Analysis of the Global Luxury Drinks Industry 2023 and Forecasts for 2024
Pandora Mather-Lees
Director
IORMA Luxury and Creative Centre
April 2024
Introduction
The global luxury drinks industry is undergoing a transformative phase, characterized by evolving consumer preferences, technological innovations, and emerging market trends. From champagne and wines to spirits and beers, this sector encompasses a wide array of premium beverages that cater to discerning consumers worldwide. Here, with a focus (as ever for IORMA) on the future and new technologies, we delve into the key market dynamics, trends, and forecasts shaping the luxury drinks industry in 2023 and beyond.
Champagne Market Overview:
The champagne market continues to be a cornerstone of the luxury drinks industry, epitomizing sophistication and celebration. In 2023, the global champagne market witnessed significant growth, with a market size reaching approximately USD 7.26 billion. Forecasts for 2024 are equally promising, with an estimated market volume of 264.10 million litres and an expected growth rate of 4.18%, reaching 324.10 million litres by 2029.
Chris Walkey, Publisher, Glass of Bubbly Magazine
We spoke to Chris Walkey publisher of Glass of Bubbly Magazine and the Champagne Collectors Club about his perspective from many years in the market:
“Vintage labels remain, for many, the pinnacle of Champagne tasting experiences. This has encouraged many leading house names to release some of their older bottles within their cellars under the title of oenotheque ranges of which myself and my latest company, Champagne Collectors, have been discovering and selling to serious Champagne enthusiasts globally.”
Walkey goes on to comment on technology:
“Technology, though embraced slightly slower to many other industries, is positively emerging in the wine sector. Champagne though holds much of it’s charm for being traditional in character so too much innovation can have a negative effect. Nevertheless, we see the household name of Champagne highly popular amongst many influencers across social media thus ever increasing the aspirational value of what many class as being the king of wines, Champagne.”
“Interest in Champagne remains relatively robust despite recent fluctuations in global sales. In some cases at the lower end, the strong popularity gains of Prosecco (DOC) have affected sales. Nevertheless, Champagne remains the premium sparkling wine choice not only for immediate consumption, but also in regard to fine wine investments. The strength of the name Champagne alone will undoubtedly see it continue to perform competitively in most market situations and it still continues to evolve with a healthy flow of new labels arriving to the market and established houses releasing exciting additions to their portfolios.”
Market Segmentation:
The champagne market is segmented by type, price, and distribution channel, offering a diverse range of options to cater to various consumer preferences. Types include the familiar Brut Champagne, Rose Champagne, Blanc de Blancs, Blanc de Noirs, Demi-Sec, and Prestige Cuvee, among others.
• Price categories encompass economy, mid-range, and luxury, catering to different budget ranges.
• Distribution channels include the catering sector along with supermarkets, convenience stores, specialty stores, and online platforms, with, at the luxury end of the market, specialist stores and channels being important for the prestige shopping experience, confidence and trust they inspire.
Regional Dynamics:
• The fastest-growing market for champagne is in the Asia-Pacific region, driven by rising disposable incomes and evolving consumer lifestyles.
• North America remains the largest market for champagne, reflecting the region’s strong affinity for luxury beverages.
• Other key regional markets include Europe, Latin America, and the Middle East and Africa, each presenting unique opportunities and challenges for champagne producers.
We spoke to Erwann Guegan of Comte de Monte Carlo Champagne which featured at last year’s Monaco Yacht Show. Erwann comments on the future of champagne from an environmental perspective:
Environmental Concerns related to Packaging and Production
“At Comte de Monte-Carlo, we pride ourselves on not only crafting exquisite champagne but also prioritising sustainability and ethical practices throughout our production process. From vineyard cultivation to bottling, we ensure minimal environmental impact while maintaining the highest quality standards. Our distribution channels are carefully selected to uphold the prestige of our brand, prioritising specialist stores and online platforms that align with our values. Additionally, our packaging reflects our commitment to sustainability, utilising recyclable materials and reducing carbon emissions wherever possible. We recognise the importance of evolving consumer preferences and market trends, and as such, we continually innovate to meet the demands of discerning consumers while remaining true to our core values of excellence and integrity.”
