The spirits market - France (2024)

1.2 Global market growth

In ****, the global spirits market was estimated at ***.** billion dollars. After a year of recovery in ****, market growth is expected to accelerate to ***.** billion US dollars by ****, with a compound annual growth rate of *%.

World spirits market size World, ****-*****, in billions of US dollars Source: ****

The global market is mainly driven by the development of developing countries and the growth of their populations, but also by market premiumization, digitalization and innovation in line with new consumer expectations, particularly with regard to environmental and health concerns.

Conversely, the main challenges facing the global market are restrictions on alcohol advertising, high taxation, strict rules and regulations in certain regions, and health problems linked to excessive alcohol consumption.

Asia-Pacific dominates the global spirits market, accounting for **% of the market by ****. North America is the second largest region, accounting for **% of the global spirits market.

Vodka is the world's most consumed spirit, followed by whisky, with over **% of revenues in ****.

Leading companies in the global spirits market include Diageo, Pernod-Ricard, Brown-Forman, Constellation Brands, Remy Cointreau, Marnier Lapostolle, Belvedere and Berentzen-Gruppe. [***]

Focus on the European market

Breakdown of spirits production in the European Union European Union, ****, in Source: ****

The production of spirits in the European ...

1.3 The French spirits market

Spirits production

In ****, the French spirits market will amount to **.* billion euros. [***]

In addition, economic activity relating to spirits is recorded under code **.**Z: Production of distilled alcoholic beverages. [***]

The annual sales indices provided by Insee can be used to estimate sales trends in the sector. For example, for ****, market sales are obtained using the formula: sales index *****sales index **** / sales index **** = ***.* * *.* / ***.* = *.*.

French spirits market size France, ****-****, in billions of euros Source: ****

The French spirits market has been growing for several years. This growth is due in particular to dynamic exports, especially of cognac, which account for almost half of sales.

In addition, the sector is experiencing a strong premiumization trend, with growth in value outstripping growth in volume. As Sylvie Hénon-Badoinot, President of the French Spirits Federation, explains, the French are "consuming less, but better, products with higher added value". [***]

Spirits consumption in supermarkets

Spirits sales in supermarkets France, ****, € billion Source: ****

Spirits consumption in France is down overall on ****, reaching *** million liters in supermarkets (***). Sales in the restaurant and supermarket sector are back to pre-pandemic levels.

Whiskies and aniseed-flavoured spir its together account for almost **% of total spirits consumption in France[***].

1.4 International trade

In ****, France exported spirits worth *.** billion euros. However, in ****, after five years of uninterrupted growth, French spirits exports came to an abrupt halt.under the combined effect of the US taxes imposed on French wines since the end of **** and the Covid-** epidemic.

French spirits exports France, ****-****, in millions of euros Source: ****

The United States is the main destination for French spirits exports, followed by China and Singapore. French spirits exports to the USA are set to accelerate further following the gradual end of restrictive measures linked to the pandemic and theand the five-year suspension of the additional **% customs duties that applied to French wines and spirits exported to the United States. Initiated in October **** and reinforced in January ****, these taxes had severely disrupted wine and spirits exports and placed exporters in a particularly difficult situation. [***]

By ****, spirits production from wine will reach **.* million hectoliters, making France Europe's leading spirits producer and exporter, and fourth worldwide in terms of exports. However, less than *% of the Cognac produced is consumed locally. Wines and spirits represent France' s second-largest trade surplus, and the country ' s largest surplus on agri-food products.

France has traditionally had a trade surplus in spirits, with a ...

1.5 The effect of the Covid-19 epidemic

The Covid-** epidemic has not spared players in the spirits market, with sales plummeting to their lowest level since April ****. The postponement of purchases in supermarkets and hypermarkets has not been able to offset the losses in cafés, hotels and restaurants.

Monthly sales index for the spirits market (***) France, ****-****, base *** in **** Source: ****

Vodka exports fell by **.*% in volume and **.*% in value, while cognac exports dropped by **.*% in volume and **.*% in value. [***]

However, business picked up faster than expected. " The start to **** has been rather good", says Jean-Pierre Cointreau, President of the French Spirits Federation.

