Global Flavoured Spirits Insights, from just-drinks and The IWSR, is now available

Global Flavoured Spirits Insights, from just-drinks and The IWSR, is now available

The global flavoured spirits market remains in the midst of a slow, long-term decline, according to research released this week, but the diversity of the 150m-case-plus category creates a complex picture that defies easy generalisations.

Looking at each segment in turn, liqueurs continues to command a near-50% share of total flavoured spirits volumes, but they have haemorrhaged some 13m cases since 2011. Bitters and spirit aperitifs have a 25% slice of the market, with bitters enjoying solid growth over the past few years, but spirit aperitifs beginning to catch up more recently.

Meanwhile, aniseed-based drinks have a 16% share and are broadly declining, being heavily reliant on traditional markets such as France (pastis), Turkey (raki) and Italy (sambuca).

Like the broader category, liqueurs is a challengingly diverse segment, including everything from traditional, fruit-flavoured range liqueurs - which includes brands such as De Kuyper and Bols - to cream-based products and low-strength flavoured vodkas with a dizzying array of variants.

Individual trends can vary widely from market to market, but cream liqueurs remain the largest sub-segment and have generally held their ground in the past few years.

However, fruit-flavoured range liqueurs, dominated by De Kuyper and Bols, have ceded market share to creams in recent years, experiencing declines in 16 out of their top 20 markets.

Full-strength liqueurs – brands including Cointreau and Grand Marnier – are seeking to reinvent themselves, moving away from their traditional but declining after-dinner consumption occasion to exploit the burgeoning cocktail trend in markets around the world.

Low-strength flavoured vodkas, which had previously seen dynamic growth, particularly in Poland and the Philippines, have fallen away recently as fashions and trends move on.

As in other spirits categories, traditional local liqueurs face the challenge of stemming long-term domestic declines while building a credible international presence.

Limoncello is a good example of this phenomenon: While sales in Italy are falling, the segment is aiming to increase its export footprint, with a particular focus on premium products and provenance from its core production area in the lemon groves around Sorrento.

Bitters and spirit aperitifs have been one of the more dynamic segments of the global flavoured spirits market, registering compound annual growth rate (CAGR) increases in 14 out of their top 20 markets in the 2011-15 period. Much of this growth has been experienced by popular bitters brands such as Jägermeister and Fernet-Branca, but growth is now stalling as these brands hit their peak and the bitters segment diversifies, with small-scale craft products coming to the fore and expanding consumption occasions.

Meanwhile, the far smaller spirit aperitifs segment is fast gaining momentum, thanks to increased health consciousness, a switch to lighter, lower-alcohol beverages and the global success of the Aperol Spritz mixed drink.

Looking to the future, the broad flavoured spirits market is expected to record small gains to 2021, despite some initial declines. However, liqueurs will continue their long-term decline in Europe, with premium-and-above the only price segment likely to show growth.

There are also some brighter prospects among the emerging markets of Africa, where gains are expected in Nigeria in particular, but also in Ghana, Cameroon, Angola, Kenya, the Ivory Coast and Uganda.

In Asia, China and several other potential growth markets remain key targets for liqueurs brands, but there are challenges – not least consumer education as cocktail culture spreads across the region, but is moving at different rates in different countries.

The global cocktail movement is a key consumer trend for mainstream liqueurs, particularly the resurgence of interest in the classic cocktails of the early-20th Century – but brands need to be well-studied to exploit this. "The liqueur brands that succeed and capitalise on the global spread of cocktail culture will be those that do their homework, zeroing in on the often diverse and complex trends found in many markets," the report says.

Meanwhile, the recent dynamic growth of so-called 'flavoured whiskies', as well as of spiced rums, poses a clear challenge and threat to large-scale flavoured spirits brands – one high-profile example being Sazerac's Fireball eroding the market share of Jägermeister in the US. Question marks remain, however, over the longevity of the flavoured whisky segment as fierce growth begins to plateau, and whether its core consumer base will migrate out of the category as they grow older, meaning that they will need to be constantly replaced.

The flavoured whisky phenomenon is an illustration of the increasing blurred lines dividing product categories, both within the flavoured spirits sector and outside it.

The report concludes: "For Millennial consumers, category and brand loyalty are increasingly alien concepts. This means that brand owners have to monitor trends not just among their direct rivals, but also among other spirits categories, to identify 'the next big thing' in terms of product trends."

For full details on just-drinks/The IWSR's Global Flavoured Spirits Insights report, click here

Expert analysis

Global flavoured spirits insights - market forecasts, product innovation and consumer trends

Global flavoured spirits insights - market forecasts, product innovation and consumer trends

The US is the leading market for flavoured spirits (excluding low-priced spirits and full-strength spirits) at 20.4m cases. The next-largest markets are Germany, France, Italy and Argentina. The UK, J...read more