“Central to our ethos is a steadfast commitment to sustainability and environmental stewardship. Our selected winegrowers, all with HVE3 Certification, employ sustainable viticulture methods to preserve the land for future generations. This focus on ecological values not only aligns with Prince Albert II’s foundation goals but also resonates with a younger demographic of consumers who prioritize sustainability in their purchasing decisions.
Moreover, our philanthropic endeavours underscore our dedication to environmental conservation. Collaborating with Sun King Diamonds, we created diamond-coated champagne bottles, symbolizing the preciousness of water and the oceans. Auctioning these one-of-a-kind bottles raised funds for the Albert II Foundation, furthering our commitment to environmental causes while epitomizing luxury and exclusivity.”
Brand image is vital in the luxury champagne market; how does a relatively new brand make inroads? Gueganexplains from his perspective:
“As the founder of Comte de Monte-Carlo, I am immensely proud of the brand’s journey, rooted in the vision of Baron Christian de Massy to create a champagne brand that not only embodies luxury but also celebrates the heritage and innovation of Monaco. Comte de Monte-Carlo stands as the most prominently marketed brand among the three distributed by SMGS, symbolizing the culmination of the Grimaldi family’s commitment to excellence and extravagance. We believe our unique identity lies in its dual provenance, originating from both the prestigious Montagne de Reims in Champagne and the iconic Principality of Monaco. This unprecedented combination not only sets us apart in the market but also reflects our dedication to transcending conventional boundaries in the pursuit of excellence.”
He comments further on the value of exclusive partnership for a small brand:
“Our strategic partnerships with prestigious events like the Monaco Yacht Show, Legends Team Cup, and Top Marques solidify our position as a luxury champagne brand for ultra-high net worth individuals. By associating with the elite worlds of yachting and supercars, we reinforce our brand’s exclusivity and appeal to discerning consumers seeking the epitome of luxury.
In essence, Comte de Monte-Carlo represents more than just a champagne brand—it encapsulates the essence of Monaco’s heritage, values, and commitment to innovation. Through sustainability, philanthropy, and strategic partnerships, we continue to shape the narrative of luxury consumption, appealing to a global audience seeking unparalleled experiences and exquisite indulgences.”
Distribution Challenges
For small brands Guegan understands that distribution is a key issue in determining success:
“The consolidation of champagne houses under LVMH poses a considerable challenge to a smaller brand trying to carve out a unique identity in a saturated market. LVMH owned brands have the capacity to outspend smaller brands, such as ours, on market research, product development, while also having the financial freedom to offer competitive pricing.”
Unique Distribution Strategy:
“Our sales strategy is focused on creating an emotional connection between and its clients. This focus on personalised interaction fosters client loyalty by ensuring that each moment of champagne consumption is accompanied by the provision of a tangible experience of brand identity. This strategic use of a personalised and service-oriented distribution method has significantly contributed to a high conversion rate from consumer awareness to acquisition and fostering long-term customer loyalty. As a small brand in a market saturated with mass-commercialised brands, this sense of personalisation and individualised care for our customers is what enables us to win over consumers used to these heritage brands. Our service-oriented method of limited distribution allows us to stand out in an, arguably, over-commercialised marketplace.”
Wine Trends and Forecasts:
In the wine sector, 2024 promises to be a year of innovation and diversity, with emerging trends reshaping consumer preferences and market dynamics. From dessert wines to chillable reds, organic and sustainable practices, and the rise of no- and low-ABV options, the wine industry is adapting to meet evolving consumer demands.
Dessert Wines and Chillable Reds:
• Dessert wines, including sherry, Sauternes, Port, and Tokaji, are experiencing increased demand, offering consumers a delightful post-dinner indulgence.
