Many thanks to all of the CEOs of our Member organisations for your responses to our Drinks Association’s Industry Insights Survey which we have conducted in partnership with Touchstone Executive Search, our Gold Partner.
The survey responses have provided real insights into market conditions and the outlook for 2026 for the drinks sector.
This article – the first of two based on the responses to the Survey – focusses on how Member organisations are coping with the current market conditions.
2025 was tough – but CEOs are cautiously optimistic for the year ahead
The Australian drinks industry faced one of its most demanding trading environments in recent years. Rising costs, ongoing excise increases, retailer margin pressures and cautious consumer spending weighed heavily on performance throughout 2025.
Around 90% of the CEO respondents described last year’s trading conditions as challenging or very challenging.
One CEO summed it up: “Ongoing regulatory pressure (excise), challenging retail customer environment and ongoing cost pressure with challenging topline expectations.”
The latest sales data from Circana reinforce the above sentiment. For the year ending 4 January 2026, the total Australian retail liquor market was valued at $25.8 billion, with subdued growth of just 0.5% compared with the previous 12 months.
Despite this performance, the dominant theme of the year was resilience rather than contraction. As another CEO observed: “We performed well but in a tough market.”
Around half of CEOs reported feeling “cautiously optimistic” about 2026, citing clearer portfolio priorities, strong innovation pipelines, and improved digital and AI capabilities as reasons for their confidence.
Cost pressures remain the defining challenge
Margin pressure continued to dominate leadership thinking. CEOs spoke of “increasing cost pressures,” “rising costs with limited ability to pass on,” and a “relentless profit margin squeeze.”
Excise increases were a central concern. One CEO noted: “Taxation on the spirits category is inequitable with other categories – not an even playing field with Australia now the second highest taxed spirits category, globally.”
Christmas trading steady, On-Premise performance strong
Survey results indicate that around half of CEOs reported Christmas and New Year trading in line with 2024, while a third experienced stronger performance. January trading softened, reflecting a more selective approach by Australians once the festive period ended.
On-Premise channels were a clear highlight. As one CEO noted, “Hospitality is still hugely relevant and growing spend in trade,” while another observed, “On Premise was the standout in 2025, delivering a very strong year that carried through into summer.”
This sentiment was supported by NIQ data, which showed On-Premise sales increased by 5.7% in the year to 30 December 2025 compared to the previous 12 months, with particularly strong sales performance for beer and cider (+10.6%) and RTDs (+12.0%) over the same period.
Changing consumption patterns are here to stay
Consumer behaviour continues to evolve, driven by moderation, health trends and cost-of-living pressures. One CEO explained that consumers are still going out but spending less per visit and constantly looking for value.
According to the latest Circana Shopper Panel Liquor Survey for 2026, 24% of shoppers say they have been buying less or have stopped buying alcohol in the past six months. Within this group, 38% say they have been forced to make cutbacks due to the rising cost of living, and 40% say they are watching the amount of alcohol they consume.
“Changes to consumption are not passing. We need to change to generate growth. Follow the consumer and act faster with insight,” said one CEO.
Bright spots of growth
Despite the headwinds, clear pockets of strength are emerging.
Consumer spending patterns suggest Australians may be more deliberate in their drinking habits – influenced by both cost considerations and health trends – but they are still prepared to spend when the value is clear and the occasion feels worthwhile.
RTDs continue to show strong momentum, with CEOs highlighting “RTD momentum” and the “growth of the spritz occasion.” Tequila was also frequently cited as an accelerating category, alongside ongoing resilience in premium spirits. As one leader noted, “Despite the media hype, premiumisation in spirits has continued.”
Interestingly, while moderated alcohol consumption is high on the agenda, it appears that zero-alcohol options are not necessarily what consumers are reaching for. Circana data showed that annual dollar sales for the zero-alcohol segment (non-alc beer, wine and RTD/Spirits products within the Liquor category) declined by 4% in the 12 months ending 4 January 2026 versus the previous year.
Cautious optimism for 2026
Looking ahead, sentiment is cautious but far from negative. Survey results show just under half of CEOs are “cautiously optimistic,” while most of the remainder remain neutral rather than pessimistic.
The key areas that CEOs plan to focus on to convert the resilience of 2025 into sustainable growth for 2026 include: AI and technology investment, improved digital capabilities, innovation – particularly in RTD, and precise consumer targeting.
A second article from the Survey responses will be published shortly. This will build on Resilient Under Pressure and focusses on how Member organisations are investing for growth.
Paul Beattie, Director Touchstone Executive Search, commented: “we appreciate the time and effort that CEOs have put into providing such meaningful responses to the Survey which has provided real insights into market conditions and the outlook for 2026 for the drinks sector”.
Touchstone Executive Search is a Gold Partner of the Drinks Association.