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Drinks industry faces 5-year COVID-19 recovery

May 27, 2020
By Alana House

A new report suggests the global liquor industry’s COVID-19 recovery could take up to five years.

Research firm IWSR Drinks Market Analysis predicts double-digit declines in 2020 for total global alcohol consumption. It’s a stark contrast to the 0.1% rise in volume and 3.6% growth in value in 2019.

And it warns that beverage alcohol volume levels in the US and UK won’t see a COVID-19 recovery until after 2024.

“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, CEO of IWSR Drinks Market Analysis.

“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.”

Beer expected to rebound better than wine & spirits

Though the beer category has taken a hit in 2020, the outlook for continued growth of no-alcohol beer remains positive, with a forecasted +8.1% CAGR 2019-2024.

In total, beer is expected to reach 2019 volumes by 2024.

Sparkling outshines still wine

The long-term global decreases in wine consumption continued in 2019, posting a -1.1% volume decline.

One bright spot in the category moving forward, however, is sparkling wine. It 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.

Whisky and gin to recover fastest

The IWSR forecasts that whisky and gin are the spirits likely rebound fastest to pre-COVID-19 levels.

According to Nielsen data, gin is already rebounding in the US, with retail sales up 42.5% from last year for the nine-week period.

Vodka volumes are not expected to recover to 2019 levels until after 2024.

Meanwhile, 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).

Selzters & RTDs trend strongly

RTD products were the fastest growing beverage alcohol category in 2019, up +19.6% in volume and +18.8% in value.

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Even though RTDs only represent a small slice of beverage alcohol market share, they contributed more than double the value growth to the industry than wine in 2019.

Much of this interest and growth in the category is fueled by the innovation and convenience of alcoholic seltzers in the US, which last year grew by over +200% in volume.

Seltzers are not expected to decline during 2020 and the global RTD category is forecasted to grow by +7.2% volume CAGR 2019- 2024.

The future for the drinks industry

IWSR predicts a slow rebound for the drinks industry as it enters into COVID-19 recovery mode.

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