IWSR: ‘status spirits’ grow faster than total market

‘Status spirits’ – brands that retail for US$100 and above – are growing “significantly ahead” of the total global spirits market, according to new data from IWSR Drinks Market Analysis.

‘Status spirits’ are growing ahead of the total spirits market, according to IWSR Drinks Market Analysis

The IWSR Status Spirits Strategic Study showed the value of the status spirits market (excluding baijiu) was worth US$8.3 billion and grew at a compound annual growth rate (CAGR) of 7% from 2014 to 2018. By comparison, the total global spirits market grew by 2% value CAGR.

The study showed status spirits were outgrowing lower-end counterparts in almost all categories. Status spirits were driven in particular by established status categories such as Cognac and Scotch whisky.

However, growth is expected to be much faster in less developed categories such as American whiskey, Tequila, Irish whiskey and rum.

IWSR also noted that while the long-term effect of covid-19 on the alcohol industry remains uncertain, the segment of brands that sell for US$100 and more “historically tends to be resistant to economic uncertainty”.

For example, between 2008 and 2012, spirits within this sector grew 82% by volume and almost 230% by value.

However, IWSR added the status spirits market can be quite reliant on Chinese consumers and tourists, as well as global travel retail, areas IWSR is watching carefully during the pandemic.

Mark Meek, CEO at IWSR Drinks Market Analysis, said: “Though we conducted our study prior to the current covid-19 situation, when we look at similar past events, such as Sars and the 2008 financial crisis, luxury goods and status spirits in particular have always recovered to previous levels.

“Also, our research shows the majority of status spirits are most often sold in fine wine and spirits retail stores and via e-commerce – more so than in bars and restaurants – which bodes well for these products in this current climate.”

Importance of accessibility

The IWSR Status Spirits Strategic Study examined eight key spirits categories in eight major focus markets, including travel retail, which combined account for 93% of the global status spirits market by value. Status spirits were divided into two categories, those retailing between US$100 and US$1,000, and those selling for above US$1,000.

IWSR found the majority of value came from the US$100 to US$250 range, but the US$250 to US$1,000 bracket is expected to grow fastest.

IWSR noted the importance of accessibility at this end of the spirits sector, particularly to attract new and younger legal drinking age consumers. It recommended brands should consider experimenting with smaller bottle sizes for sampling as an example of how to build a solid consumer base.

“Though the status spirits market is relatively small in size, these are highly coveted and often very rare and allocated products that appeal to affluent and aspirational spirits aficionados and collectors, and yes, sometimes to people only seeking that badge value,” Meek continued.

“It’s a unique and nuanced sector, which has definitely benefited from the general trend towards premiumisation, and also by the younger generation who continue to seek out luxury, and find it in high-end spirits.”