The intensity of the recovery has varied according to product, with tequilas, gins and cognacs showing significant dynamism, while whiskies have struggled.

Sales trends for alcohol categories in supermarkets France, from January * to May * ****, in % Source: ****

2.1 Profile analysis: The French consumer

Consumption of spirits has fallen sharply in recent years. In ** years, per capita consumption of pure alcohol has fallen from *.** liters per person in **** to *.* liters per person in ****, under the influence of public policies to raise awareness of the dangers of alcohol. Spirits consumers are becoming increasingly reasonable, and are increasingly choosing quality over quantity.

Spirits consumption per person France, ****-****, liters per person aged ** or over Source: ****

In terms of frequency of consumption, older people and men are the most frequent drinkers, with men over ** showing the highest rate of daily consumption (***). Similarly, over half of men aged ** to ** claim to drink at least one glass a week, ** points more than women in the same age category. Conversely, women are more likely not to drink spirits: **.*% of them say they don't drink alcohol, compared with **.*% of men. [***]

Consumption of spirits varies with age. According to an Ipsos study, there are also differences between the profiles of rum and whisky consumers. While half of whisky drinkers are over **, and **% are men, rum drinkers have a more mixed profile (***). **% of rum drinkers are even under **.

2.2 Demand drivers

The economic difficulties brought about by the health crisis have heightened the attention paid by the French to the quality/price ratio and promotions applied to spirits. This increased focus on budget does not, however, seem to be at the expense of the quality of spirits purchased by the French, as this is still taken into account in the arbitration process. In addition, the French are placing increasing importance on specific aspects of production (***), reflecting the still marginal but growing attention paid to the responsible nature of the spirits they buy.

Trends in the importance attached to spirits purchasing criteria since the Covid-** epidemic France, ****, in Source: ****

2.3 New consumer trends

Growing interest in cocktails

Cocktail consumption is indeed a catalyst for spirits demand, and has been growing in recent years. According to a survey conducted in ****, **% of French people were consuming spirits in cocktails. Furthermore, in ****, **% of those surveyed said they were interested in mixology, down * points on ****. [***] This is a market with a relatively marked gender distinction, since **% of men and **% of women claim to consume cocktails (***).

Top * spirits cocktail drinkers prefer to drink France, ****, in Source: ****

Cocktail consumption in France is mainly rum-based, as are drinks like the Mojito. The latter accounted for nearly **% of cocktails sold in bars in France in ****. But cocktails appear to be a potential growth niche for all players in the spirits industry. [***]

The Covid-** epidemic has also heightened French interest in cocktails, with **% of major cocktail spirit consumers having increased their consumption since the last containment. [***]

The no-low trend

The trend towards no-alcohol or low-alcohol wines and spirits has been growing strongly in recent years, as exemplified by the "Dry January" movement. However, this trend does not seem to signify a shift away from spirits consumption, but rather a change in drinking habits, with an increased preference for more sophisticated, less alcoholic and ...

2.4 The French's relationship with leading spirits: the French's favourite brands

Opinion Way's **** survey of French consumers' favorite brands gives us a clearer picture of their favorite spirits. The podium is made up of Martini in *st position (***). The distribution between the different categories of spirits seems relatively equitable, with a preference for liqueurs and other spirits, and the bottom of the ranking occupied more by vodka brands.

The French™ favorite brands

Liqueur category

Liqueur brands preferred by the French France, **** Source: ****

Rum category

France's favorite rum brands France, **** Source: ****

Whiskies category

Favorite whisky brands of the French France, **** Source: ****

Aniseed category

Preferred anise brands of the French France, **** Source: ****

Vodka category

Preferred vodka brands of the French France, **** Source: ****

Other

Other spirits] brands preferred by the French France, **** Source: ****

3.1 Value chain

The French spirits industry is made up of several types of players involved in one or more stages of the value chain. The value chain comprises * main phases:

The first is the extraction of agricultural raw materials, such as absinthe, sugarcane, potatoes, cereals or beet. These raw materials are then processed to obtain the desired alcohol, notably by fermentation and distillation. Packaging refers to the bottling and packaging of spirit drinks. Finally, the finished products are distributed through a variety of channels (***).

