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The alcoholic beverages market size was valued at USD 1,949.2 billion in 2021. The market is projected to grow from USD 2,134.8 billion in 2022 to USD 4,102.3 billion by 2029, exhibiting a CAGR of 9.78% during the 2022-2029. The global COVID-19 pandemic has been unprecedented and staggering, with alcoholic beverages experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of -5.22% in 2020 as compared to 2019.
Alcoholic beverages are produced by fermenting grains, berries, sugars in fruits, and other ingredients such as tubers, plant saps, honey, and milk. They can be distilled to decrease the original watery liquid to liquid having greater alcoholic strength.
Alcoholic beverages are categorized into three general categories, wines, beers, and spirits. According to the National Center for Biotechnology Information (NCBI), U.S., to produce specific types of alcohol, variable production methods are used. The beer manufacturing process includes the fermentation of malted barley and adding hops to it, which will give the final output in terms of beer. Wine production consists of the fermentation of crushed grapes. Distilled spirits are produced from various sources such as sugar or starch, molasses (from sugar beets), cherries, cereals, grapes, plums, potatoes, or other fruits; then, the completion of fermentation of sugar is followed by distillation of liquid.
Increased inclusion of natural and functional ingredients in making premium category alcohols provides a massive opportunity for premium alcoholic drinks. Hence, the leading manufacturers of alcohol-based beverages are emphasizing entering into partnerships with key players manufacturing premium alcohol-based beverages. For instance, in October 2022, Pernod Ricard reinforced its partnership with Sovereign Brands. Through this partnership, Pernod Ricard will considerably increase its minority stake in the portfolio of super premium spirits and wine brands of Sovereign Brand. This investment is expected to help Pernod Ricard by accelerating, transforming, and reflecting its ambitions to enhance its consumer-centric product portfolio development.
Increased Demand Post-pandemic Positively Aided the Market Growth
The COVID-19 pandemic drastically changed several aspects of everyday life globally in early 2020. Due to the lockdown imposed during COVID-19, a ban on socializing, closure of all restaurants, nightclubs, and pubs during the pandemic in 2020-2021 impacted consumers' purchase and consumption of alcohol. The alcoholic drinks industry has observed a decline in business and a decrease in global consumption of alcohol in the first half of the year 2020. The sales of alcohol drinks in bars, nightclubs, pubs, and restaurants were also affected due to the complete shutdown. The drinking behavior of consumers changed significantly during COVID-19. Consumers used to consume alcohol-based drinks at restaurants and pubs, which changed to home consumption. According to the NCBI, e-commerce is growing steadily due to the COVID-19 restrictions for the on-trade channel (in shops). In various countries, such as China, the U.K., Poland, and Italy, the consumption of alcohol witnessed an overall decrease during the pandemic compared to previous years in on-premise sales; however, e-commerce sales of alcoholic drinks skyrocketed in the second half of the year 2020.
The post-pandemic impact on the market growth was positive. As the consumers stepped out of their homes to socialize, they consumed alcohol at pubs, bars, and restaurants. In the last months of 2020 and early months of 2021, the consumption of alcohol increased, thereby increasing sales of alcoholic drinks.
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Growing Popularity of a Variety of Hybrid Alcohol Beverages to Aid Market Growth
Alcoholic beverage manufacturers have begun introducing ready-to-drink (RTD) hybrid beverages to meet evolving consumer preferences and tastes. These mixed beverages are alcoholic cocktails that combine elements from various beverage categories. These are prepared with attractive flavor ingredients and production processes in combination with various drinks. For this purpose, these manufacturers produce beers or spirits in wine barrels to provide them with a particular flavor. Hybrid beverages blended with tea and rum mixed with vodka are trending in the spirit category. Kahlua Midnight (rum and Kahlua), Malibu Red (rum and tequila), and Absolut Tune are some of the popular hybrid alcohol drinks, which have highly increased consumer demand as these RTD beverages are premium alcoholic drinks. Different flavors of beer play a vital role in shaping the market growth as consumers are considerably more open and flexible to experimenting. Beer is a multi-generational product category in demand as all generations can associate with different beer flavors. Tasting rooms of alcohol-based beverages are becoming increasingly popular as consumers can try new flavors, which aids in crowd-sourcing beer innovations. With market players focusing more on producing RTD alcoholic beverages, this trendy category is attracting new customers.
