Why suppliers are putting their money on gin

May 30, 2019
By Alana House

The declining alcohol consumption trend will reverse over the next five years according to IWSR, with gin leading the revival.

While worldwide alcohol consumption declined 1.6% in 2018, IWSR expects the market to grow by 3% by 2023.

In terms of retail value, the global market for beverage alcohol in 2018 was just over $1trillion, a number which the IWSR expects to grow 7% by 2023 as consumers continue to trade up to higher-quality products.

The news follows Roy Morgan releasing data earlier this week that showed alcohol consumption has gradually declined in Australia over the past five years.

According to Roy Morgan’s ‘Alcohol Consumption Currency Report March 2019’, 67.5% of Australians aged 18 and over consumed at least one type of alcoholic drink in an average four-week period.

This represents a gradual decline over the last five years from 70.1% recorded in 2014.

Pink gin leads spirits growth

The 2018 IWSR Drinks Market Analysis Global Database also shows gin was the leading global growth category in 2018, up 8.3% versus 2017, and is forecasted to reach 88million cases by 2023.

Pink gin was a key growth driver, helping the category sell more than 72million nine-litre cases globally last year. In the UK alone, gin was up 32.5% in 2018 according to IWSR, while WSTA says gin sales in the last quarter of 2018 grew 53% by volume and 59% by value, compared to 2017 – the largest growth by quarter on record for gin.

Gordon's Pink Gin

Diageo-owned Gordon’s Pink gin broke the million-case barrier less than two years since its launch, selling 1.21million nine-litre cases in 2018, according to IWSR figures.

Sales are also skyrocketing in the Philippines (the world’s largest gin market), which posted growth of 8%, fueled by a booming cocktail scene and premiumisation of the market.

By 2023, the gin category is expected to reach 88.4million cases globally, with particular strong growth in key markets such as the UK, Philippines, South Africa, Brazil, Uganda, Germany, Australia, Italy, Canada and France.

Gin consumption was up 33% last year in Australia

Even beer companies are jumping on the bandwagon – Lion recently bought a 50% stake in Four Pillars Gin.

Whisky and agave-based spirits boom

Spurred by innovation in whisky cocktails and highballs, the global whisky category increased by 7% last year, driven in large part by a strong Indian economy (whisky grew by 10.5% in India, as consumers continue to trade up in the category).

The US and Japan posted 5% and 8% growth, respectively. The IWSR forecasts whisky to grow by 5.7% CAGR from 2018 to 2023, to almost 581m nine-litre cases.

Patron tequila

Also, continued interest in tequila and mezcal (especially in the US), and innovation in more premium variants and cocktails, drove the agave-based spirits category to 5.5% global growth in 2018 – and is expected to post 4% growth over the next five years (2018-2023 CAGR).

The RTD revolution

The mixed drinks category (which includes premixed cocktails, long drinks, and flavoured alcoholic beverages) grew 5% globally in 2018. By 2023, it is projected that more than 597million nine-litre cases of mixed drinks will be consumed across the world.

The growth is backed by continued strong gains in ready-to-drink (RTD) cans in the US and Japan, the category’s two largest markets. In Japan, most RTDs are locally made and almost exclusive to Japan. In the US, the popularity of alcohol seltzers has been a tremendous engine for growth in the RTD market.

In the cider category, as investment levels in those products continue to rise, almost 270m cases are expected by 2023, a 2.0% CAGR 2018-2023. Both of those categories (mixed drinks and cider) are taking share from beer as perceived accessibility increases (less bitter, easier to drink.)

Vodka’s decline to continue

Vodka lost volume in 2018 (-2.6%) as the market for lower-priced brands continued its decline in Russia and the Ukraine (two of the largest markets for this spirit).

Higher-priced vodkas, however, showed a more positive trend last year. Nonetheless, the outlook for total vodka over the next five years remains sluggish as the category is forecasted at -1.7% CAGR 2018-2023.

Also in decline is the flavoured spirits category (liqueurs), which dropped by -1.5% globally in 2018, and is expected to continue to slip in 2019 before rebounding slightly in 2020. Cane spirits (primarily Brazilian cachaça) was down 1.6% last year, and is forecasted to lose another 4.5m cases by 2023.

Beer rebound on its way

Global beer declined 2.2% in 2018, impacted greatly from volume decreases in China (-13%). Other large markets such as the US and Brazil also fell (-1.6% and -2.3%, respectively), while Mexico and Germany saw growth (6.6% and 1%, respectively).

The future outlook for beer, however, paints a more positive picture according to IWSR, as the category is expected to show a slight increase in 2019 and post a 0.7% CAGR 2018-2023. 

The group forecasts that beer consumption in Australia will increase 0.5%, but much of that growth will come from craft beer, which is predicted to rise 13%.

Wine volume declines, but value increases

Wine, which had posted strong global growth in 2017, lost 1.6% in volume in 2018 as wine consumption declined in major markets such as China, Italy, France, Germany and Spain (the US market was flat). However, though consumers are drinking less wine, they’re increasingly drinking better – pushing wine value to increase.

Globally, the retail value of wine is projected at $224.5billion by 2023, up from $215.8billion in 2018.

Brown Brothers sparkling wine

The one bright spot in wine volume is the sparkling wine category, which is expected to show a five-year CAGR of 1.17% 20182023, driven in large part by prosecco.

Low and no-alcohol products on the rise

Low- and no-alcohol brands are showing significant growth in key markets as consumers increasingly seek better-for-you products and explore ways to reduce their alcohol intake.

Carlton Zero

Growth of no-alcohol beer is expected at 8.8%, and low-alcohol beer at 2.8%. No-alcohol still wine is forecasted at 13.5%, and low-alcohol still wine at 5.6%. Growth of no-alcohol mixed drinks is predicted at 8.6%.

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