'Premiumization,' Functionality Expected to Fuel Growth of Alcoholic Beverage Category
A new report from Markets N Research details the expected growth of the alcoholic beverage category, which is expected to hit $2.54 trillion in value by 2028.
The category, which includes beer, wine, spirits and more, is expected to grow at a compound annual growth rate (CAGR) of 10.1% between 2023 and 2028. In an overall analysis, the increasing number of young adults is expected to be the driving factor of alcoholic beverage growth, although growing trends in the non-alcoholic beverage space could hamper this.
Markets N Research examined branded alcoholic beverage companies, offering clues for private brands about where the category is headed. One growing trend is the rise of craft alcoholic beverages and the emergence of ‘premiumization’ in the market.
“Customers are becoming more accustomed to the craft alcoholic beverage market,” said the report. “The market offers a wide range of craft beer flavors. Well-known breweries will likely devise plans to introduce their craft beer line or buy out rivals' labels or brands. They will now have access to various marketing strategies and small brewers' distribution networks. Similarly, the craft spirits, craft liquor, craft cocktail and craft cider markets are also growing.”
The report added that younger consumers will seek new flavors and varieties from alcoholic beverages. In addition, they will look for function out of alcoholic beverages, a trend that has been seen across the CPG industry in recent years. Those same functional benefits, found in energy drinks and many non-alcoholic beverages, could also decrease the overall growth of the category.
“Consumers around the world have more developed palates than a decade ago,” wrote Markets N Research. “They are continually on the lookout for novel, high-quality alcoholic beverages. The integration of natural ingredients in alcoholic beverages enhances their functionality, and such products are gaining consumer attention. The growing health consciousness among people, which encourages the integration of functional and natural ingredients, opens up more opportunities for the premium alcohol market.”
The full report can be found here.