IWSR Spots Signs of a Slow Down in Premiumization

Although first half total bev/al volumes across 20 key markets continued to grow in the 2022 first half, rising 7% from 2021, they still haven't reached pre-pandemic levels across 20 key markets.  

A survey by IWSR across 20 key markets finds consumer confidence starting to weaken, with trading down in many market, as well as a focus on reducing quantity but maintaining quantity.  Increasingly, ISWR finds, consumers are looking to at-home consumption and expect on-premise to provide experience led drinking occasions.  

Premium+ spirit growth remains relatively broad-based across categories, including gin, rum, malt Scotch, and US and Irish whiskey, although agave is a key driver. Premium+ agave-based spirits saw growth of +16% in H1 2022 vs H1 2021; this follows growth of +44% in first half 2020-21, with much of this driven by the tequila category in the US.

Sparkling wine drives growth in the overall premium+ wine market. The growth of premium+ sparkling outpaces that of total premium+ wine (+8% vs +1%, H1 2021-22). Champagne and prosecco are growing across a broad base of markets, including the US, France, Japan, and Italy. Growth off a smaller base is also evident in markets such as India, Mexico, and Spain, among
others.

While overall beer volumes are lower than pre-pandemic, beer shows recovery in many markets, including healthy ongoing growth in Brazil (+12%, H1 2021-22) and Mexico (+5%, H1 2021-22).  Demand in these two markets is driven by a growing younger LDA population that favous beer.

Although volume losses in China and the US drag down the overall category, beer’s rate of decline in the US is easing compared to recent first-half periods. Beer is also well positioned to grow in select markets across Southeast Asia, Latin America and Africa.

Ready-to-drink growth is slowing globally, and the US, which holds over 40% share of global RTD volumes, is experiencing a general shift to more premium products (on a smaller volume base), as hard seltzer growth moderates. Positive growth trends across FABs in many markets, including Japan, China, Mexico and the US, also continues. Spirits-based RTDs lead the shift in premium+ RTD growth. The number of spirit-based SKUs on the market in the US has risen by approximately +70% between 2020 and 2022.