Where Consumers Shop for Alcoholic Drinks

August 2023

Total alcoholic drinks volumes have almost reached pre-pandemic levels, but an adjustment is evident in the channel balance; retail is on the rise while on-trade recovery is still underway. Macroeconomic pressures and long-term socialising changes are reshaping purchasing patterns. E-commerce accounts for a very limited share of global sales, but digital developments remain a strategic priority. What are the prospects for alcoholic drinks as the distribution landscape continues to evolve?

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This report comes in PPT.

Key findings

The rise of retail

Global alcoholic drinks volumes have almost reached pre-COVID-19 levels. However, the industry has not simply returned to its previous state - the on-trade is only due to recover from the devastating impacts of the pandemic towards the middle of the forecast period. By contrast, the off-trade continues its global rise, even as consumers embrace the return to bars and restaurants.

Macroeconomic pressures weigh on purchasing habits

Producers have been passing on their higher input costs, driving up unit prices, at the same that disposable incomes are being squeezed. Even so, trading down within categories, whether to other brands or private label, has been limited so far. That may change in some markets as macroeconomic pressures continue. Moving some occasions from the on-trade into the home is already becoming more common as cash-strapped consumers look to reduce their outgoings.

Challenges and change in the on-trade

The on-trade is vital to value generation in alcoholic drinks. However, the channel is contending with a host of difficulties across much of the world. Venues and producers need to adapt to long-term shifts in socialising requirements; sophisticated non-alcoholic offers are increasingly expected, and to overcome the financial and practical benefits of staying home, providing an experience, rather than just a setting, is more important than ever.

E-commerce growth moderates but digital transformation continues

E-commerce growth has slowed significantly since the pandemic-driven peak of 2020, and the channel accounts for just a low-single-digit share of retail. However, the digital space continues to gain importance. Emerging technology such as augmented reality and blockchain has seen some uptake. Greater disruption may be on the horizon as producers and retailers explore the use of artificial intelligence to advance engagement and personalisation.

Key findings
Global volumes have almost returned to pre-pandemic levels
Wine is the only category to see volume decline in 2022
Pandemic impacts weigh heavily on Western Europe
Slow and steady growth for e-commerce as brick-and-mortar retail remains key
Perceived complexity, legislation and membership clubs support online sales in wine
China holds a significant lead in e-commerce volume sales
Supermarkets step up their emphasis on affordability
Pandemic drives almost across-the-board growth for retail channels
India and South Africa help drive a second year of growth for specialists
Discounters could benefit from macroeconomic headwinds
Top discounters’ strategies diverge geographically
Strength of branding constrains private label expansion
Western Europe leads in private label due to extensive modern grocery network
Limited potential for private label despite financial pressures
The pros and cons of promotional pricing
E-commerce retains long-term potential despite moderating growth
Retailers and third parties spot the online opportunities in the US
Beer leads e-commerce growth in the latest year, while wine shows decline
Setbacks and casualties are only to be excepted as online channels expand
Direct-to-consumer platforms need a point of differentiation
Artificial intelligence will support personalisation and engagement
E-commerce retailers: Pinduoduo climbs the rankings
Hennessy expands web3 engagement
Pandemic recovery is still underway in the on-trade
Premium retail alcohol as an affordable alternative to on-trade consumption
“Drinkflation” as challenges persist in the UK
On-trade digital innovation needs to be approached with caution
Other factors shaping the on-trade
A new lease of (night)life? Jägermeister partners with G2 Esports
Evolving requirements in a changing world
Key takeaways

Alcoholic Drinks

Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.

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