• Chillable reds are gaining traction, providing a refreshing alternative with lower alcohol content and vibrant flavours, catering to health-conscious consumers seeking lighter wine options.
Organic and Sustainable Practices:
• The shift towards organic and sustainable winemaking practices is driven by growing consumer awareness and demand for eco-conscious products.
• Vineyards and wineries are embracing environmentally friendly practices to reduce their carbon footprint and promote biodiversity, reflecting a broader trend towards sustainability in the wine industry.
No- and Low-ABV Options:
• The rise of no- and low-alcohol wines is driven by shifting consumer preferences towards health and wellness. However, taste issues and quality are still an impediment to development of this sector, despite brands innovating to offer high-quality, full-flavour alternatives with reduced alcohol content. Nevertheless, they are catering to a growing segment of health-conscious consumers and surely taste will improve as technology develops.
Luxury Wines
At the top of the market, specialist wines demonstrate some jaw dropping prices along with champagnes. London’s most exclusive wine shop is located in Mayfair. Hedonism wines boast a Yquem 1847 vintage semillon described by David Peppercorn MW as one of the greatest Yquem ever bottled from one of the greatest Sauternes vintages of the 19th century. Also rated 5/5 by Michael Broadbent MW as having “Astonishing power and concentration”. Auctioned at nearly £60,000 a bottle, one would think so. Even more exclusive on offer however is a Magnum of Domaine de la Romanée Conti (DRC) Red wine at £195,000.
At this level, one questions how often the wines are actually opened and tried, or whether they are retained as objects to be treasured in a specialist portfolio.
Luxury Champagne and Wine Pairings:
• In addition to cocktails and spirits, luxury drinks experiences often include curated champagne and wine pairings that elevate the dining experience to new heights.
• High-end restaurants and wine bars offer tastings and pairings featuring rare and prestigious champagne and wine selections, enhancing the culinary experience and catering to discerning palates.
Beer Industry Insights:
Whilst beer might not be considered a luxury drink, it is developing some high end specialist facets. Beer remains a dominant force in the global beverage market, driven by changing consumer preferences, product innovations, and a growing emphasis on health and wellness. From craft and microbrewing to innovative flavouring and packaging solutions, the beer industry is poised for continued growth and expansion.
Market Size and Growth:
The beer market dominated the industry in 2023, with a value of US$ 808.4 billion, reflecting sustained growth and market dominance.
Forecasts indicate a compound annual growth rate (CAGR) of 7.6% over the next 10 years, driven by changing consumer desires and product innovations.
Futures (Beer)
Craft and Microbrewing:
• The future of the beer industry lies in craft and microbrewing, with consumers seeking unique flavour profiles and artisanal brewing techniques.
• Craft breweries are driving innovation and creativity, catering to diverse the beer afficionado preferences and expanding the market’s product offerings.
Innovative Flavouring and Packaging:
• Product launches and innovations in flavouring and packaging are reshaping the beer industry, with brands embracing creativity and differentiation to stand out in a competitive market landscape.
• From infused flavours to sustainable packaging solutions, breweries are leveraging technology and consumer insights to drive growth and market penetration.
• China is expected to overtake the US as the leader in the beer market, reflecting shifting consumer demographics and market dynamics.
Spirits Market Dynamics:
The global spirits market remains robust, with forecasts indicating steady growth and evolving consumer preferences shaping the industry landscape. From gin and liqueurs to innovative packaging solutions and sustainability initiatives, the spirits sector is experiencing dynamic shifts in response to changing market dynamics.
Market Size and Growth:
• In 2023, the global spirits market was valued at approximately US$ 59,408 million, with forecasts projecting a compound annual growth rate (CAGR) of nearly 4% until 2033.
• By 2033, sales of spirits on a global scale are estimated to be worth around US$ 90,288.9 million, reflecting sustained growth and market expansion.
Gin and Liqueurs:
• Gin and liqueurs are witnessing notable developments, with innovations aimed at creating unique offerings intended to drive engagement with a plethora of brands.
