Euromonitor: spirits premiumisation hits a wall
Euromonitor’s Spiros Malandrakis says premiumisation has reached its limits, as worsening market conditions push spirits into a prolonged slowdown.
According to Malandrakis, global insight manager of alcoholic drinks at Euromonitor International, the industry has seen a “continued deterioration” in 2025, as macroeconomic and lifestyle factors impact the sector.
He also warns that there has been a reversal of the “almost untouchable” premiumisation trend of the past two decades in the spirits sector.
“I’m not suggesting that everything’s being traded down [or] that the only way is economy, but I am clearly stating the monolithic premiumisation narrative of the past couple of decades, this idea that the only way is up and the only way is more premium – I think this has reached its limits.”
Perhaps indicative of this movement to more affordable products is Diageo CEO Dave Lewis’ recent comments that the business would target the mass market to curb falling sales. For many years, Diageo has focused on its premium portfolio of brands, which includes the likes of Johnnie Walker, Tanqueray and Don Julio.
Malandrakis warns that the assumption of endless trading-up is increasingly disconnected from consumer reality.
“You cannot completely disassociate and go in an opposingly different direction from the economy [by] selling discretionary products that are luxury while the economy is suffering for years,” he says.
Malandrakis also believes that the industry is facing structural changes. Weighing in on the cyclical versus structural debate, he says: “We’ve had these arguments for like three years now. At some point, you reach the stage of: ‘OK, this is something different. This is a change’. Now we could call it structural, we could call it cyclical. If we call it cyclical, it’s a very long cycle.”
The shift is also being reflected across the industry, with major producers increasingly focused on restructuring, consolidation and cost-cutting.
He also reiterated the concept of ‘permacrisis’, cautioning that the industry is facing an extended period of instability and insecurity.
Malandrakis likens many leaders in the drinks industry to bankers in 2007 who “never experienced a major market correction”, adding that they “convince themselves that the only way is up”.
He continues: “Nothing is infinite, nothing is forever. So I think we are in this kind of timeline now that many of the leadership in the industry are waking up to the fact that maybe premiumisation is not infinite.”
In the US, one of the world’s biggest markets for spirits, the category is experiencing a slowdown in value sales. According to the Distilled Spirits Council of the US data, spirits revenue dipped by 2.2% to US$36.4 billion while volumes rose by 1.9% to 318.1 million nine-litre cases.
Vodka, Tequila/mezcal, American whiskey and cordials (liqueurs) were all in volume decline or flat last year.
Despite the gloomy performance for most spirits categories, two segments continue to stand out in the US.
Malandrakis highlights non-alcoholic ‘spirits’ as on the rise, growing by double digits from a very low base. Spirit-based ready-to-drink (RTD) products also remain one of the strongest performers in the US, maintaining growth momentum as traditional categories slow. RTDs and pre-mixed cocktails soared by 17.1% in volume to surpass vodka as the leading spirit category in the US last year, according to Discus.
Malandrakis adds: “There is no other major category in spirits in the US in positive growth territory in 2025.”
‘Nihilistic indulgence’
Malandrakis also notes the emerging trend of ‘nihilistic indulgence’, which he describes as a countertrend to wellness-driven moderation.
In an era marked by anxiety, political instability and economic uncertainty, he believes consumers may increasingly reject long-term optimisation in favour of immediate pleasure.
He says that this “era of optimisation and hyper health focus” made sense when there was optimism about the future, adding that “it does not make so much sense in a world that’s falling apart around us.”
Malandrakis expects consumers to lean into indulgence as a response to broader societal instability.
“If there is no future, why would I optimise?” he says. “Why would I be embracing sober curiosity and not have a little bit more fun as the world burns?”
Supporting this theory, according to Malandrakis, are early anecdotal signals that participation in initiatives like Dry January and Sober October may be declining among younger consumers. He also cited reports suggesting combustible cigarette smoking could be rising again among US youth.
“If there is a bigger sign of a reversal of all the health trends… that’s one of them,” he says.
If the trend strengthens, Malandrakis believes it could create opportunities for more products that are affordable, “democratic, non-elitist and not necessarily premium” that are targeted for enjoyment instead.
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