Global alcohol sales to fall eight per cent in 2020

11 November, 2020 by Andy Young

Leading alcohol data and intelligence analysts IWSR is forecasting global beverage alcohol sales will perform better than expected this year, but also predicts a slow long-term recovery.

Based on how the pandemic has unfolded in 2020 so far, IWSR conducted an in-depth mid-year assessment on the outlook for the global beverage alcohol industry.

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IWSR reviewed beverage alcohol consumption in 19 key global markets, and the global travel retail channel (representing over 75 per cent of total global alcohol consumption). The key markets reviewed were Australia, Brazil, Canada, China, Colombia, France, Germany, India, Italy, Japan, Mexico, Poland, Russia, South Africa, Spain, Thailand, Turkey, UK, US, and the global travel retail channel.

“Given the incredibly tough measures the industry has continued to face due to Covid-19, it’s encouraging to see that beverage alcohol in the 19 focus countries is only projected to decline by –eight per cent in 2020, rather than by the double-digit losses originally expected,” said Mark Meek, CEO of IWSR Drinks Market Analysis.

“Excluding national spirits such as baijiu and shochu, total beverage alcohol in the 19 focus countries will recover to 2019 levels by 2024. We may see that recover even faster now, given the recent news on encouraging vaccine trials.

“The rise of ecommerce and the efforts by retailers and on-premise operators to adapt to this crisis, coupled with consumers expanding to new occasions, created a dynamic, albeit challenging, new environment for beverage alcohol.”

IWSR says volume losses in Australia will be under five per cent, while the US and Canada are expected to show actual volume growth this year.

The report says that China also performed better than initially foreseen at the start of the pandemic, as Chinese consumers – including 400 million millennials in the country – have returned to almost all everyday activities. The international spirits market in China, in particular, will see full recovery by 2021.

In terms of recovery, and the impact of COVID-19 on the on-premise, the IWSR estimates that Australia will be one of just four key markets (along with Colombia, Poland and Russia) that will see a market share gain over 2019 levels in on-premise by 2024. In many markets, COVID-19 has accelerated a long-term pre-crisis trend of a declining traditional on-premise, according to IWSR.

The clear winner during lockdowns has been alcohol ecommerce, which has increased in all focus markets. The value of ecommerce in 10 core countries (Australia, Brazil, China, France, Germany, Italy, Japan, Spain, UK, US) is forecast to grow by over 40 per cent in 2020, to reach US$17bn, and is expected to grow to over $40bn by 2024.

Looking at the overall impact of COVID-19 on global markets, Meek added: “COVID-19 has had a polarising effect on the world economy and thereby the global beverage alcohol market. Large markets such as the US and China have survived the best, while less developed regions and countries such as Africa, Mexico and Argentina have unfortunately suffered more.

“Very premium high-end spirits have also held up well, while low-end and value products have seen gains in struggling markets as Covid-19 leads to down-trading. Some of the more standard middle ground categories, blended Scotch for example, have lost share.”