Sales of status spirits rose by 9% in value last year, with Scotch overtaking Cognac and Armagnac for the first time, according to IWSR’s latest report.
The Status Spirits Report 2024 examines the performance of spirits priced above $100, with this segment currently accounting for a 4.8% value share of the global spirits category.
IWSR said Status spirits grew 2% in value globally last year but outperformed the broader alcohol category, which declined 1% in volume. Global spirits sales were also flat in 2023.
Status Spirit has not been immune to the challenges facing the global alcohol industry, including inflation, high interest rates and rising costs of living. These have made a “significant difference” across Status Spirit markets and price points.
Guy Wolfe, Head of Status Spirits Insights at IWSR, said: “Despite difficult macroeconomic conditions, Status Spirits has remained surprisingly resilient when compared to products at more mainstream price points. “
“While the above-average wealth of Status Spirit buyers means the market is more isolated, recent challenges for Status Spirit have demonstrated the importance of discipline regarding the value of stocks and broader footprints. Innovation and a focus on the consumer will be key to sustaining growth.”
Scotch beats cognac
Scotch whisky, the leading category among status spirits, rose 17% in 2023, led by malt/grain and blended whiskies. IWSR predicts malt/grain growth of 5% and blends of 10% over the five years to 2028.
The Scotch category is expected to add US$2 billion in value to the market, driven by duty free, the US, and emerging markets such as Nigeria and Vietnam. IWSR noted that innovation will help drive Scotch’s growth, with more than 340 new high-end products to be launched in 2023.
By comparison, Cognac and Armagnac released the lowest number of new products in 2023 among all other status spirits segment new products in a category that is “steadily losing market share,” IWSR noted. did. In 2023, it was pushed to second place by Scotch for the first time.
Cognac values fell by 12%, affected by China’s decline due to high inventory levels and economic weakness. The category is expected to suffer further from China’s anti-dumping duties on imports of European brandy.
High-priced agave spirits grew 4% last year, slower than the sector’s previous growth rate of 25% in 2022. Tequila is the top agave-based product, but mezcal has soared 73% from low levels.
IWSR revealed that the Agave Spirits Division increased the value of Status Spirits by US$220 million.
The US is the leading market for $100 bottles, with a compound annual growth rate (CAGR) of 35% since 2019, ahead of Cognac and Scotch. Sales of premium agave spirits recorded double- or triple-digit increases in all markets except Russia in 2023.
The US $100+ American whiskey segment also grew by 17% over the past five years (CAGR 2019-2023) due to increased demand for premium bourbons, ryes, and American single malts.
IWSR believes American whiskey will deliver the greatest value growth by 2028 as tequila growth slows.
Meanwhile, Chinese baijiu, a premium product, is expected to face price pressure this year and see slower growth in the short term.
Status spirits boom in GTR
In terms of markets, Status Spirits’ value fell by single digits in France and the UK, and by 12% in China. However, while the sector experienced low single-digit growth in the US, global travel retail (GTR) sales soared 48%.
GTR currently leads the market in status spirits by value, with IWSR previously pointing out that segment sales in this channel could surge 115% over the next five years (2022-2027) I am doing it.
According to IWSR, Status Spirits’ GTR sales are expected to register a CAGR of 10% by 2028. We targeted selected markets in Asia Pacific over a five-year period, with the US expected to grow by 4% between 2023 and 2028, and the UK and France expected to grow by low single digits.
IWSR said a potential free trade deal between the UK and India could provide a “significant boost” to premium Scotch if import duties were cut by 150%.
The report also said there will be a “slump” in status spirits on the secondary market in 2023, with the exception of rare super-aged spirits like The Macallan.
Across all subcategories, bottles in the $350 to $499.99 price range increased 42%, and the value of spirits retailing for $5,000 or more per bottle increased 39% last year. Other price points saw much slower growth, with top-end bottles ($2,500 to $4,999.99) declining.
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