is gone,” said Euromonitor spirits analyst Spiros Malandrakis.

“It looks like a hangover after the great party that followed the pandemic recovery.”

The way Australians party is changing

According to Havas’ latest Prosumer Report ‘Is the Party Over?’ the impact of world events and evolving social trends are changing the way Australia – and the world – celebrates. 

The global study of nearly 13,000 people across 30 markets, has highlighted the shifts in the culture of festivity around the world, comparing the sentiments of ‘mainstream’ respondents with those identified as ‘prosumers’ – a percentage of the population that influences the behaviour of others and predicts emerging tendencies.  

Key findings for Australia include:  

• 47% of Gen Zs prefer staying home on a typical weekend night rather than going out  
• 48% of Australian Prosumers say COVID related confinements killed their desire to party, compared to 39% of Prosumers globally. Gen Zs are nearly twice as likely to agree as Boomers (50% vs 27%) 
• 29% of Australians overall and 19% of Gen Z don’t drink alcohol at parties  
• 57% of Australians overall and 49% of Gen Z say they don’t need alcohol to have fun at a party 
• 75% of Prosumers say they are willing to attend a party hosted by a brand and 59% say they love when brands host parties because they have the means to make them unforgettable 

Olly Taylor, Chief Strategy Officer for Havas Creative Group Australia and Havas Labs, said: “This latest Prosumer study shows a significant divergence between how different generations party. Partying is certainly not over, but if brands want a ticket to this party, they need to better empathise with Gen Z’s evolved attitude to partying which is very different to previous generations.”  

Stepping away from years gone past when parties were highly planned and special occasions, the report found 82% of Prosumers agree a party can happen wherever and whenever, giving brands many moments to engage with consumers throughout the party cycle.  

While parties can happen anytime and anywhere, the study found the influence of a post-COVID “control freak society” has seen Australians choose to retreat to a safe space. Two thirds (65%) of Australian Prosumers prefer to party at home or in someone’s home than in clubs or at big events. Nearly half (45%) prefer to celebrate with people like them because they feel safe and one in four (26%) say they couldn’t party with people who don’t share their political opinions, a preference that is highest among Gen Z (32%). 

While they occur less frequently, celebrations are reinventing themselves, with preparation a new highlight of festivities. Three in four (77%) of Australian Prosumers believe preparing for a party is as fun as the party itself, with dressing up, makeup and planning the perfect menu all part of the occasion. Australians are also more likely to consider the impact of the events they attend, with 75% of Prosumers compared to 66% globally believing parties should respect and preserve the environment. 

Despite evolving feelings towards festivities, brands have become sought after party hosts, bringing added value to events and ensuring people can unwind and celebrate in a safe environment. The report found three in five (62%) Australian Prosumers would prefer brands spent more money on organising events and parties rather than advertising. More than half (56%) prefer to buy a product from a brand that is an active sponsor of the big events they like to attend. 

“While the ways we celebrate together have changed, this research shouldn’t dampen our party spirit. In a chaotic world, people are looking to new forms of festivity to reignite the joy and excitement in their lives. Brands can play a key role in fulfilling this need by helping to re-imagine what it means to party today,” Taylor added.   

Access the full report here