Increased Alcohol Consumption among Young Adults Due to Rise in Disposable Income Drives Market Growth
In various developing economies, such as China, India, Singapore, and Indonesia, spending on alcoholic beverages is increasing faster due to the increasing number of young adults in the workforce. According to the Organization for Economic Co-operation and Development (OECD), a slight increase was observed in alcohol purchases in some countries. It stated that in the U.K., there was an increase of 4.5% in total alcohol beverage duty receipts from April to October 2020 compared to the same period in the previous year. In addition, consumers' drinking frequency is also observed to be increased. In 2021, according to the Organization for Economic Co-operation and Development (OECD), in 11 countries, 43% of individuals showed an increased drinking frequency. At the same time, the consumption of alcoholic drinks increased at home, with a substantial increase in sales in retail and online stores as well. The rising global economy and robust growth of developing economies such as India, Brazil, and China are likely to increase the disposable income of consumers. This rise in growth can result in increased purchases of premium alcoholic beverages. Therefore, the increasing alcohol consumption among young adults due to rise in disposable income is significantly driving market growth.
Increasing Wineries and Breweries are Supporting the Alcoholic Beverages Market Growth
The number of wineries and breweries has been increasing since the past few years. According to the U.S. Census Bureau data, the number of wineries and breweries in the U.S. increased from 2017 to 2020. The number of breweries in the U.S. in 2020 was 4,493, which grew from 3,305 in 2017. The rising demand for alcoholic drinks has led to an increase in wineries and some craft, micro, and artisanal alcohol producers entering the winery industry. According to the U.S. Bureau of Labor Statistics, there was an increase in the number of winery establishments in the U.S., exceeding 4,000 in 2016. In 2020, the number was 5,024 wineries, four times more than in 2001. Additionally, in 2020, wineries accounted for the second-largest establishment share in beverage manufacturing. There were 13,478 establishments in beverage manufacturing, with 38% breweries and 37% wineries having a significant share in the industry.
Thus, the increasing number of wineries and breweries during the last decade resulted in substantial growth in the global market.
Rising Consumer Inclination to Consume Non-alcoholic Beverages May Pose Challenges to Market Growth
No alcohol and low-alcohol beverages are making their way in the market as more consumers accept a moderate approach to alcohol consumption. According to the Institute of Food Technologies (IFT), from wine and beer to spirits, mocktails, seltzers, and champagne, non-alcoholic or low-alcoholic beverages are growing in popularity. IFT's recent research states that one in five consumers has reduced alcohol consumption to make healthier beverage choices. The study states that global non-alcoholic or low-alcoholic spirits consumption is anticipated to increase by over 70% by 2024. This is the reason that several startups are entering this no-alcohol beverage space. Moreover, consumers are becoming more aware of the health issues caused due to excess consumption of alcohol. Thus, due to increased health awareness among consumers, they are shifting their preference toward consuming non-alcoholic beverages or low-alcohol beverages. An increasing understanding of the adverse effects of alcoholic type of beverages on consumers' health is shifting consumers away from alcoholic drinks, thereby restraining the growth of the market.
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Distilled Spirits Segment Holds the Largest Share Backed by Increasing Number of Distilleries
The distilled spirits segment holds a significant market share. Some of the factors that are significantly driving the market growth are the growing number of distilleries. The upswing of social media has made it easier for consumers to learn about new releases in the spirits category and to identify local distilleries. According to the Distilled Spirits Council of the United States (DISCUS), the supplier sales of distilled spirits in the U.S. increased by 12% in 2021, accounting for a total of USD 35.8 billion, whereas its volumes increased by 9.3% to 291.1 million 9 liter cases. The consumers' enthusiasm for distilled spirits continued as they spent more than usual to enhance their cocktail experiences with super-premium brands. According to the DISCUS, in 2021, nearly 82% of the spirits sector's revenue increase was due to the sale of super-premium and high-end spirits.
Beer is the second largest segment in the market. The beer industry is mainly fragmented, with many local and international players competing with each other to capture markets. The U.S. is a major exporter of beer in the world. According to the U.S. Department of Agriculture (USDA), U.S. beer exports in 2021 amounted to USD 538.78 million. Newly launched lively and rich flavors are highly appealing to millennials and Gen-Z. Beer manufacturers are engaged in product innovations due to the young population's rising demand for innovative beer flavors. Additionally, the adoption of western culture and cultural changes have highly influenced the consumer perception toward alcohol-based beverages, specifically beer, in Southeast Asian nations. Beer is the most consumed alcoholic type of beverage among young adults, as young consumers look for more diverse and higher quality beer.
