How Moderation and Premium Beverages are Transforming Europe’s Alcohol Market
Evolving Trends in Europe’s Spirits Market Amid Changing Consumer Preferences
Europe is home to some of the world’s most famous spirits, including French cognac and Scottish whisky. However, changing consumer preferences, particularly the rising popularity of cocktails and low or non-alcohol options, are transforming the beverage landscape as economic pressures persist.
In June, producers in France, a leading producer and exporter of alcoholic beverages, raised concerns over a significant drop in spirits exports, which saw a 13% decrease in volume and a 12% decline in value in 2023, primarily attributed to inflation and reduced consumer spending. Cognac, in particular, faced the steepest decline, with exports plummeting over 21%. The situation may worsen as China initiated an anti-dumping investigation in January that could result in tariffs on imported cognac.
While inflation is a key factor in the declining consumption of alcoholic beverages, societal trends towards moderation also play a crucial role. Emily Neill, Chief Operating Officer at IWSR, emphasized that the shift toward moderation, which began with Millennials and Gen Z, is now influencing consumers across all age groups, not just in established markets like the US and Western Europe but also in Asia and Latin America.
Despite these changes, the beverage industry remains optimistic. The rising demand for low-alcohol options like spritzers and no-alcohol gins and beers is creating new business avenues. The IWSR reports that the top ten markets for low and non-alcoholic beverages include several European countries—France, Germany, Spain, and the UK—along with Australia, Brazil, Canada, Japan, South Africa, and the US, together accounting for 70% of global sales. In these areas, the market value of low and non-alcohol consumption surged by 5% in 2023, reaching over €11 billion, with projections anticipating a 6% growth through 2027.
Zero-alcohol beer, in particular, has seen the fastest sales growth in Europe, with production rising by 13.5% in 2023, contrasting sharply with a 5% drop in traditional beer production. Globally, non-alcoholic beer sales increased by a third last year, navigating a generally stagnant beer market.
Neill attributed this success to advancements in food technology that have significantly enhanced the tastes of non-alcohol products. However, Ulrich Adam, Director General of Spirits Europe, cautions that while the non and low-alcohol segment is expanding, it still constitutes a small share of total beverage sales. The IWSR predicts that no-alcohol beverages will represent approximately 4% of the overall alcohol market by 2027.
Consumer behavior is also shifting due to changing societal dynamics; for instance, the traditional post-work pub culture is evolving into a more family-oriented, food-centric dining experience. Both Adam and Neill noted a trend towards "premiumisation," where consumers increasingly seek high-quality products such as craft beers and premium spirits rather than high-volume, low-cost options. Younger consumers are gravitating toward established global brands, diverging from the domestic spirit preferences of previous generations.
In France, though, spirits such as gin and cocktail liquors have seen slight consumption increases. Notably, the Italian cocktail spritz experienced a 17.2% rise in popularity in early 2024. Social media influences consumers, particularly Gen Z and Millennials, who are not only looking for flavorful, lower-alcohol options but also for visually appealing drinks. This trend has led to a surge in vibrant cocktails that are popular on platforms like Instagram.
The surge in interest in ready-to-drink products, including pre-mixed drinks like tequila beer and canned classics like piña colada, reflects this ongoing transformation. Adam mentioned that European brands are tapping into this niche, creating a diverse range of ready-to-drink options with alcohol content between 5% and 10% ABV.
As Gen Z consumers increasingly favor ready-to-mix beverages over traditional high-volume alcohol categories, the spirits industry is adapting to meet these modern preferences.
John Peterson graduated with a degree in Agricultural Sciences from Wageningen University in the Netherlands. His specialization is in sustainable crop production and soil health management. John is passionate about integrating modern technology with traditional farming methods to enhance productivity while preserving the environment. He currently works as a consultant, helping farmers adopt sustainable practices.