Alcohol Industry Trends  U.S. and Europe

2024 was a slow year for spirits. Despite positive early signs, the Wine and Spirits Wholesalers of America (WSWA) reported a 3.9% drop in sales in 2024 – which analysts predict may continue in 2025.

Changing consumer preferences and declining alcohol consumption among younger generations are two reasons for the change. But rising costs are the biggest culprit. In the face of financial uncertainty, consumers are reluctant to spend $30, $40, or $50+ on alcohol.

The ready-to-drink (RTD) segment has emerged as a significant force in the alcohol industry in recent years. According to NielsenIQ, it's now the fourth major category after beer, wine, and spirits.

It's easy to see why canned cocktails appeal to today's discerning consumers. Aside from changing tastes, RTDs require little to no prep time – making them a fast and convenient way to enjoy cocktails. 28% of respondents in one survey said they purchased at least one pre-mixed cocktail every week.

The RTD sector was the only major alcohol category to record volume growth last year. RTDs posted a 2% volume rise, with Mexico (up by 8%) and Germany (up by 4%) reporting the biggest increases.

This appetite for RTDs will see the market reach a total value of $40B by 2027, according to some analysts.

Increasing awareness of the risks associated with excessive alcohol consumption and a generational shift towards healthier lifestyles will continue to boost sales of non-alcoholic beverages. This is especially true among Gen Z, who recently earned the unique distinction of soberest generation in history. In 2024, non-alcoholic  beverages were the third-fastest growing category in the U.S. Manufacturers are taking heed, with many joining the race to introduce new products to capitalize on this trend. Major brands, including Heineken, Peroni, Seedlip, Guinness and Don Julio Tequila, have all released low- or no-alcohol products in the past few years.

Global non-alcoholic beverage sales grew by 5.9% between 2023 and 2024, with continental Europe showing significant momentum. Sales of dealcoholized wine have increased by more than 25% over the past five years. In France, consumers drank 32 million litres of alcohol-free wine in 2023.

Elsewhere, analysts predict the better-for-you beverage market to grow by 8.5% over the next decade, reaching a value of $484 million by 2034.

Sustainability will remain among the key alcohol industry trends in the coming years. As concerns around climate change grow, consumers will increasingly gravitate towards eco-friendly brands. Brands are already adapting their processes to meet expectations. Brockmans recently launched a new, lightweight bottle that contains 30% less glass. While discount supermarket chain Aldi is among a growing number of retailers and alcohol brands that are replacing glass bottles with low impact aluminum and even paper-based alternatives.

Away from packaging, brands will double-down on sustainable ingredient sourcing and explore more efficient ways to recycle waste. This will go a long way retaining customers. According to the Kerry Group, 49% of consumers say they consider a brand's commitment to sustainability or environmental initiatives before purchasing alcohol products.

Coffee is a well-known ingredient in cocktails – from Black Russians to Espresso Martinis. Tea isn't as common in alcohol products, but that's changing.

Popular brands including Jack Daniels and Lipton have expanded their hard tea RTD product ranges in recent years to meet. In Bacardi's Global Brand Ambassador Survey, 32% of respondents said they were interested in tea-based beverages. This includes basic black teas and more exotic blends.

All of these factors translate to a positive economic outlook for the hard tea market. Between 2023-2028, analysts project an 18% growth in hard tea product sales, driven primarily by the U.S.

Following a similar trend in the online grocery market, the alcohol industry is experiencing a surge in demand for subscription-based alcohol services and home delivery. Millennials and Gen Z are driving this trend, as they crave convenience and variety from their brands.

With subscription-based models, consumers can enjoy curated selections of their favorite beers, wines, and spirits from the comfort of their own home. For many, subscription services provide a convenient and affordable way to indulge in tried-and-tested tipples, while also giving them the opportunity to experience new flavors.

