Research in Focus - Alcoholic Drinks in 2014: Subdued, Uneven and Precarious
Volume growth for alcoholic drinks globally remains subdued for a second year running and, at merely 0.8% for 2014, last year is set to be amongst the three lowest over the past decade.
Beyond the usual Western European patient that ended the year flat lining, the Chinese slowdown – at just 1.2% - and Russia's on-going macro and geopolitical travails - culminating in a nigh-apocalyptic decline of 6% for 2014 - weigh heavily on the global landscape.
But, as the seemingly unstoppable emerging market engine begins to sputter, North America has shifted back into focus with total volume growth for the year. That said, at +1%, up from a poor 0.3% in 2013, the region is still some distance from the exuberance of its past.
Geographic diversification - or the lack thereof - remains one of the defining factors determining top-line success or failure. It is in this context that categories like Cognac and vodka have suffered disproportionately due to their over-reliance on a single market or region, with China and Russia respectively exerting their immense gravitational pull to drag their global growth rates lower.
With Cognac registering total volume growth of just 0.4 % and vodka declining by 5%, it was second-tier markets beyond their core strategic bastions that provided - or could yet provide - some respite. For example, Cognac’s belated shift of focus towards the US and mass market varietals has already planted the seeds of an American renaissance for a category otherwise trapped in a gilded cage of luxury and nouveau rich extravagance.
On the other hand, the on-going pivot towards brown spirits and selected varietals within the whisk(e)y stable underscore the still untapped opportunities even in otherwise terminally-mature markets.
Heritage, authenticity and craftsmanship solidified their position as key drivers for whisk(e)ys but some fared better than others. Bourbon, Irish and Japanese whiskeys – witnessing spectacular total volume rates of 5%, 8% and 7%, respectively - stole the limelight from Scotch, which was eclipsed in terms of innovation and relevance to the millennial demographic alongside key Scotch distillers’ over-optimistic assessment of the emerging market mantra.
There were winners and losers across all categories. In beer, beyond the ever-rising tide of craft offerings across the globe, Imported premium lager, ale and non-alcoholic variants proved to be the star performers at the same time that imported mid-priced lager suffered the most. Here, we can witness a reiteration of the relevance of polarisation, craftmanship, diversification and exoticism as the key drivers across the alcoholic drinks landscape.
Cider, which has been seemingly insulated by recessionary forces, macroeconomic volatility or even evolving drinking patterns, continued enjoying solid total volume growth of nearly 9% on a global level, as the western European core markets gradually take a back seat to the sky-rocketing North American success story.
Lastly, RTDs reiterated their dominant position over retreating, high-strength premixes. Even though Bud Lime-A-Rita’s explosive trajectory in the US got inevitably reacquainted with gravity, strong growth in Asia Pacific secured an overall healthy performance of 2.7% for the RTDs/high-strength premixes category.
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