The issue at the heart of the challenging past few years for beverage alcohol is this: are we experiencing a merely cyclical period of market softness, prompted by geopolitical and macroeconomic uncertainty? Or is something deeper and more structural at work, epitomised by the growing use of GLP-1 weight loss drugs and a moderation movement that is as much about wellness as economic factors?
Much of the discussion on the subject – as with so many debates in today’s somewhat febrile world – tends to be binary: either you should sell off all your booze stocks because the industry is going to hell in a handcart; or you should stick with it because, once consumers feel a bit more financially secure, the good times will roll again.
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I suspect that the truth, as is so often the case, lies somewhere in the middle. There’s no doubt that cyclical factors are at play in vital markets such as China and the US; once LDA consumers in those countries start to feel a bit more prosperous again, many of them will return to historic purchasing and consumption patterns.
But not all. Already there is evidence in the US of GLP-1 users (who have a disproportionate tendency to be regular consumers of alcohol) cutting back on drinking, and as these drugs become more widely adopted around the world, we are likely to see something similar play out elsewhere.
Throw in the competition offered by THC beverages (recent legislation notwithstanding), plus external threats such as online gaming and streaming, and there are a growing number of rivals for consumers’ discretionary spending. In isolation, they may not have a serious impact on alcohol; in combination, they very well may.
So not much Christmas cheer for the industry this festive period? Well, I wouldn’t be too downbeat as we head into 2026 because we still live in a world with plenty of opportunities for spirits groups – from the ripe promise of the Indian market to the continued growth of RTDs and no/low products. Arguably, that’s especially true of unaged spirits, including the buoyant aperitif consumption occasion and – whisper it – a possible vodka revival.
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By GlobalDataIndia: it’s not all whisky
Much of the recent buzz about India has revolved, understandably, around whisky: the free-trade agreement with the UK sparking huge opportunities for the already dynamic Scotch category in the country – but also the potential for American and Irish whiskey, as well as the fast-developing home-grown malt whisky scene.
India’s promise is largely built on demographic and economic factors, resulting in a fast-expanding core of upwardly mobile, increasingly urbanised younger LDA consumers. While the country’s status as the most whisky-mad nation on Earth isn’t under serious threat, many of these consumers are looking for more than just Johnnie Walker or Jameson – they’re keen to explore vodka, gin, Tequila and more.
Success in India can be elusive for all kinds of reasons, particularly given the regulatory and fiscal challenges of such a complex and highly politicised drinks scene. Those who will win in the long term will have to be agile and adaptable, reacting fast to shifting demands in what is sure to be a very dynamic, and quite possibly volatile, market in the years ahead.
RTDs: growing complexity
One of the few bright spots in the beverage alcohol marketplace, RTDs have grown increasingly complex and diverse as they have expanded over the past few years. The common attributes shared by everything from hard seltzers to ready-to-serve cocktails? Convenience, portability, accessibility.
Apart from being a highly influential trend in their own right, RTDs can tap into the drinks zeitgeist. Whether we’re talking about the rise of the aperitif/spritz serve or the growing relevance of no-alcohol products, there’s an RTD for that – or, if there isn’t, there soon will be. Another plus point for the category is the relative speed with which products can be brought to market.
If there is a difficulty attached to the RTD success story beyond the ephemeral nature of product life cycles, it is its sheer diversity and heterogeneity, with highly localised trends exerting a greater influence than in almost any other category. Flavours and combinations that work in Brazil will sink like a stone in Japan, and vice versa, so companies need to flex their RTD strategies on a market-by-market basis to ensure growth.
Agave: adapting the playbook
Now that the Tequila boom has definitively ebbed in the US, the internationalisation of the agave spirits category has become more important than ever. For all the promising growth trends across Europe and into Latin America and Asia-Pacific, this remains a category with a hugely imbalanced global footprint.
It would be tempting to think that the safest bet for global expansion would be to repeat the US playbook: Margaritas, 100% agave, cristalino, celebrities, luxury añejo and extra añejo. But, while all of the above may have their parts to play in the years to come, it’s important that brand owners don’t enforce the US template in markets that simply don’t share the same attributes.
The Margarita may remain the standard-bearer when it comes to populist Tequila serves, but the recent success of the Paloma – not to mention twisted Negronis and Martinis – outside the US shows that, as with RTDs, a locally responsive strategy will be a necessity to drive trial.
Vodka: on the way back?
When Pernod Ricard chairman and CEO Alex Ricard spoke at Bernstein’s Strategic Decision Conference in Paris in early December, much of the talk was of emerging markets, the challenges of operating in the US and the contrasting prospects in China and India. But Ricard also hinted, we’re told, that vodka could make a comeback.
Just a throwaway remark? I’m not so sure. When you look at prevalent consumer trends around refreshment and lighter, more casual drinking options, vodka ticks a fair number of boxes, especially for a younger LDA Gen Z or Millennial consumer base looking for what they perceive to be ‘cleaner’ or ‘healthier’ alcohol options.
Vodka is also an increasingly influential player in the RTD space, lending its obvious versatility as a blank canvas to all kinds of flavour innovation. If vodka brands can capitalise on that opportunity, they could reap the rewards in terms of luring new consumers over to their core products in the years ahead.