• Market trends indicate growing consumer interest in premium gin varieties and artisanal liqueurs, reflecting a broader trend towards craft and quality in the spirits sector.
Sustainability Initiatives:
• Producers are increasingly embracing sustainability initiatives, incorporating eco-friendly practices into their production processes and packaging solutions.
• From recyclable materials to reduced carbon emissions, sustainability is becoming a key differentiator for spirits brands, resonating with environmentally conscious consumers.
De-Carbonising Luxury Spirits: Copper Lion’s story:
We interviewed Angus Maclean, Co-founder of Copper Lion Gin
“My business partner Minnie and I launched Copper Lion Gin in December 2023. Copper Lion is a premium London Dry Gin that has the complexity, balance and texture to be enjoyed neat, as well as more traditionally mixed. We have found that the demand for mid and low tier gin seems to be receding predominantly due to over-saturation of the market and disruptions caused by the pandemic and global events. We have found that there is still an exciting market and strong demand for high quality, artisanal gins and in particular those with sustainable values.”
Impact of Technology and the future of the spirits market
Maclean goes on to explain what technical innovation means for small producers:
“With regard to the technical side, we are researching how to be as sustainable as possible. We have located two off-grid barns that we hope to develop into 100% green energy distilleries in which to make our spirits. We are looking at combining numerous renewable sources of energy in order to meet the challenges of the batch process involved in distilling. As the farm already grows organic barley of the right quality for single malt whisky, we are also considering synergies and have plans to implement a circular co-product management strategy that will further reduce our carbon footprint. Our focus is to design out emissions at source, rather than simply offsetting our carbon. If we manage to achieve our ambitions, this could set a template for de-carbonisation of the distilling sector and other light industry.
See www.copperliondistillery.com for updates on the project.
Rare Whiskey
Whiskey enthusiasts and collectors seek out rare and limited-edition spirits, willing to pay premium prices for bottles with unique histories and flavour profiles.
• The Macallan 1972 whiskey, priced at £10,000 per glass, exemplifies the allure of rare and vintage spirits. However, caution is warranted, as evidenced by the case of the ‘Macallan 1878’ single malt, which was revealed to be a modern fake—a blended Scotch from the early 1970s masquerading as a rare vintage.
• Despite the risks of counterfeit products, the demand for luxury whiskey and spirits remains strong, fueled by connoisseurs and collectors seeking exclusive and prestigious additions to their collections.
Luxury Imbibing: Future Growth and Emerging Trends in the Global Market
Looking ahead, several key trends and market dynamics are expected to shape the future of the luxury sector. From the rise of ready-to-drink (RTD) beverages to the growing importance of sustainability initiatives and emerging market opportunities, luxury and prestige drinking is poised for continued growth and evolution.
Market Expansion Opportunities:
• Emerging markets in South America, Asia, and Africa present new opportunities for growth and market expansion, driven by rising disposable incomes and evolving consumer preferences.
- Specialist small producers will continue to enter the market.
Technological Innovations:
• Technological advancements are revolutionizing the luxury drinks industry, enhancing production processes, and elevating consumer experiences.
• From AI-driven marketing strategies to blockchain solutions ensuring product authenticity, technology is driving innovation across the supply chain, reshaping the industry’s future trajectory.
Sustainability Initiatives and Packaging Innovations:
Sustainability initiatives and packaging innovations are gaining traction, reflecting growing consumer demand for eco-friendly products and ethical business practices. Examples include recyclable materials to reduced carbon emissions, luxury drinks brands are embracing sustainability as a key differentiator, driving growth and market differentiation.
Luxury Cocktails and Spirits:/Egregious indulgence
In addition to traditional beverages like champagne, wine, and beer, the luxury drinks industry also boasts an array of high-end cocktails and spirits that cater to the most discerning of consumers. From rare whiskeys to meticulously crafted cocktails, these premium offerings command attention and often come with exorbitant price tags.