Source: ****

It is therefore possible to segment the types of jobs generated by the spirits industry and estimate the number of jobs supported by the industry at around ***,*** in ****, of which **,*** will be in the supply of raw materials, *,*** in spirits production and **,*** in product distribution. Finally, the spin-offs from the industry's wages and taxes would create **,*** jobs in the rest of the economy.

Jobs supported by the spirits industry France, ****, as % of total Source: ****

Jobs directly linked to the production and distribution of spirits are distributed geographically as shown in the table below. Nouvelle-Aquitaine and Ile de France concentrate the largest numbers of jobs in the industry, with **,*** and **,*** jobs respectively in ****. [***]

Source: ****

Focus on spirits production ...

3.2 Key industry players

In France, Pernod Ricard (***).[***]

Other major players in the French spirits market include Moët Hennessy (***).

In ****, the top-selling brands by value in supermarkets and hypermarkets were Ricard (***) and Jack Daniels.

Ranking of spirits brands by volume sales in supermarkets France, ****, in millions of liters Source: ****

Furthermore, the brands with the strongest annual sales growth in supermarkets and hypermarkets are Captain Morgan rum (***).

3.3 Distribution

In ****, sales of spirits in the on-trade reached **.* million liters, while sales in supermarkets totalled *** million liters. The main distribution channels are hyper- and supermarkets, which in **** accounted for three-quarters of the volume of spirits and champagne sales in supermarkets. It is important to note, however, the meteoric rise of sales in the on-trade, where volumes have jumped by over **% in * year, while sales in supermarkets are tending to slow down slightly (***)

Breakdown of spirits and champagne supermarket sales by channel France, ****, in Source: IRI In supermarkets, whiskies, aniseed-flavored spirits and rums appear to be France's favorite spirits, accounting for **%, **.*% and **.*% of sales value respectively, and similar shares in volume.

Breakdown of supermarket sales by spirits category (***) France, ****, in Source: ****

Distribution of supermarket sales by spirits category (***) France, ****, in Source: ****

Spirits consumption is more diversified in out-of-home channels, due in particular to the importance of cocktails, which encourage more varied consumption. Rums, whiskies and liqueurs, however, stand out slightly as the most consumed spirits outside the home.

Breakdown of on-trade sales by spirits category (***) France, ****, in Source: ****

A sector where digital technology plays an increasingly important role

The digitalization of the sector accelerated in ****, becoming a major trend in the industry. ...

4.1 Product overview

The Fédération Française des Spiritueux identifies ** categories of spirit drinks, the main ones being :

Aniseed and absinthe Armagnac, cognac and wine spirits Brandy Calvados, cider and perry brandies Fruit creams Fruit brandies Grape marc brandies Juniper and gins Gentian and bitters Liqueurs Rum Tequila and mezqual Vodka Whisky

The two main Appellations d'Origine Contrôlée (***) for spirits, Cognac andArmagnac, present a marked geographical concentration and a well-organized structure covering all stages from grape cultivation through vinification and distillation to export.and a well-organized structure covering all stages, from grape growing to vinification, distillation andexport, thanks to their respective interprofessions.

Spirits are produced using a variety of techniques, such as distillation, maceration orinfusion of agricultural products (***). Some of these products are then aged in casks.

French production is based mainly on Cognac, which occupies over **,*** hectares of vineyards in production, representing over **% of the total wine grape production area in France. This spirit is produced exclusively in the Cognac region from white grape varieties, mainlyUgni blanc.Armagnac is the second-largest spirits producer, with around *,*** hectares of vineyards in production. In ****, a total of **.* million hectolitres of wine were produced for Cognac andArmagnac.

Interest inexporting Cognac is high, which ...

4.2 Price analysis

The curve below highlights the premiumization of the French spirits market, with prices up **% in ** years. What's more, the sharp rise in **** is the result of the Egalim law of October ****, which raised the prices of certain spirits by between *% and *%. As distributors need to better remunerate farmers and producers, they have passed this increase on to prices. [***] Increases in ****-**** are almost certainly due to widespread price hikes caused by the war in Ukraine. Consumer price index for France, ****-****, base *** in **** Source: Insee Below you'll find an overview of prices by spirits category. However, prices are extremely variable and often show wide ranges, so the table below serves merely as an overview.

