The Ardent spirit market is projected to grow at a CAGR of 6.1% during the forecast period 2021-2026, and is poised to contribute a market value equivalent of $25 Billion by 2026. Ardent spirits are a category of ethyl alcohol that are fermented from vegetables and fruits and go through several rounds of distillations. After the entire process of distillation, each product type is aged according to the standard and requirement. Ardent Spirits consist of gin, vodka, tequila, rum and whiskey along with others are considered in alcoholic drinks. Each product type has different distillation and fermentation process, and each of them contains a specific alcohol content that differs from the others. The demand of the ardent spirits industry is set to grow due to the rising demand for premium drinks from the millennial generation, and also due to the opening of various distilleries serving various craft drinks, thus curating a new taste amongst the population.
Ardent Spirit Analysis- By Product Type
By product type, the ardent spirit market is bifurcated into gin, whiskey, rum, brandy, tequila, and vodka. Amongst the following, Vodka dominated the ardent spirit industry in the year 2020.
The associated reason for such demand is owing to multiple factors, firstly, Vodka offers various flavors and varieties like citrus, orange, green apple, coconut and various others which appeal to the younger adults. Another reason for the surge in recent years is attributed to the premiumization of vodka by the millennials, making it a popular choice in cocktails and other drinks.
Although, during the forecast period of 2021-2026, Tequila is poised to grow at a CAGR of 6.4%, which would be the fastest amongst all the categories. The attributed reason for the growth in the tequila market share is owed to the fact of rising distilleries across regions of the USA and Europe. The uprising demand is fulfilled by craft drinks, that are subjugated by Tequila. Tequila is also used to produce a non-alcoholic beverage, which has various health benefits and would provide a balanced growth across the food and beverages industry.
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Ardent Spirit Analysis- By Distribution Channel
By distribution channel, the ardent spirit industry is again bifurcated into two channels, namely, off-trade and on trade. The former focuses on selling products via stores of different kinds, while the latter focuses on the selling of alcohol via businesses like restaurants, bars, and clubs.
In the year 2020, off-trade constituted a revenue which was dominant in the channel. The reason for an uprising demand is associated with COVID-19, which forced the economies to go under strict lockdown thereby hindering any on-trade activities to function as usual, while the supermarkets and hypermarkets provided discounts and on door delivery to all the aligned customers at the shortest period, that made them the dominant contributor in this segment. RTD drinks or ready-to-drinks that are being sold by the hypermarkets were one of the closest substitute of cocktails, which was well received by the population.
Although, for the forecast period of 2021-2026, the on-trade channel is set to grow at the fastest CAGR of 6.7%. The reason for the change in dynamic is linked to the opening of economies post lockdown, and hence the socializing would drive the revenues from the on-trade segment higher than the former segment. The on-trade segment industry outlook looks optimistic due to various craft distilleries opening across regions serving premium drinks and cocktails.
Ardent Spirit Analysis- By Geography
North America dominated the year 2020, across all the demographics and had the maximum revenue share of 37.1%. The reason for the demand is associated with a rising millennial population adopting to cocktails and other non-alcoholic beverages. The millennials have favored drinks of premium quality over those of inferior, and hence the highest number of distilleries lies within the US, contributing substantially to the said demand.
Asia-Pacific is poised to grow at the fastest CAGR during the forecast period of 2021-2026. The reason of the increasing demand is owing to an increase of young adults in China and India, and due to excess usage of social media across countries, premiumization has caused the demand to surge across the Asia-Pacific.
Ardent Spirit Drivers
Assists in reducing the chances of diabetes
Due to presence of polyphenolic compounds, beneficial microbes, and no added sugars in most of the ardent spirits, which makes all the beverages beneficial for one’s health and reduces the chances of developing diabetes.
Aids in improving immunity
The presence of anti-bacterial properties in spirits helps in curing cough, cold and sore throat. Studies have reportedly suggested that spirits taken in controlled amounts has helped people in boosting immunity for a prolong periods of time.
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Ardent Spirits Challenges
Can lead to high-blood pressure and strokes
If ardent spirit is ingested in uncontrolled amounts, then it can lead to high-blood pressure-that in turn can increase the chances of strokes and heart ailments.
High Competition
The rising competition is a threat to the new entrants, as the distilleries pose a threat to established players, and also makes the new entrants worried.
Ardent Spirits Landscape
The Ardent Spirits Market's primary tactics are product launches, mergers and acquisitions, joint ventures, and R&D activities. Ardent Spirits Market top 10 companies include, Diageo, Pernod Ricard, Tito’s Handmade Vodka, HITEJINRO CO., LTD, Brown Forman Corporation, Bacardi Limited, Tanduay Distillers, Inc., Allied Blenders and Distillers Pvt. Ltd. (ABD), Guizhou Moutai Wine Co., Ltd., Alliance Global Group, Inc. (Emperador), Roust.
Development
In March 2021; Diageo acquired Far West Spirits LLC. The latter focuses on producing a blend of agave beverages, which has set foot in the USA market quite firmly. Diageo plans to run the beverages offered in both alcoholic and non-alcoholic segment across USA, and help its business give a new dimension to Far West Spirits.
Key Takeaways
In the year 2020, North America owed the maximum share in the market of ardent spirits, owing to a surge in demand in the beverages industry and also due to a surge in the sale of mezcal products, that are a type of spirit closely related to tequila.
Increasing preferences of the millennial generation for fair trade products and the premiumization of premium drinks would drive the Asia-Pacific region revenues in the projected period.
An in-depth SWOT Analysis, i.e., Strength, Weakness, Opportunities and Threats would be provided in the market report of Ardent Spirits Market.
Companies operating in the ardent spirit industry will have to face stiff competition to earn their market share. As different companies within region and across the globe are entering in the field of spirits manufacturing.
Related Reports:
A. Craft Spirits Market
https://www.industryarc.com/Research/Craft-Spirits-Market-Research-504982
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