Beyond Premiumization: Why Consumers Are Drinking Less but Spending More

The numbers behind the narrative

The headline figures are stark. According to IWSR's preliminary 2024 data, total beverage alcohol volumes across the top 20 global markets fell by 1% versus 2023, with spirits contracting more sharply. The US — historically the engine of premium spirits growth — recorded its first volume decline in nearly 30 years in 2023, a fall that extended through 2024. The first half of 2025 offered little immediate comfort: IWSR reported a further 1% volume drop across key markets, with the US down 4% and Germany down 5%.

Yet the value line held. Despite the volume compression, global beverage alcohol value remained broadly steady in H1 2025, underscoring a divergence that has been quietly forming for years: consumers are buying fewer bottles, but they are not necessarily buying cheaper ones. That gap between volume and value is the defining structural feature of the current market — and reading it correctly is what separates reactive brands from strategic ones.

The premiumisation supercycle: maturing, not dead

Through the 2010s and the post-pandemic rebound of 2021–2022, the industry operated on a near-religious faith in premiumisation — the belief that consumers would perpetually trade up. That faith is now being stress-tested. IWSR's 2024 data shows the super-premium-and-above segment recording some of the steepest volume declines as inflation-weary consumers pulled back on discretionary luxury, even as no-alcohol expressions continued to grow.

The more precise reading is that premiumisation has matured rather than reversed. The supercycle — driven by a one-off re-rating of spirits as a luxury category — has run its easy course. What remains is a more demanding, more selective form of premiumisation, where consumers will pay a meaningful premium for the right product in the right context, but no longer do so automatically or habitually. The brands that thrived by surfing the wave now have to earn each transaction on its merits.

Drinking less: the moderation shift is structural

Volume softness is not simply economic — it is demographic and behavioural. IWSR's moderation research finds that per-capita consumption of pure alcohol across ten major markets has fallen around 20% since 2000. The proportion of self-described light drinkers has risen steadily, and a substantial share of consumers now report deliberately abstaining for defined periods.

Gen Z is the cohort most frequently cited, and the data is genuinely nuanced. IWSR reports that this generation moderates more consciously than older cohorts, yet the early narrative of wholesale Gen-Z abstinence has softened — abstention rates have eased in some markets as the cohort ages into legal drinking. What is consistent across generations is a conscious recalibration of alcohol's role: drinking as occasion, not default.

Spending more: where the value is actually going

The spend-per-occasion dynamic has not collapsed — it has concentrated. When consumers do drink, a meaningful share choose deliberately and trade up within their chosen category. The no- and low-alcohol segment is a useful lens: IWSR data shows tens of millions of consumers entering the no-alcohol segment across the top markets between 2022 and 2024. These are not defectors from premium spending — they are occasion-specific consumers who still invest in taste, brand and ritual when they do drink.

The same logic applies within full-strength categories: Irish whiskey, agave spirits and Indian whisky all posted growth even as total spirits volumes fell. Pernod Ricard and Diageo are navigating this bifurcation in real time — Diageo's FY25 net sales were broadly flat despite positive organic price/mix — a clean illustration of the pattern: heritage and provenance still command a premium; undifferentiated positioning does not.

The geography of resilience

The decline is not uniform, and that unevenness matters enormously for route-to-market strategy. IWSR's H1 2025 data identifies a clear polarisation between contracting mature markets and expanding emerging ones. India delivered strong total beverage alcohol growth, with premium-and-above growing faster still; Mexico, South Africa and parts of LATAM also expanded. Against this, the US, Germany and China contracted.

For a brand-owner deciding where to concentrate distribution effort, this map is instructive. Markets where premiumisation is still in its first or second innings — India above all, but also parts of LATAM and sub-Saharan Africa — offer genuine volume and value upside. Markets where the supercycle is fully played out demand a different playbook: fewer, better-positioned SKUs, tighter on-trade activation, and a clear answer to the "why tonight?" question a moderate consumer now asks more consciously than ever.

What the normalisation actually signals

The industry tends to describe 2023–2025 as a hangover from the post-pandemic boom — distributor inventory correction, consumer belt-tightening, temporary sentiment weakness. There is truth in that, but it risks obscuring the structural signal beneath the cyclical noise. A roughly 20% decline in per-capita alcohol consumption since 2000 is not a blip. The brands that will perform through the next decade are those that treat moderation not as a threat to be managed but as a context to be designed for — with smaller, higher-quality ranges, formats built for occasion rather than volume, and marketing that speaks to discernment rather than aspiration.

The premiumisation supercycle was always going to normalise. What "normal" looks like is a market that rewards authenticity over novelty, depth over breadth, and selectivity over scale. That is, in fact, a favourable environment for brands with genuine provenance — provided they are positioned, priced and distributed to meet the consumer where she now is.

What this means for brand-owners

The imperative is not to chase the next volume wave — it is to accept that this is a value-led market and align every decision accordingly. That means rationalising portfolios to concentrate investment behind lines with a defensible price-tier rationale, not a legacy one; prioritising markets where premium consumption is still growing over mature markets where the fight is for share in a shrinking pool; investing in the on-trade activation that converts a moderate consumer's infrequent occasion into a considered, branded choice; and treating no- and low as a legitimate expression of the same brand values rather than an afterthought. At Escalon Partners, we work with brand-owners through exactly this transition — from volume-growth assumptions to value-per-occasion discipline. The brands that thrive in the next cycle will be those that began that shift before the data forced their hand.