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Summary of our market study
The global spirits market has been experiencing robust growth, with Asia-Pacific leading over half of the market sales and strong momentum. Despite a 33% sales decline in Spain in 2020 due to COVID-19-induced bar and nightclub closures, the industry rebounded in 2021. Household demand in Spain showed a tendency towards in-home consumption with a -8.9% volume decrease from 2020 to 2021 but higher than 2019 levels. Internationally, Spain holds a trade surplus of €150 million in 2021, with the UK being the largest import source.
Regulations in Spain are governed by both EU and national laws, with the country boasting 19 protected geographical indications. The market is heavily dominated by international giants like Pernod Ricard, with local sales in Spain reaching €290 million in 2021. Innovation in spirits is trending toward health-conscious products, with non-alcoholic versions gaining popularity. Out-of-home consumption in Spain largely occurs in bars, accounting for 30% of these establishments' revenues from spirit sales in 2020.
Trends and Dynamics of the Spirits Market in Spain
Spain's spirits market witnessed significant fluctuation due to the impact of the health crisis. Subsequent recovery saw a resurgence in sales through hospitality channels and tourism, although figures still lagged behind pre-2019 levels. Notably, the fall in sales affected various spirit categories differently, with vodka, gin, and rum experiencing the sharpest declines, whereas brandy, liqueurs, and whisky demonstrated a degree of resilience. Despite the dip, household demand for spirits showed a complex pattern, with overall consumption volumes reducing by approximately 10% between 2020 and 2021. However, indicating a shift in consumption patterns possibly tied to the Covid-19 crisis. Gin, liqueurs, and whisky retained their status as the most popular spirits in Spain, with gin and rum showing an upward trajectory in consumption over the long term compared to other categories like brandy and whisky, which saw declines. From a socioeconomic perspective, the middle classes were responsible for most of the spirits demand, but interestingly, the lowest and highest socioeconomic segments consumed above the national average. Older consumers, particularly those above 50, formed the majority of the spirits consumer base, and family status analysis revealed that singles and childless couples were the primary market segments for this industry.
In terms of distribution, supermarkets were the preferred purchasing venues for Spanish households, accounting for over half of the spirits sales. Geographically, regions like the Balearic Islands, Catalonia, La Rioja, and Cantabria exhibited higher per capita spirits consumption, as opposed to areas like Navarre which exhibited much lower consumption levels. Spain's international trade in spirits revealed a positive shift, with the country experiencing a trade surplus, notably exporting to a diverse set of countries with destinations like the Philippines and Germany as prominent markets. Remarkably, Spain is a significant player in the spirit's trade, being the third EU country with the highest number of protected geographical indications. Pricing trends showed a cyclical nature with spikes during the festive season. In 2021, the average price for a liter of spirits dipped slightly compared to the preceding two years. Regulations within the EU and nationally have been pivotal in ensuring the authenticity and quality of spirit drinks, with Spain having several protected geographical indications like Brandy de Jerez and Orujo de Galicia, which together account for a substantial portion of the national production.
Prominent Spirits Industry Players Shaping the Market Landscape
The spirits market is home to a host of influential players, each with its unique portfolio of brands and strategic approaches that keep the industry dynamic and competitive. Let's delve into the profiles of some of the key companies that are major contributors to the shape and direction of the spirits sector as we know it today.
- Pernod Ricard is a titan in the world of spirits, boasting an extensive range of popular brands across various spirit categories. This French company is known for its innovation and global footprint, making it a significant force within the industry.
- Zamora is a family-owned company that has carved its niche in the market by focusing on high-quality liqueurs and wines. Despite its smaller size relative to some competitors, Zamora has established a strong presence, particularly in its home market of Spain.
- Osborne, another Spanish powerhouse, has been a longstanding player with deep roots in the production of brandies and fortified wines. Osborne's iconic bull logo is an emblematic symbol across Spain, representing a legacy intertwined with the nation's history and culture.
- Maxxium brings to the table a consortium approach, acting as a distributor for a broad selection of internationally renowned spirits brands. This strategy allows them to offer a diversified portfolio, catering to various tastes and preferences.
- Diageoe is one of the most diverse and expansive spirits companies globally, with a vast product line that includes many of the world's top-selling brands like Johnnie Walker and Smirnoff. The British company is a leader in both innovation and distribution, influencing the market on a global scale.
- Varma is a distributor that manages a sophisticated portfolio of international and local spirits, along with wines and champagnes. Their strategic relationships with various brands enable them to be an important conduit in the Spanish market.
- Bodegas Fundador takes pride in being the first bodega in the Jerez region, a storied producer of sherry and brandy. Their products are steeped in tradition yet remain relevant and beloved in the modern market.
