Europe boasts some of the world’s most renowned spirits, from French cognac to Scottish and Irish whisky, but consumer tastes are shifting—co*cktails and the rise of low and non-alcohol options are reshaping the industry due to pressure from economic challenges.
Producers in France, one of the world’s largest producers and exporters of alcoholic beverages, sounded the alarm in June. Spirits exports dropped by 13% in volume and 12% in value in 2023, as consumer spending was squeezed by inflation.
The worst-hit drink is cognac, whose exports dropped by over 21% last year. Producers are now bracing for further challenges, as China launched in January an anti-dumping investigation that could lead to tariffs on cognac exports.
Inflationary pressures, however, are not solely to blame for the drop in consumption. A long-term trend toward moderation is also at play.
“People are drinking less,” said Emily Neill, Chief Operating Officer at IWSR, a global drinks intelligence provider, in an interview with Euractiv. She noted that this trend is driven not just by financial struggles but also by a growing focus on well-being and lifestyle choices.
Neill points out that moderation, often associated with Millennials (born between 1981 and 1996) and Gen Z (born between 1997 and 2012), is becoming more widespread across all age groups. “It’s also geographically spread—not just in mature markets like the US and Western Europe, but we also see it in Asia and Latin America,” she added.
Despite these shifts, the beverage industry isn’t panicking. The rise of trendy low-alcohol options like spritzers, along with no-alcohol gins and beers, is creating new business opportunities.
The top ten markets for non and low-alcohol include European countries like France, Germany, Spain, and the UK, as well as Australia, Brazil, Canada, Japan, South Africa and the US. Together, these markets account for 70% of global sales.
In these regions, consumption of non or low-alcohol drinks grew by 5% in 2023, reaching a market value of over €11 billion, with projections for 6% growth between 2023 and 2027.
In Europe, zero-alcohol beer has had the fastest growth in sales, with EU production up 13.5% in 2023, while traditional beer fell by 5%, according to Eurostat data released in August.
Globally, global sales of zero-alcohol beer grew by a third last year in what was otherwise a “flat beer market,” said Neill.
“Companies have cracked the taste problem,” Neill noted, highlighting how investments in food technology have significantly improved non-alcohol products in the last decades.
Despite this potential, Ulrich Adam, Director General of the EU-based lobby Spirits Europe, points out that while the non and low-alcohol market is growing strongly, it still represents a small segment of overall sales.
“The non and low-alcohol market looks like a promising story, but in terms of absolute sales share, it is still not huge,” said Adam.
For the ten largest markets, the IWSR forecasts that no-alcohol beverages will make up nearly 4% of the overall alcohol market by 2027.
Less is more
For Neill, shifting consumption patterns are part of broader societal changes, affecting how alcohol is consumed.
“Decades ago, in the UK, a lot of factory blue-collar workers would go to the pub and relax after work,” she explained, noting that the alcohol consumed was typically high volume, relatively low priced, and not strong.
“Now it’s more family-oriented, more about food and more of an experience,” she added.
Both Adam and Neill agree that this shift is due to the trend toward “premiumisation” of alcoholic products—a rising preference for higher-end options like craft beers, single malt whiskies, and premium sparkling wines.
Adam also notes that young consumers are increasingly turning to global, well-established brands, unlike their parent’s generation, who often favoured domestic spirits.
This trend has allowed international companies to expand their business in new markets, even as overall consumption declines slightly.
“Spirits are well positioned to grow in a stagnant market or falling in volume, but with rising value,” said Adam.
Make it ‘Insta-worthy’
In France, versatile spirits like gin, and other liquors used for co*cktails have been spared from the downward trend in consumption, even rising slightly during the first months of 2024, according to the Fédération Française des Spiritueux (FFS). Notably, the consumption of the Italian co*cktail spritz increased by 17.2%.
The changing preferences of young consumers can also be attributed to the influence of social media. Gen Z and Millennials not only want a tasty, less alcoholic drinks but also one that looks great on Instagram.
This explains the boom in colourful and aesthetically pleasing co*cktails, like spritz, whose characteristic flashy orange can be spotted in terraces in most of Europe during the summer months.
“It’s lovely, orange and social media friendly,” said Neill.
This co*cktail fever is also boosting the ready-to-drink niche, with pre-mixed products – like tequila beer, or canned versions of well-established drinks like piña colada gaining popularity.
Adam noted that European companies are also embracing this market. “There is a growing range of ready-to-drink mixes in the range of 5% to 10% ABV (alcohol by volume),” he said
This trend is expected to become even more pronounced in the future, as Gen Z consumers are less represented in traditional high-volume alcohol categories like beer and wine, but disproportionately drawn to ready-to-mix drinks, white-spirit-based co*cktails, liqueurs, and aperitifs, according to IWSR.
“They drink less, but better,” said Adam.
*Maria Simon Arboleas contributed to this article
[Edited by Angelo Di Mambro and Rajnish Singh]
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