Rare and Exotic Cocktails:
• The luxury drinks market features a range of extravagant cocktails crafted from the finest and rarest ingredients. These cocktails are often exclusive to high-end bars and establishments, offering patrons a unique and indulgent experience.
• Examples include L ’Imperial at $5,000 served at the Baccarat Hotel in New York, with very rare 1920 Chartreuse served in a Baccarat glass costing £3,600. These cocktails are not just beverages but works of art, meticulously crafted to delight the senses and evoke a sense of luxury and opulence.
We interviewed Oskar Kinberg, Executive Group Bar Manager at Hide Restaurant overlooking London’s Green Park. The foremost Michelin Star restaurant presided over by celebrity chef Ollie Dabbous offers a sumptuous dining experience with 6,800 wines available within 15 minutes up to £120,000. This makes for a special night out.
However, cocktails are king. Hide offers a myriad of potions according to Kinberg:
“The most luxurious cocktail we have on the menu is our elevated version of the classic Rob Roy. We have a rolling offering of this classic that we put our own signature on. For each different batch we source a delicious and often harder to find whisky and then pair it with complementing ingredients before we finally age it in beeswax to give it a silkier mouthfeel and a honied finish. Our current Batch #6 features Hibiki Blossom Harmony 2022 release, Cocchi di Torino sweet vermouth, woodruff and beeswax. This delicious cocktail is £52 on the menu and for a whisky lover never fails to impress. “
Cocktail trends and technology
Oskar Kinberg continues, explaining how technology drives novelty and the impact of environmental concerns on the industry:
“Over the last decade we have seen an evolution in cocktail making techniques for clarification, vacuum distilling, switching, fermenting, centrifuging etc. This has been hit and miss for me as sometimes new techniques get used for the sake of being innovative rather than actually improving the drink. It seems to have slowed down a little bit and bartenders are now starting to put flavour first again, which for me is a good thing. I love using modern methods, but in all honesty, all the guests want is a delicious cocktail, and methods are more often than not lost on them. Trends tend to go in cycles. Currently the trend is towards minimalistic presentations that don’t tear on mother earths resources. You don’t see parasols and single use items in a flamboyant tiki drink so much anymore. I would imagine that garnishes will get more creative in the future while still being eco friendly.”
Market Impact:
• While these ultra-luxury offerings represent a small segment of the overall market, they play a significant role in shaping perceptions of prestige and exclusivity within the luxury drinks industry.
• The demand for rare and exotic cocktails, whiskeys, and spirits underscores the aspirational nature of luxury consumption, with consumers willing to pay premium prices for experiences that evoke sophistication and indulgence.
Conclusion:
In conclusion, the global luxury drinks industry is changing rapidly. Growth is predicted, despite health concerns and this is fuelled by continuous innovation and creative marketing strategies, both by the major drinks brands, but also from micro businesses.
From champagne and wines to spirits and beers, this sector offers a diverse array of premium beverages to feed demanding consumers worldwide. Looking ahead, sustainability, innovation, and technological advancements will continue to shape its future along with the quest for novelty.
Of course, this sector encompasses not only traditional beverages like champagne, wine, and beer but also a range of high-end cocktails and spirits that pander to big spenders high on exclusivity and rarity. Moreover, in luxury venues from Mayfair to Manhattan and beyond, the uber wealthy socialising and entertaining are being awed by celebrity ‘mixologists’ offering outrageous cocktails and expert connoisseurs introducing valuable whiskeys, cognacs and specialist spirits. Prestigious champagne and wine degustations are ever popular. These offerings exemplify the opulence and perceived sophistication associated with such consumption. As the industry continues to evolve, the demand for ultra-luxury drinks experiences is expected to grow as hedonists seek out unique and memorable indulgences that transcend ordinary consumption.
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How can luxury spirits be sustainable? – The Spirits Business
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$10,000 glass of Macallan confirmed as fake | Scotch Whisky
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