- Bacardi is synonymous with rum, and for good reason. The family-owned company, originating from Cuba, has grown to become one of the largest privately-held, family-owned spirits companies in the world, with a portfolio that extends well beyond rum.
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Summary and extracts
1 Market overview
1.1 Definition and presentation
Spirits are categories of alcohol made by distilling agricultural raw materials. Simple" spirits, such as tequila, vodka, rum or whisky, result directly from the distillation of the raw material. Compound" spirits, such as gin or aniseed, are obtained by adding an aromatic substance to a neutral alcohol or brandy.
Worldwide, the spirits market is enjoying strong sales growth. The Asia-Pacific region now accounts for more than half of the global market, with very strong growth momentum, followed by North America and Europe. Leading companies in the sector include Pernod-Ricard, Remy Cointreau, Diageo, Brown-Forman, Marnier Lapostolle and Belvédère. Several countries have their own particular areas of excellence, such as Cognac in France or Whisky in Scotland.
In Spain, sales of spirits fell by 33% in 2020. At that time, they represented 3% of the total volume of alcoholic beverages sold in the country. The market was particularly affected by the health shutdowns: bars and nightclubs being a particularly important distribution channel for companies. Vodka (-48.2%), gin (-36.5%) and rum (-33.3%) plummeted, while brandy (-29.8%), liqueurs (-29%) and whisky (-28.9%) held up a little better. Sales recovered well in 2021, however, with a revival of sales through the Horeca channel and an upturn in tourism, though without reaching 2019 levels. Gin, liqueurs and whisky remain the three most consumed spirits in Spain.
1.2 Global market
The global spirits market is set for strong growth over the next decade. Between **** and ****, sales in this sector could rise from US$** billion to US$*** billion, an increase of +**.*% per year.
trend in spirits sales World, ****-****, US$ billion Source: ****
Despite growing health awareness, demand for spirits continues unabated. The market is punctuated by frequent new trends, with consumers constantly demanding change and the discovery of new subtleties. Demand is fuelled by the Millenials generation, whose purchasing power is growing. Whiskey remains one of the most popular drinks.
1.3 Domestic market
The Spanish spirits market has suffered greatly from the restrictions imposed by the health crisis. In ****, total sales in the sector were still **% lower than in ****. Sales for ****, **** and **** are obtained from INE data through CNAE activity code ****: "Distillation, rectification and blending of alcoholic beverages."
spirits manufacturing sales trend Spain, ****-****, € million Source: ****
1.4 International trade
Spirits flows can be analyzed on the UN Comtrade website under HS code ****: "Undenatured ethyl alcohol of an alcoholic strength by volume of less than **% vol; spirits, liqueurs and other spirituous beverages".
In terms of imports, Spain spent US$ *** million in **** importing liqueurs, rum and other spirits. The leading country of origin is the UK, with **.*% of the total, or US$*** million of imported products. Over **% of imports come from three countries: UK, Netherlands, USA.
Origin of spirits imports Spain, ****, % of total Source: ****
By contrast, exports, which generate US$*** million in revenues, are spread across a multitude of countries. Only the Philippines (***) account for more than **% of total exports.
Destination of spirits exports Spain, ****, % of total Source: ****
In terms of the trade balance, the trend reverses between **** and ****. From negative, it becomes positive, generating a €*** million surplus in ****.
balance of trade trends in the spirits market Spain, ****-****, € million Source: ****
Finally, it is interesting to segment these flows according to the types of products traded. The following HS codes allow us to track five spirits in particular:
Code ******: "Eaux-de-vie de vin ou de marc de raisins" ; Code ******:"Whiskies" ; Code ******:"Rum and other spirits distilled from sugarcane products after fermentation"; Code ******:"Gin ...
2 Demand analysis
2.1 Household demand
The government's report on Spanish diet, entitled"Informe del consumo alimentario en España ****", provides information on the quantities and prices of spirits consumed by households. The beverages analyzed are whisky, brandy, gin, rum, aniseed and others. The other category includes liqueurs, vodka and tequila.
Despite a drop in the quantities of spirits purchased compared to ****, the figures are higher than those for ****. This is because, in addition to lasting behavioral changes in the population, the Covid-** crisis has reinforced home consumption. Between **** and ****, the category will therefore fall by -*.*% in volume and -**.*% in value. Volumes consumed amount to ** million liters, for a total of €*** million.
Change in spirits sales Spain, ****-****, % Source: ****
Over the long term, consumption in volume terms is down -**. *% on ****. This is the case for all beverages except gin and rum, whose sales jumped by +**.*% and +**.*% respectively. By contrast, brandy sales fell by **.*%, and whisky by **.*%.
