Top shelf spirits are booming. Here's why

August 10, 2022

Want to know the single biggest buzzword in the beverage industry right now?

Premiumisation.

Everywhere, the talk is about becoming more premium, whether it's beer, wine, canned cocktails, RTDs or whisky. And with increased costs pushing everyone to think about pricing, it's little wonder that going further upmarket is an advantage.

The push to go premium is influenced by drinkers' behaviour too. On the one hand, increased health consciousness and the modern focus on 'drinking less but better' means that volumes are flat. Couple that with a post-pandemic excuse for drinkers to finally treat themselves to something special after months or even years of lockdown, and you have plenty of drinkers looking for a reason to trade up (but just for the moment).

It's reflected in the numbers, too, with the global value of alcoholic beverages up 12% last year alone, while volume only lifted by 6%. In fact, volumes are still behind pre-pandemic 2019 numbers, even though value has now crested through $US1.17 trillion globally to illustrate how we're willing to spend more for premium drinks.

And the big winner from this premiumisation push? Spirits! Overall, spirits globally grew by 3% in volume and 15% in value during the last year alone. It's not just a recent thing, either. As noted in the latest IWSR data released last week, the spirits' average global price per serving has been growing at a compound rate of 3.8% per annum, putting it ahead of wine (close behind at 3.4%) and then beer.

Notably, the spirits share of the overall alcoholic drinks market is only expected to grow too, set to rise from 24 to 27% globally over the next five years. Spirits are booming!

Interestingly, it is the so-called 'premium-plus' category (which is $US22.50+ which roughly equates to a $A60+ retail price once you take in Australian taxation) that is expected to enjoy the most significant growth, with this price segment projected to rise by almost 20% locally in the four years to 2026.

Across Kaddy Marketplace, we've seen that trend firsthand, too, with spirits now counting for 40% of the top 20 most popular products over the past six months, up from 25% in the previous six months, with an increasing preference for products with an RRP beyond $60/bottle.

What are the top categories?

Tequila/Mezcal

As we wrote about back in April, tequila is smashing it, up a massive 46% in Australia during 2020 alone. As the IWSR also noted in a recent briefing, one of the biggest winners is agave-based spirits (tequila and mezcal) which will grow by a giant 67% in value globally over the next four years. There are many reasons why tequila is in the box seat, with the power of celebrity brands, the increased love of margaritas and investment in new brands all driving growth (with plenty of perspective in this comprehensive article).

Four of 2022's most popular premium tequila on Kaddy Marketplace

- El Jimador Reposado Tequila
- Don Julio Tequila - 1942 Tequila Anejo
- Espolòn Reposado Tequila
- El Tequileño Blanco Tequila

(Based on the period from Jan 1st-July 31st, 2022. Cutoff RRP $60)

Whisky/Whiskey

As this article in The Shout details, Total whisky/whiskey is forecast to post volume growth of +23% and value growth of +29% over the five years to 2026 - big numbers. While traditional Scottish, American & Irish whisky/whiskey continues to dominate, we have seen an uptick in attention for Australian-made products, with local whisky surging at 30% MAT. We've looked into the crystal ball at what the future of Australian whisky looks like, too - well worth a read for anyone interested in a dram.

Four of 2022's most popular premium whisky/whiskey on Kaddy Marketplace

- Chivas Regal 18 Year Old Whisky
- Glenfiddich 12 Year Old Whisky
- Dimple 12 Year Old Whisky
- Starward Two Fold Whisky

(Based on the period from Jan 1st-July 31st, 2022. Cutoff RRP $60)

Gin

IWSR also predicts that the annual growth of gin will be just under 10% compound in Australia, which contrasts to markets like the US and Europe, where gin has hit saturation point, with volume and value flatter. Interestingly, while imports dominate other spirits categories, gin has seen perhaps the most substantial volume growth in locally made products. What's more, premium craft gin is winning over the most fans, as this article details. As we talked about in this article, Australian spirits are also cutting through the noise in restaurants and bars (and gin is at the forefront) as well.