The global spirits sector has had its fair share of ups and downs in recent years as the industry has grappled with duty rises, tariffs, the effects of war, and shifts in consumption patterns. In the past 12 months in particular, spirits have struggled to grow as a result of inflationary pressures. There are several bright spots though, as the rise of the ready‐to‐drink (RTD) category and the growth of low‐and‐no drinks disrupt the traditional alcohol market.

IWSR revealed that spirits (excluding national spirits such as Chinese baijiu and Japanese shochu) had a 30% share of the global alcohol sector in 2023, while wine held a 15% share. Beer retained the biggest share, at 52%.

By 2028, IWSR forecasts spirits will increase slightly to hold a 31% share, while wine will have a 14% share. Beer’s share is expected to remain the same, while the RTD category could have a 3% stake within the next few years – signifying its growth potential.

Data from IWSR showed that global spirits volumes were flat last year, with “subdued growth” expected for the coming years. IWSR predicts 2023‐28 compound annual growth rate (CAGR) increases of 1% by volume and 2% by value, excluding national spirits.

Looking to 2025 and the spirits sector could face fresh challenges when US president Donald Trump returns to the White House.

Spiros Malandrakis, head of alcoholic drinks at Euromonitor, is cautious about Trump’s return due to potential tariffs that could affect the spirits sector once again.

“We will most likely be moving into the territory of trade wars in 2025,” Malandrakis predicts, adding that Trump could install tariffs “quite quickly after he gets power”.

On his social media platform, Truth Social, Trump announced he would issue an executive order to charge Mexico and Canada a 25% tariff on all products coming into the US when he takes office on 20 January. This tariff would have a particularly profound effect on Mexican spirits Tequila and mezcal, and on Canadian whisky.

Speaking about the threat of tariffs on Tequila, Malandrakis called it a “major headwind” for a category that has “already started seeing the first signs of de-premiumisation”, but he believes the sector “will not lose its relevance overnight lifestyle‐wise”.

Furthermore, the industry is also grappling with China’s imposition of anti‐dumping duties on EU brandies and Cognacs in October – a retaliation to Brussels’ 35% duty rise on China’s electric vehicles.

Tax hikes have also added further headaches for the spirits sector, particularly in the UK and Australia where they have risen in line with inflation. In October, it was confirmed that alcohol taxes in the UK would increase in February 2025 based on the Retail Price Index. It followed a whopping 10.1% hike on spirits duty in August 2023. In Australia, spirits tax rose from AU$101.85 to AU$103.89 per pure litre of alcohol on 5 August 2024, with another rise expected in February.

Malandrakis notes that all spirits categories are under pressure, with Tequila “being among the leaders in the race” in terms of growth, while Cognac is suffering the most. He spotlights no‐alcohol and spirits‐ based RTDs as sectors with “opportunity and momentum”.

With the threat of tariffs looming, Malandrakis is optimistic about the future of “local products targeting local consumption” such as Scotch in the UK and American whiskey in the US because of trade wars – signifying a “shift away from internationalism”.

And in more optimistic news, India is generating intrigue across the industry as a potential powerhouse market, with a growing demographic of premium drinkers.

Despite the generally gloomy economic outlook, there are opportunities for growth in emerging markets while the evolving preferences of a younger generation of drinkers could see new trends take hold. The spirits industry must prepare to chart a course for 2025 and unite in tackling these challenges head on.