Change in consumption by beverage Spain, ****-****, in % Source: ****
The document also details the segment's revenues by beverage. Other spirits(***) account for **.*% of the spirits industry's revenues, or almost a third.
Breakdown of revenues by type of spirit Spain, ****, % Source: ****
Finally, we present the distribution of different spirits ...
2.2 Socio-economic characteristics
The middle classes account for most of the demand for spirits, representing **.*% of quantities consumed. However, the lowest and highest socio-economic categories consume the most spirits per capita, buying on average *.*% more than the national average, or around *.* liters per year.
Breakdown of spirits consumption by volume and socio-economic category Spain, ****, % Source: ****
Consumers of spirits tend to be older. The over-**s consume nearly **% of the total. In particular, the +** age group consumes an average of *.* liters per person per year.
Breakdown of quantities consumed by age group Spain, ****, % (***) Source: ****
Finally, it's worth noting that couples without children (***) are preferred customers for the spirits industry.
Breakdown of consumption by family status Spain, ****, % Source: ****
2.3 Out-of-home consumption
Outside the home, households frequently consume spirits in bars and other stores. In total, this channel generated €**.* million in revenues in ****.
Spirits consumption by value in bars Spain, ****, € thousand Source: ****
This product range is highly profitable for bars, restaurants and hotels. In fact, **% of these establishments' revenues come from the sale of spirits. [***]
3 Market structure
3.1 Companies
The market is dominated by leading international companies.
Local sales of world leaders in the spirits market Spain, ****, € million Source: ****
3.2 Distribution by channel
The distribution channel preferred by Spanish households for the purchase of spirits is the supermarket, which accounts for more than half of sales.
Breakdown of volumes by distribution channel Spain, ****, % of sales Source: ****
3.3 Geographical distribution
The Autonomous Communities where inhabitants consume more than *.* liters per person per year are the Balearic Islands, Catalonia, La Rioja and Cantabria. By contrast, average spirits consumption in Navarre is the lowest, at just *.* liters per person per year, **.*% below the national average.
4 Offer analysis
4.1 Average price
Consumption of spirits is cyclical. It rises sharply during the festive season in December, driving up the price to over €**/liter. In ****, a liter of spirits was worth an average of €**.**/liter, ** cents less than in **** and ****. by way of comparison, a liter of wine was worth €* on average, and a liter of beer around €*.
average consumer price trends for spirits Spain, ****-****, €/l Source: ****
4.2 Product variety and geographical indications
There is a wide range of spirit drinks produced in Spain. The main protected geographical indications are listed in the following table:
Source: ****
Below, we give orders of magnitude for the proportion of each protected spirit drink in total national production. Brandy de Jerez is the variety with the highest market share, at **.*%. All in all, brandies account for almost **% of the supply, which is a unique Spanish feature.
Breakdown of spirits produced by geographical appellation Spain, ****, % of total Source: ****
4.3 Innovations
According to Kantar's"Radar de la Inovación ****", alcoholic beverages, and spirits in particular, are the categories with the highest number of successful innovative products. This marketing success is measured by product penetration rates and innovation repeat rates.
Of the ** most innovative products, * are beverages, * of them alcoholic and * in the spirits category: Ballantines whisky light, Tanqueray gin *.* alcohol, Beefeater gin light. It is also worth noting that the marketing and product development teams are seeking to develop an offer that meets the demands of an increasingly health-conscious clientele.
To find these innovations on the shelves, you need to choose your supermarket carefully. Indeed, while innovations are present in an average of **% of Spanish stores, this figure drops to *% for Mercadona and rises to **% for Carrefour.
Percentage of innovative products on shelves Spain, ****, % of total Source: ****
Finally, it's useful for manufacturers to keep in mind current market trends. In ****, the most successful innovations on the Spanish market are those combining simplicity, health and pleasure.
Additional profit by product positioning Spain, ****, % of sales Source: ****
5 Regulations
5.1 Current regulations
The standards governing the production and sale of spirit drinks are both EU and national.
Regulation (***) ***/****, concerns the denomination of spirit alcohols. It ensures that not only geographical designations but also the agricultural origin of distilled liquids are respected. Regulation (***) n°****/**, concerns the presentation and labeling of spirit drinks. The Royal Decree,"Real Decreto ***/****", of March ** (***) establishes complementary standards to those mentioned above.
With ** indications, Spain is the third EU country with the highest number of protected geographical indications, after France and Germany. [***]
6 Positioning the players
6.1 Segmentation
- Mercadona
- Bacardi
- Brown Forman
- Rémy Cointreau
- Pernod Ricard Groupe
- Diageo
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