Whisky to drive GTR recovery

Sales of whisky in global travel retail (GTR) rose by 77% by volume last year and are expected to increase by 16% in 2023, according to data from IWSR Drinks Market Analysis.

The IWSR revealed its key trends for GTR in 2023, with whisky and Champagne to ‘spearhead’ the channel’s resurgence in the years ahead.

The analyst noted that a full recovery for GTR ‘remains elusive in the short term, partly due to high global inflation and economic concerns’, and the war in Ukraine.

The IWSR said GTR whisky volumes are predicted to post a compound annual growth rate (CAGR) of 8% between 2023 and 2027.

“Whisky proved the key engine for volume recovery in 2022, notably US whiskies benefiting from strong performance in the Americas,” said Jairo Lopez Suarez, head of GTR insights, IWSR.

“Blended and malt Scotches also posted strong growth in 2022, but from a deep drop, and are still way short of pre-crisis volumes (-22% for malt, -26% for blends).”

The IWSR noted that gin has led the recovery of spirits in the channel, while agave-based spirits surpassed 2019 levels in 2022.

Furthermore, the analyst noted that recovery for brandy and Cognac were less positive, with the latter hit by softening demand in the US and the absence of Chinese travellers.

China ‘key’ to GTR recovery

General recovery in the channel is reliant on the return of Chinese travellers, the IWSR pointed out. The GTR channel is waiting for international travel to pick up since pandemic restrictions on Chinese consumers were relaxed in early 2023, Suarez noted.

After recording a decline in 2022,  duty free shopping destination Hainan is expected to bounce back in 2024 but with less focus on higher-priced segments.

“The sheer size and growth of China’s burgeoning middle class, who will be adopting Hainan as a travel destination, is believed to be fuel enough to compensate for those Chinese nationals who are now ready to rejoin the international travel circuit,” Suarez explained. “There are also signs that Hainan is beginning to attract an international audience.”

Citing International Air Transport Association (IATA) data, the IWSR said a full recovery in international air passenger numbers is now not forecast before 2025/2026. It also noted a potential move towards self-catering holidays as consumers deal with cost-of-living challenges.

“The global travel retail channel is transforming as beverage alcohol brand owners reshape their strategies and adopt a more holistic approach across all global travel retail channels,” said Emily Neill, chief operating officer, market research, IWSR.

“Brand activations will evolve to reinforce the halo effect from GTR to domestic channels. Renewed focus will fall onto subchannels such as cruises and airline pour, and premium segments will regain market share as the channel increasingly embraces its role as a high-end product showcase.”

The IWSR also named ‘re-imagined’ brand activations for luxury customers as a trend in the channel.

“The rise of standalone boutiques, shop-in-shop concepts, pop-ups and tie-ins with non-beverage luxury brands in GTR environments are all indications of brand owners seeking to target not only the high-end drinker, but also the more general luxury shopper who may also be after fashion, accessories or cosmetics,” Suarez added.