Dynamic growth on premium alcohol market
The most recent data published by IWSR Drinks Market Analysis indicate that the „premium alcohol” market (i.e. brands whose retail price exceeds USD100) is growing much faster than that of remaining spirits. According to IWSR Status Spirits, the value of strong premium liquors amounts to USD8.3 billion and it grew with compound annual growth rate (CAGR) of 7% between 2014 and 2018. In contrast, the total global market of spirits grew by 2% CAGR. This growth was boosted mainly by Scotch whisky which has an established position in the eyes of consumers and for many of them represents the most exclusive and exquisite drink.
IWSR notices also that although it is hard to estimate the long-term impact of COVID-19 on the alcohol industry, the premium brands market has historically always been immune to economic crises. For example, between 2008 and 2012 alcoholic liquors in this sector experienced an increase of 82% quantity-wise and nearly 230% value-wise.
Premium spirits resistant to crisis
Mark Meek, CEO of IWSR Drinks Market Analysis, said: „Although our research was done before the current epidemic situation, when we look at similar situations from the past, like SARS epidemy or the financial crisis from 2008, luxury goods and alcohols quickly returned to their previous levels. In addition, our research shows that most premium alcohols are sold in specialist and online shops, rather than in bars and restaurants, which is now a good sign”.
Coronavirus seems to indeed have a positive influence on e-commerce of the alcohol industry. Masters of Malt, an online shop with a wide array of high quality whisky, reported an increase in sales by 200% in the last week of March.
In the IWSR research, premium alcohols were divided into two price categories – from USD100 to USD1000, and above USD1000. The report shows that the most part of the sales value comes from the first category, adding that the highest increase is predicted in the USD250-1000 range. The research indicates that the „inexpensive luxury” range is a gateway category. Those who get to know bottles priced at USD150 today are likely to buy bottles exceeding USD1000 in the future.
„It is an exceptional and well defined sector which benefited from the global trend of premiumization” – said Meek.