The Australian retail liquor market stands at a crossroads, navigating through turbulent waters. Despite marginal value growth, largely driven by price inflation and rising excise taxes, the industry has faced volume losses in seven out of the last eight quarters.
Retail liquor sales gains have slowed to below 1%, with price inflation in retail liquor rising faster than the total CPI.* This global downturn mirrors a challenging environment, with the industry struggling to maintain its ground against the increasing popularity of non-alcoholic beverages.
The industry has seen marginal growth but is down on last year, with significant volume losses. Performance parallels with overseas markets, indicating a broader global trend. Price increases across all categories are placing affordability issues on consumers who are increasingly looking for deals or discounts to alleviate cost of living pressures
The market's response to economic pressures
There have been notable changes in category and banner momentum, with RTD (Ready-to-Drink) slowing down and beer experiencing a decline. Spirits have reached a low point, while wine continues to perform well. The largest two-year declines are observed in RTDs and gin, with craft beer and ginger beer also showing decreases. The demand for zero-alcohol products has stabilised amid varying demand signals.
Purchase & consumption restraint
More consumers are buying less liquor due to rising living costs. Discounts and promotions influence choices, while liquor occasions and alcohol serve decline modestly. A continued focus on physical and mental health is driving intentional drinking reduction, especially among younger adults. Liquor sales lag compared to other retail sectors, affected by population growth disparities and increased abstention across key demographic groups.
However, we are seeing that mid-strength and low-carb beer are soaring, driven by a crisp and dry flavour profile. Tequila presents a key high-value growth opportunity, while cross-channel sugar-free demand is rising.
Future outlook
The liquor market is poised for significant transformations. The rise of health-conscious consumers will continue to drive demand for low-carb and mid-strength beers, while the premiumisation of tequila and other spirits will offer lucrative opportunities. Additionally, the growing interest in sugar-free options and innovative flavours like peach and citrus will shape product development and marketing strategies.
As the industry adapts to these evolving trends, embracing innovation and consumer-centric approaches will be key to thriving in the future landscape of the liquor market.
As the Australian retail liquor market faces unprecedented challenges—from rising costs and shifting consumer preferences to the growing demand for healthier, low-carb, and sugar-free options—the industry stands at a pivotal moment. Reach out to your Circana representative to find out more on how we can help you and your business respond to these evolving market dynamics.
Circana is a Gold Partner of the Drinks Association.
*Source: Circana MarketEdge Retail Liquor Weighted, MAT To 02/02/25