Distilled spirits refer to alcoholic beverages that are produced by distilling and then bottling fermented grains, fruits or vegetables. Some of the commonly consumed distilled spirits include whisky, gin, rum, vodka among others. Distilled spirits offer benefits such as relaxation and stress-relief. They are consumed on various social occasions and celebrations. However, excessive consumption can cause health issues.
The global distilled spirits market is estimated to be valued at US$ 36.86 Mn in 2023 and is expected to exhibit a CAGR of 5.4% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The increasing consumption of distilled spirits by the millennial population presents a key market opportunity. Millennials are increasingly becoming comfortable with consuming spirits as they represent convenience, exoticism and expression of personality. Brands are launching premium and super-premium spirits offerings targeted at millennial drinkers. They are experimenting with flavored and blended variants to attract more millennial consumers. The growth in spending power of millennials along with their adventurous tastes will continue driving the demand for distilled spirits in the coming years. This presents distillers an opportunity to launch innovative products catering to the preferences of millennials and capture this high growth customer segment.
Porter’s Analysis
Threat of new entrants: The threat of new entrants in the distilled spirits market is moderate. Establishing production facilities and distribution channels require high capital investments. However, there are low switching costs for consumers.
Bargaining power of buyers: The bargaining power of buyers is high in the distilled spirits market. Buyers can easily switch between various brands based on price and quality.
Bargaining power of suppliers: The bargaining power of suppliers is moderate. While raw materials used in production such as grains, molasses, grapes are globally available, supplier switching costs are low for producers.
Threat of new substitutes: The threat of new substitutes is high. Alternative beverages like beer, wine offer substitutes. Moreover, changing consumer preferences toward low-alcohol beverages is a threat.
Competitive rivalry: The competitive rivalry is high given the presence of several global and regional players. Players compete on the basis of product differentiation, pricing, branding and marketing.
SWOT Analysis
Strengths: Distilled spirits have established market presence globally. Leading brands have strong brand recognition and loyalty. Technological advancements have improved production processes.
Weaknesses: Local regulations restrict advertising and promotions of distilled spirits in many countries due to health hazards of excessive consumption. Taxations are high impacting sales. Strict regulations surrounding alcohol content increase production costs.
Opportunities: Emerging markets like Asia Pacific and Latin America offer lucrative growth opportunities owing to changing consumer lifestyles and rising disposable incomes. Innovation in flavors catering to evolving consumer tastes presents new avenues.
Threats: Factors such as health awareness, high taxes and regulations pose challenges. Growing popularity of low-alcohol beverages threaten sales. Vulnerability to economic downturns impacting consumer spending on luxuries.
Key Takeaways
The Global Distilled Spirits Market Size is expected to witness high growth over the forecast period supported by increasing social acceptance and consumption in traditional and emerging markets.
Developed regions like North America and Europe currently dominate the market. However, developing countries of Asia Pacific are likely to grow at the fastest pace led by China, India and other Association of Southeast Asian Nations (ASEAN) countries experiencing rapid economic development and lifestyle changes.
Key players operating in the distilled spirits market are Coloplast Corp, ConvaTec Inc., Hollister Incorporated. The market remains fairly concentrated with top players striving to gain shares by expanding their product portfolios and leveraging digital mediums for enhancing brands and driving sales. Strategic acquisitions also feature prominently to supplement organic growth and establish footholds in new regions.
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