Enjoy a 15% discount when you use the code EQLYJUNE24 at checkout from the 17th to the 30th of June 2024

Drinks From coffee and kombucha to seltzer and champagne, we explore the latest insights on the consumer trends and new products shaping the drinks industry.

Spirits: Premiumisation in An Age of Uncertainty

3/20/2024
Anna Ward Profile Picture
Anna Ward Bio
Share:

Premiumisation forms the foundation of modern spirits demand and has proved remarkably resilient over the trials of the last few years. Yet, it is not invulnerable to external pressures. Consumers are now having to reassess spending habits given the prolonged strain on disposable incomes, and, unavoidably, rates of premiumisation are slowing.

The risk of disruption persists

The effects of the current macroeconomic landscape are evident across the industry. The need to economise is forcing some consumers to cut back on spirits purchases or even consider trading down for certain occasions, either through products or channels.

Further moves towards home socialising will be a common story given the attraction of lower prices in retail stores compared to bars and restaurants. For many, it will be seen as a relatively small sacrifice that means they can still buy their preferred brands. Bearing that in mind, distillers are releasing ready-to-serve, sharing bottles of well-known cocktails, recognising the fact that communal consumption inherently favours premium choices. Such innovation provides a good example of adapting efforts to target premium demand to suit new routines.

Consumers are increasingly category agnostic and will happily switch between alternatives – an indication of how aspiration is evolving, and also another possible tactic for saving money. Even outside obvious substitutions, brandy in place of cognac for instance, purchase decisions will not be narrowly defined by category boundaries, but will instead consider occasion, mixology potential, and price.

On the industry side, a flexible approach to products, marketing, and sales channels will therefore greatly enhance resilience, with advantages that extend beyond the short term. Further significant disruption to supply chains and spending habits remains a risk for the years ahead given economic uncertainty, geopolitical volatility, and the possibility of future crises.

A change of pace, not a change of direction?

Despite the sizeable challenges, embracing premiumisation remains a sensible future strategy, and key characteristics present identifiable goals that will help companies navigate uncertain times. Relevant trends are firmly embedded in spirits: the focus on quality over quantity linked to wellbeing concerns, aspirational consumption, and demand for heritage and authentic brand stories.

Those themes will outlast temporary disturbance. Behavioural shifts add weight to that argument. Take tequila as an example – as habits migrate from high-energy settings that focus on shots to sipping occasions, consumers are willing to spend more on a bottle.

Adding value: Ethics, experiences, and emerging technology

While demand continues to shift towards high-end spirits, enhancing value for money perceptions will be vital – something that can be achieved through added value, not just lower prices. An understandable desire to appreciate the present moment is balanced against the need to save money, given immediate financial concerns plus anxiety about the future.

44% of global survey respondents plan to increase the money put aside for savings in the next 12 months

Source: Euromonitor Voice of the Consumer: Lifestyles Survey, fielded January to February 2023

Socialising and creating memories remain top priorities and are still seen as reasons to spend. Offering imaginative experiences can help premium brands to elevate their engagement efforts and take interactions with consumers beyond the product itself, leaving a lasting impression.Chart showing consumer attitudes towards experiences

Brand image is a key consideration in spirits; consumers are drawn to brands that reflect their personal values and the way they wish to present themselves. Environmental and social issues are an expanding part of that picture. Transparent communication highlighting progress around sustainability, and challenges too, will build trust and add value, especially when paired with existing commentary on ingredients, heritage, and production techniques.

64% of Sustainability Survey respondents try to have a positive impact on the environment through their everyday actions in 2023 (stating “agree” or “strongly agree”)

Source: Euromonitor Voice of the Consumer: Sustainability Survey, fielded January to February 2023

The digital space has a growing role to play in brand outreach. Social media is instrumental in connecting with younger adults, who tend to consume less traditional media than older groups. Emerging technology will only accelerate the speed of change and take personalisation to another level, as generative AI drives the expansion of tailored recommendations and custom cocktails.

The underlying themes governing purchase choices will not suddenly change course. However, the upper end of spirits will become a tougher environment, with more products competing while household finances remain under pressure. Cultivating a successful premium positioning will require extra care and attention. The slowdown in premiumisation could potentially linger longer than initially expected, with an unsettled environment becoming the norm if periods of crisis become a pattern, not an exception.

Learn more in our report, Premiumisation in Spirits: Aspiration and Adversity

Interested in more insights? Subscribe to our content

Latest Insights

Indian Manufacturers Spice Up the Gin Market

Amulya Pandit 05 March 2024

RTDs: The Spirit of Diversification

Anna Ward 05 December 2023

Mindful Drinking: No/Lo Comes of Age

Spiros Malandrakis 20 November 2023

Shop Our Reports

Product Innovation in Hot Drinks

Consumers are stressed by the state of the world in 2024 and hot drinks companies are responding in different ways. Functional ingredients, fun and…

View Report

Retail Reinvention: A Framework for Future Growth

New business models, channels and shopper expectations continue to change retail, redefining industry rules and relationships and disrupting the path to…

View Report

Focus: The Next Great Need State in a Distracted World

The eroding attention spans of the modern world have created an opportunity for beverages that provide consumers with the ability to focus on the moment whether…

View Report
Related Content Premiumisation in Spirits: Aspiration and Adversity Learn More
;