Analysts project a 20.7% growth in the global wine subscription market between 2023 and 2033, achieving a value of $3.9 billion. The North America Wine Subscription Service Market size is projected to reach USD 2.4 Billion by 2030, growing at a CAGR of 9.2% from 2024 to 2030.

Communicating your values is essential to marketing high-end alcohol products. For the most part, this means showcasing your heritage, motivations, and community spirit. Highlighting facts around traditional brewing practices or sustainability initiatives can encourage consumers to spend more on higher-quality products.

Gen Z especially makes buying choices that align with their values, but authenticity is the name of the game. They expect honesty from their brands and are quick to spot anything disingenuous, like greenwashing. 41% of consumers say they boycott brands that exploit public sentiment.

Brand activations have become an important way to engage consumers in the alcohol industry. 75% of people will purchase a drink they've tried and enjoyed at a bar, restaurant, or club for home consumption. And this ‘halo effect’ is vital to leaving a lasting impression in an increasingly competitive landscape.

Research shows that people are more open to experimentation at bars and restaurants. 41% of U.S. consumers like to try new or different drinks brands on an evening out, increasing to 47% for 21–24 year-olds. Similarly, 38% of European consumers are open to trying new or different drinks on a night out, while 59% are more likely to trade up for a premium drink.

Alongside home consumption, brands can capitalize this 'halo effect' on-premises, too, with co-branded promotions and seasonal activations.

A strong social media strategy is key to getting younger consumers to engage with your brand. Roughly one-third of consumers aged 18-34 say posting about a new experience is essential for it to feel complete.

Cocktails are among the most shareable food and drink items. Capitalize on this by working with on-premises partners to design 'Instagrammable' drinks and memorable moments. These could be anything from 'house cocktails' to personalized digital menus that give customers a reason to share their experiences on social media.

Gartner predicts that, by 2026, 25% of people will spend at least one hour a day in the metaverse - to work, shop, socialize, or consume entertainment. Marketing in the metaverse is far from mainstream, but there are opportunities for tech-savvy brands - opening virtual bars or hosting augmented reality (AR) tasting sessions that allow consumers to socialize and explore your products in a safe digital space.

Outside of the metaverse, there are other Web3 strategies you can use to amplify your marketing. Gamifying your content and promotions, hosting virtual concerts and events, and embracing non-fungible tokens (NFTs) can all help you engage with digital-native consumers. For example, using AI-powered AR tech to run virtual tours of your distilleries or teach customers about the history of your products.

Cost-conscious consumers find it difficult to justify non-essential, luxury purchases in the face of ongoing economic challenges. To convince them to part with their cash, you have to make it worth their while – and a quality product alone isn't always enough.

Embracing a subscription-based model is a great way to support cost-conscious consumers while providing a predictable recurring revenue. In the last five years, subscription box businesses selling alcohol has increased by nearly 200% in the US with Millennials and Gen Z increasingly buying booze via subscriptions for convenience, new experiences and savings. To help consumers make their money go even further, you can also experiment with product bundles combining related items into affordable packages. Contests, promotions, sweepstakes, and rewards programs give consumers a compelling reason to buy their favorite drinks. Relevant rewards like cash back, tickets to sports games or concerts go a long way in driving consumer participation and engagement. Remember to check relevant legislation first to ensure your promotion is fully compliant.

Initiatives like this add value to consumer-brand interactions as well as provide a reliable source of first-party data. This helps you develop a deeper understanding of your customers, so you can deliver more relevant and rewarding offers.

Drink labels can have a huge influence on buying decisions, as consumers spend more time researching ingredients and production processes.

QR codes lead the way in seamless on-pack experiences, offering consumers a quick, easy, and unobtrusive way to learn more about their favorite products. Whether it's a video showing a behind-the-scenes glimpse of how the product they’re considering is made or a link to your sustainability promise, the entire bottle can be a digitally-enabled surface for engagement to help consumers get to know your brand and build trust.