The alcoholic drinks industry is contending with persistent macroeconomic challenges, while ongoing changes in consumption behaviour, such as shifts in purchase channels and moderation trends, bring both risks and opportunities. Key themes in a strategic direction are emerging as brand owners respond and adapt, notably with an acceleration of product diversification moves, digital transformation, and – with the long term in mind – continued commitment to premiumisation.
This report comes in PPT.
Alcoholic drinks’ resilience has been put to the test over the last few years, with severe pressure on household finances driving a reduction in discretionary spending. In 2023, many brand owners recorded flat volumes or decline, and while there is now cause for cautious optimism, economic uncertainty and geopolitical tensions continue to present risks to growth.
Portfolio diversification is a rising priority given the maturity of core categories in key markets, moderation trends, and variable consumer tastes governed by occasions. Cross-category M&A is accelerating, RTDs are attracting attention from all angles, and the overlap between alcoholic and soft drinks is increasingly evident in co-branded launches and acquisitions.
Consumers’ ability to trade up or opt for their preferred premium choices is weakening under sustained cost of living pressures, illustrating the risks of a narrow strategic focus on the highest price brackets. A flexible approach is key, but premiumisation retains long-term relevance; demand is ultimately still tilted towards aspirational consumption and drinking “less but better”.
The industry is exploring the array of possibilities presented by the underdeveloped digital space. The disruptive potential of AI extends across production, marketing, sales channels, and innovation. Effective online platforms and digital engagement approaches will often provide practical benefits or add value with an elevated, interactive experience – or both.
Alcoholic drinks companies are stepping up their environmental ambitions. Changing legislation and the need to improve supply chain resilience are key motivations. Importantly, so is brand image. Ingredients, production, and location are already important talking points, especially in the premium space. Clear and open sustainability communication can enhance that messaging.
Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.
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