The beverage alcohol market has shown ‘greater resilience’ than initially expected in 2020, but total sales are expected to decline by 8% this year, according to new forecasts from IWSR Drinks Market Analysis.
In May, IWSR forecast total global alcohol consumption would experience double-digit declines in 2020 due to the impact of the Covid-19 pandemic, and that it would take until at least 2024 for the industry to recover to pre-crisis levels.
IWSR has analysed beverage alcohol consumption in 19 key global markets and the global travel retail channel, representing more than 75% of total global alcohol consumption combined. The key markets reviewed were Australia, Brazil, Canada, China, Colombia, France, Germany, India, Italy, Japan, Mexico, Poland, Russia, South Africa, Spain, Thailand, Turkey, the UK, the US and global travel retail.
China is expected to see a ‘full recovery by 2021’, as Chinese consumers have returned to almost all daily activities. Together with the US, the two markets will be key growth drivers of global beverage alcohol, accounting for one-third of global volume consumption and more than 40% of global value.
The US and Canada are expected to be the only two markets to show volume growth in 2020, both increasing sales by more than 2%.
In the US, the 2020 volume consumption increase is in keeping with 2019 trends, suggesting Covid-19 has not impacted overall consumer demand. However, gains in retail and ecommerce have not offset ‘heavy losses’ in the ‘more profitable’ on-trade channel.
Several markets, including Russia, Australia, Japan and Germany, are expected to see volume sales decline, but this will be less than 5%.
Mark Meek, CEO of IWSR Drinks Market Analysis, said: “Given the incredibly tough measures the industry has continued to face due to Covid-19, it’s encouraging to see that beverage alcohol in the 19 focus countries is only projected to decline by 8% in 2020, rather than by the double-digit losses originally expected.
“Excluding national spirits such as baijiu and shōchū, total beverage alcohol in the 19 focus countries will recover to 2019 levels by 2024.
“We may see that recover even faster now, given the recent news on encouraging vaccine trials. The rise of ecommerce and the efforts by retailers and on-premise operators to adapt to this crisis, coupled with consumers expanding to new occasions, created a dynamic, albeit challenging, new environment for beverage alcohol.”
Furthermore, IWSR reported that Brazil and Japan have also been ‘remarkably resilient’ in the face of the pandemic this year, and are expected to recover to pre-pandemic volume consumption levels next year. Cachaça sales are expected to decrease in Brazil this year, but will ‘bounce back quickly’, according to IWSR.
India and South Africa, which endured partial or full bans on alcohol during the pandemic, will experience some of the biggest volume losses this year.
Global travel retail is expected to see volume consumption down 68% in 2020.