Circana’s annual State of the Industry presentation brought together leaders from across Australia and New Zealand to examine the economic, behavioural and technological forces shaping the year ahead. For the drinks industry, the session offered clear signals about where consumers are heading, how value is being redefined and what will influence category growth as 2026 approaches.
A cautiously improving economic landscape
Despite ongoing global volatility, including shifting US tariffs and a softer Chinese economy, both Australia and New Zealand are showing signs of renewed momentum. Export performance has held up better than expected and consumer spending is beginning to stabilise after several years of pressure.
In Australia, essential spending has remained strong, but the more telling shift is the early revival of discretionary categories. After a prolonged period of tightened household budgets, the data now shows a gradual return to small indulgences and treat purchases, particularly in goods-based categories that had been under the greatest strain . New Zealand is following a similar pattern, with nine consecutive months of growth in consumer spending volumes indicating that confidence is slowly rebuilding.
Strengthening job markets and easing interest-rate pressures are two of the most critical ingredients to restoring consumer sentiment. These levers will be central to helping households feel more settled and secure in the year ahead.
Value remains central to purchasing decisions
Cost-of-living pressures remain high, and while shoppers are starting to feel slightly more positive, value continues to shape how and where they buy. In both grocery and liquor, price, efficiency and perceived worth are primary drivers of store choice.
Circana highlighted that promotional intensity has reached unprecedented levels. Yet the industry has reached a point where simply discounting harder is no longer a sustainable strategy. Shoppers still want a good price, but they also want reassurance that what they are buying offers genuine benefits. For the drinks sector, this means clarity around quality, flavour, moderation and experience will play an increasingly important role in reinforcing value without eroding margins.
A reshaping of drinking behaviour
Within beverage categories, several meaningful shifts are already underway.
Non-alcoholic drinks continue to surge ahead, adding $1.8 billion in sales over the past two years, far outpacing growth in traditional liquor channels. Circana noted that this is not just a function of price or promotion. It reflects rising interest in functional benefits, flavour variety and elevated drinking experiences that don’t require alcohol.
In alcohol, ready-to-drink remains a powerful category. Brands that combine bold flavour, convenience and accessible value continue to outperform. Smirnoff Crush, for example, added $45 million in sales in the past year, driven by strong repeat purchase and the appeal of vibrant, fruit-forward formulations.
Mid-strength and low-carb beer also stand out. These products are tapping into moderation trends while delivering strong value cues. The top three growth brands collectively added $310 million in sales. One mid-strength SKU alone contributed $166 million, showing just how firmly these formats have embedded themselves in consumer repertoires.
Wellness, GLP-1 and shifting expectations
Health-led behaviour is now influencing consumption across food and drinks. The rapid adoption of GLP-1 medications – now in double-digit household penetration – has prompted a subtle but meaningful change in eating and drinking habits. Users are more likely to consume smaller, nutrient-dense portions, prioritise protein and hydration, and track their wellness digitally. These shifts are already influencing the types of products consumers are seeking and the occasions in which they consume them.
Protein-led innovation continues to perform strongly. Circana expects further momentum in areas tied to functional wellness, such as gut health, digestive support, cognitive performance and mood. While these themes historically aligned more with food, they are increasingly relevant to beverages – particularly non-alc, hydration-focused drinks, better-for-you propositions and functional seltzers.
The acceleration of AI in retail and media
The most future-shaping theme of the day centred on agentic AI: systems that not only analyse behaviour but begin to make choices on behalf of consumers. Circana expects AI to play a growing role in how shoppers discover products, compare value and navigate both digital and physical retail environments.
Consumer expectations are evolving faster than ever, with personalised, frictionless and connected experiences quickly becoming the norm rather than the aspiration. For drinks businesses, this shift reinforces the importance of high-quality product data, stronger attribution, and tighter alignment between media activity and shopper conversion, especially as social selling and algorithm-driven discovery play a growing role in shaping the path to purchase.
Looking ahead to 2026
Across the event, a consistent message emerged: adaptability will determine category leadership in the year ahead. The drinks industry sits at the intersection of shifting value perceptions, rising wellness priorities, expanding non-alcoholic occasions and rapidly evolving retail technology. Brands and retailers that stay close to consumer motivations, invest in meaningful innovation and embrace the new frontiers of AI-enabled engagement will be best positioned to thrive as the market enters its next phase of growth.