Source: ****

4.3 High taxation

The chart above illustrates the breakdown of taxes on spirits. The total tax on a spirit sold for €**.* is €**.**.

Taxes on spirits are revalued each year in line with inflation. With **% of tax receipts for just **% of the volume of pure alcohol released for consumption in France, the industry is subject to significant taxation, to which must be added the inflationary effect of the **% increase in the resale-at-loss threshold (***) introduced by the Egalim law.

Breakdown of taxes on a spirit sold for €**.* France, ****, in Source: ****

4.4 Emerging supply trends

An increasingly intoxicant-friendly offering

Thespirits industry is at a crucial turning point in terms of eco-responsibility. Major houses such as Martell, Hennessy and Rémy Martin are leading innovative initiatives, such as testing disease-resistant grape varieties and environmental certifications, to promote sustainable viticulture. Small producers such as Vivant, with its certified organic and locally produced eaux-de-vie, are also contributing to this trend. In Scotland, the Aberlour distillery works with biodiversity conservation organizations to preserve local rivers, while in Normandy, the Saint-James distillery uses reasoned agricultural practices to produce its rums.

On the carbon footprint reduction front, concrete actions are being taken. For example, the Flor de Cana distillery in Nicaragua plants thousands of trees every year to offset the CO* emissions of its operations. In France, initiatives such as the use of C* sugar cane by the Saint-James distillery in Martinique and the use of green energy in the production of spirits in Normandy demonstrate a determination to reduce environmental impact.

Finally, innovative practices are emerging to reduce waste and encourage recycling. Brands like Le Philtre use ***% recycled glass bottles and encouragerefilling to minimize their impact on the environment. These examples illustrate how the spirits industry is actively engaged in the ...

5.1 An increasingly strict regulatory framework

France is concerned by European regulations. In particular, the following regulations are central:

Regulation (***) No ***/**** of the European Parliament and of the European Council of January **, **** on the definition, description, presentation, labeling and the protection of geographical indications of spirit drinks related regulations ****/*** and ***/**** update the aforementioned framework

In addition, there is a comprehensive national legislative framework. given that spirits are alcohols of at least **º and that the majority of products have an alcohol content well above the average, spirit drinks are highly regulated.

Below is a non-exhaustive list of laws and regulations relating to alcohol (***) in France:

Production

Bottles of alcohol must be strictly labeledwith the followinginformation: type of beverage, ingredients, alcohol content, capacity, allergens, "Zero alcohol during pregnancy" pictogram. Regulation of certain products to obtain the AOC (***) label, as is the case with cognac, armagnac and Martinique rum. In total, there are ** products with the acronym AOC in France. [***]

Distribution

Retailers need a License IV in order to sell spirits within a CHR (***) circuit. Anyone operating a drinking establishment must undergo training to obtain an "operating permit". There are often restrictions on the hours during which liquor outlets can be open or during which alcoholic beverages can be sold. ...

6.1 Segmentation

This section seeks to analyze the various players in the spirits industry. Broadly speaking, we can differentiate these companies by classifying them into three main categories, presented below:

• Diageo
• La Martiniquaise Bardinet
• Distillerie Jean Chatel
• Coquerel Distillerie
• Vinet Delpech
• Bacardi
• Pernod Ricard Groupe
• Beam Suntory
• Campari France Distribution
• Marie Brizard Wine And Spirit
• Giffard
• Moët Hennessy (MHCS LVMH)
• Dom Pérignon (LVMH groupe)
• Champagne Ruinart (Groupe MHCS)
• Hennessy
• Champagne Mercier (Groupe MHCS)
• Belvedere Vodka
• Calvados Roger Groult
• La Chartreuse Diffusion
• Stock Spirits (CVC Partners)
• Campari
• BBC Spirits
• Seguin Moreau - Oeno Groupe
• Lejay-Lagoute
• Lejay-Lagoute
• Distilleries Massenez Peureux
• Distilleries Peureux Massenez (Perfect 1864)
• Calvados P.Huet