In these challenging times for beverage alcohol, a number of opportunities for growth persist – from the evolving attitudes of Gen Z to a shift in premiumisation, along with the promise of developing markets, global travel retail, RTDs and judicious innovation.
IWSR has identified six major drivers shaping the short- and mid-term future of beverage alcohol and influencing trends in the months and years ahead, spanning categories, channels and growth opportunities linked to innovation and the increasingly influential Gen Z age cohort.
These key drivers – outlined in IWSR’s e-book, ‘Beverage Alcohol Drivers 2026: Six key drivers shaping beverage alcohol in 2026 and beyond‘ – are all the more vital, given the current difficulties faced by brand owners, from ongoing financial pressures to macroeconomic and geopolitical uncertainty.
From the evolving premiumisation trend to the opportunities across developing markets, global travel retail and RTDs – as well as the vital role played by well-thought-out innovation – these developments will guide the strategies of brand owners as they target future growth.
1 – Gen Z’s behaviour evolution
Rather than rejecting beverage alcohol, the Gen Z consumer demographic is redefining its relationship with it, becoming more selective while balancing moderation with discovery. As this important age cohort reshapes when, where and why it interacts with alcohol, there is a strong focus on intentionality, moderation and value-driven choices.
According to IWSR Bevtrac consumer research conducted in September, Gen Z’s participation in alcohol is stable compared to the previous year, and higher than in September 2023. However, these consumers are becoming more selective, with the average number of categories consumed per occasion down from 2.8 to 1.8 over the past two years.
Abstinence rates are also changing, with fewer younger LDA+ consumers taking ‘dry’ days and enthusiasm for taking temporary breaks from drinking appearing to have peaked in most Bevtrac markets.
Gen Z will also be vital to the future revival of the on-trade: this age group is highly engaged with the channel, and more likely to visit it across Europe, North America, Australia, South Africa and Japan.
2 – Affordability drives choice
The long-running premiumisation trend is being reshaped by price consciousness, as cost-of-living concerns persist and the moderation trend takes root.
While consumers are not rejecting premium experiences, they are becoming more and more selective about when and where they trade up, looking for clear value and justification when they make purchasing decisions.
In the first half of last year, according to Bevtrac research, alcohol budgets shrank in many markets – even among the high earners who are traditionally thought to be insulated from affordability concerns. Financial confidence is rising in many markets, but there is a disconnect between this and actual spend on alcohol.
Price consciousness is also driving year-on-year declines in on-premise visits – ending the brief rally seen in late 2024 – and categories that are perceived as better-value and more accessible are the big winners, including standard beer and RTDs.
3 – Broad-based growth in developing markets
As growth stalls in a number of beverage alcohol’s mature markets, developing economies are poised to become the primary drivers of global expansion – but success will hinge on local knowledge of category dynamics, consumer behaviour and the regulatory environment.
Between 2024 and 2029, countries including Brazil, Ethiopia, India, Mexico, Nigeria and South Africa are predicted to add the most total beverage alcohol (TBA) volumes, according to IWSR forecasts, with India to the fore. Meanwhile, China is expected to see a volume decline, despite projected growth for RTDs, sparkling wine, imported still wine, plus gin, rum, whisk(e)y and tequila.
While developed markets face continued struggles, they should not be ignored or neglected; many of the biggest future category growth opportunities are offered by the US, despite ongoing TBA volume declines there.
4 – Experience and exploration in GTR
While the global travel retail (GTR) channel is resurgent, the recovery in passenger numbers has been uneven – leading to its evolution from a transactional channel to an experience-led environment, with storytelling, exclusivity and exploration increasingly driving engagement and conversion.
By 2034, IWSR forecasts predict GTR growth of US$4.2bn and 10bn nine-litre cases, but volume growth is continuing to lag behind passenger traffic recovery in most regions – most notably in China and North America. Rebounds in the Middle East, India and parts of Europe have not been sufficient to fully offset losses.
Increased space is being devoted in the channel to emerging categories such as agave-based spirits and bitters, at the expense of whisk(e)y – where scotch’s traditional dominance is being challenged by dynamism in American, Irish and Japanese whisk(e)y.
5 – RTDs – A multi-trend touchpoint
The versatility of RTDs – spanning occasions, channels and consumer groups – makes them a key driver of TBA expansion today. Their connection with flavour-led discovery, moderation and convenience is crucial to their consumer appeal, creating clear growth opportunities for brand owners.
According to IWSR’s ‘RTDs Strategic Study’, RTDs are outpacing TBA growth in eight out of the top ten markets; growth has slowed recently, but the category is poised to continue to gain market share, especially in destinations where RTDs are well established, with a TBA volume share of more than 5%.
New consumer recruitment has also slowed, but existing consumers – particularly younger LDA+ age cohorts – will drive continued volume growth through increased frequency of consumption. Gains in the on-premise, on-the-go and e-commerce channels are bringing further growth opportunities.
6 – Innovation’s increasing importance
The development of new products – whether new-to-world or brand extensions – has long been a crucial element of value creation for beverage alcohol brands: Over the past decade, according to IWSR data, innovation in all its forms delivered 55% of the US$231bn TBA value added.
The number of innovations launched each year has continued to rise, expanding at a CAGR of 5% over the same timescale, spearheaded by the dynamic RTD category, but with spirits and beer also highly involved.
However, brand owners need to innovate judiciously, focusing on new products that deliver incremental growth, rather than cannibalising existing value pools. In a fast-moving market, they should also carefully examine emerging trends or flavours, in order to pinpoint which will have true staying power.