Food Service Segment Holds a Larger Share Owing to Increase in Socializing
A tremendous increase in post-pandemic socializing and social gatherings is observing an upswing in alcoholic beverage consumption, boosting alcohol sales in the food service sector. Most consumers have been switching from beer to brown liquor such as rum, scotch, whisky, and brandy. Food service establishments have a large variety of spirits; hence, consumers are keen on trying new types of spirits at food service establishments. Socializing and hoteling have been a long trend in the industry, but in the wake of COVID-19, alcohol sales through food service establishments were heavily impacted. Sales through convenience, retail, and specialty stores also decreased. But after the COVID-19 restrictions were removed, consumers stepped out to socialize in clubs, bars, pubs, hotels, and restaurants. Thus, the rising trend of socializing and the increase in the number of social gatherings and get-togethers after COVID-19 have generated the demand for the expansion of chains of restaurants, pubs, clubs, hotels, and bars. It has increased alcohol consumption at all these places, thereby driving the sales of these beverages in the food service sector.
Asia Pacific Alcoholic Beverages Market Size, 2021 (USD Billion)
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Asia Pacific holds majority of the alcoholic beverages market share. The working population's social lifestyle has significantly changed consumers' eating and drinking habits, which is a significant factor enabling the market growth in Asia Pacific. The market's steady growth can also be attributed to the rising demand for premium alcohol. The growing income of middle-class consumers, the higher purchasing power, and rapid urbanization have pushed consumers toward trying super premium alcohols, contributing to market growth. Alcoholic beverage manufacturers in Asia Pacific, such as Asahi Group and Suntory Holdings Limited, are engaged in mergers and acquisitions, expansions, and product launches to strengthen their market position.
In January 2021, Anheuser-Busch InBev Vietnam Limited Company (AB InBev Vietnam) and SAB Beer Production Limited Company (SAB Beer) declared the merger of SAB Beer into AB InBev Vietnam. Through this merger, AB InBev's brewery will produce Hoegaarden for domestic consumption and other beers for export. At the same time, SAB Beer's brewery will brew Budweiser and Beck's beer for the local market.
Europe contributes to a significant market share, followed by Asia Pacific. Europe shows an increasing inclination of millennials toward craft beers due to the rising number of brewpubs in the region. The cultural significance of alcohol drinks in Europe, backed by beer and other alcohol-based drinks festivals such as Oktoberfest in Germany, is fueling the market growth.
North America has a substantial market share, followed by Europe. The rise in the number of urban consumers consuming alcohol drinks has led to increased alcoholic beverage consumption in North America. The alcoholic drinks industry in this region is anticipated to grow in the coming years due to the introduction of honey-based drinks, which will appeal to health-conscious consumers. Companies, such as Boston beers and Anheuser-Busch InBev, and constellation brands are some of the prominent players in the market.
The South America market is growing at a significant market growth rate. The increased demand for super-premium spirits, ethnic premium spirits, and flavored spirits is observed among Gen-Z and millennials in the region. The Middle East & Africa is growing considerably, owing to the surging demand for hard drinks such as gin and whiskey. The curiosity among millennials about premium alcohol-based drinks is making them try different products.
Companies Focus on Mergers & Acquisitions and Partnerships to Gain Competitive Edge
Various regional and international players are consistently making efforts to formulate advanced strategies to take a competitive advantage. Many companies are forming mergers & acquisitions and partnership & collaboration strategies to enable market growth. The companies are expanding their business by establishing manufacturing facilities in different regions worldwide to widen their geographical presence and increase their consumer reach.
An Infographic Representation of Alcoholic Beverages Market
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The report provides detailed market analysis and focuses on key aspects such as leading companies, product/service types, and leading applications. Besides, the report offers insights into the alcoholic beverages market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the market growth in recent years.
Value (USD Billion)
By Distribution Channel
Fortune Business Insights says that the global market size was USD 1,949.2 billion in 2021 and is anticipated to reach USD 4,102.3 billion by 2029.
In 2021, the global market value stood at USD 1,949.2 billion.
Ascending at a CAGR of 9.78%, the global market will exhibit steady growth over the forecast period (2022-2029).
By type, the distilled spirits segment is expected to dominate the market throughout the forecast period (2022-2029).
The increase in the number of wineries and breweries in the industry is accelerating market growth.
The leading companies operating in the market are Anheuser-Busch InBev Sa/NV, Heineken N. V., Diageo, Constellation Brands, Inc., and Pernod Ricard.
Asia Pacific dominated the global market in 2021.
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