Global economic uncertainty and increasing consumer interest in wellness means that consumption of alcoholic beverages is predicted to decline over the next decade. However, the spirits market is set to defy the trend – with its share of the alcohol market only predicted to increase.
Driving this growth is the premiumisation trend, with the popularity of craft spirits and unique flavours continuing to rise with younger Millennial and Gen Z consumers. Moreover, the growing availability of low and zero alcohol spirts ensures that the sector remains appealing to health-conscious individuals.
As a result, in Western Europe, the value share of spirits in alcoholic beverage consumption will increase from 25.6% in 2023 to 32% in 2028, according to analysis from GlobalData.
Spirits market adapts to meet consumer preferences
Positive forecasts for the spirits market indicate that the sector is adapting well to the challenges faced by the alcoholic beverages market overall. Slow GDP growth in many countries has resulted in consumers cutting back on discretionary purchases to reduce living costs. Consequently, consumers looking to spend on alcohol are seeking value for money combined with premium flavours and quality to justify the additional expense.
“The main challenge in today’s spirits market is to navigate the trend towards premiumisation while managing rising costs,” says Carlos Peralata, general director of imports and exports at Varma Group, a leading distributor of spirits based in Spain. “Consumers are looking for innovative and high-quality products, but economic pressures are also a reality.”
Additionally, the wellness trend shows no signs of slowing. GlobalData’s 2024 Q3 Consumer Survey found that 45% of global respondents are either extremely or quite concerned about their physical fitness and health. As a result, consumers are seeking reduced calorie and lower alcohol options to support an aspirational healthy lifestyle.
The spirits market is well-positioned to adapt to these changes, with products such a White Claw Hard Seltzer providing consumers with a refreshing low-alcohol alternatives. Sales of the product have boomed in the Americas, with White Claw holding a 12.3% share in the regional flavoured alcoholic beverages market in 2023, according to GlobalData.
Now launching across Europe, the rise of White Claw is also linked to the personalisation trend, with its extensive list of flavours appealing to consumers’ different taste preferences. As a ready-to-drink (RTD) beverage, the product provides consumers with an affordable premium product they can enjoy anywhere they like.
Growth of Varma Group continues in Spain
White Claw is part of the Varma Group, a Spanish distributor of spirits and other consumer spirits. Its portfolio now spans more than 50 spirit brands, including Ron Barcelo rum, Hendrick’s Gin, Glenfiddich, and Bollinger. Ron Barcelo, a Dominican export, has been Spain’s best-selling spirit for three consecutive years now. These figures further demonstrate the Group’s success even amid a challenging general market.
“Fundamentally, we have maintained a strong focus on quality and the consumer experience, which resonates with today’s discerning drinkers, who seek added value even in times of economic uncertainty,” explains Peralta. “On the other hand, our portfolio diversification strategy, with brands ranging from standard to super-premium, allows us to adapt to the different needs of the consumer.”
2024 was a year of dynamic growth for Varma, culminating in the integration of Marcaronesian Gin into its portfolio. This premium Spanish gin is crafted in the Canary Islands with indigenous botanicals and reinforces Varma’s presence in the premium gin sector.
On the back of these recent successes, the group is planning to enter the Portuguese market in partnership with Garcias Wines & Spirits, where similar success is anticipated for Ron Barcelo.
“This partnership with Garcias Wine & Spirits, a distributor with an extensive experience and knowledge of the local market, is allowing us to effectively reach Portuguese consumers and build a solid presence in the country,” explains Peralta. “We will also explore opportunities to introduce other brands from our portfolio, adapting to the specific preferences of the Portuguese market.”
Preparing for the spirits market of the future
Peralta believes Varma’s ongoing success rests on four key pillars: diversification, brand building, their route-to-market (RTM) model, and agile family business structure. Acting as true brand builders, Varma nurture international brands within the Spanish market, combining an expert sales team and multi-channel presence with an adaptable leadership quick to identify changing market dynamics.
In future, Varma hopes to continue its growth trajectory by strengthening its core brands, innovating with new products, and expanding the distribution network. International expansion remains a strategic priority as the group looks to introduce its brands to new consumers globally.
“The market is in a transitional phase, but I am optimistic about the future,” says Peralta. “Premiumisation, innovation, and the rise of RTD beverages are exciting trends that offer significant opportunities.
“Varma is well-positioned to capitalise on these trends to deliver exceptional experiences in spirits to consumers.”
