Sales of status spirits rose by 9% in value last year, with Scotch overtaking Cognac and Armagnac for the first time, according to IWSR’s latest report.
The Status Spirits Report 2024 explored the performance of spirits priced over US$100, with the segment now accounting for a 4.8% value share of the global spirits category.
IWSR said status spirits have outperformed the wider alcohol category, which rose by 2% globally in value last year but declined by 1% in volume. Global spirits volumes were also flat in 2023.
Status spirits were not immune to the challenges faced by the global alcohol sector, including inflation, high interest rates and rising living costs. These have resulted in ‘significant differences’ across markets and price bands for status spirits.
“Despite a challenging macroeconomic context, status spirits have remained remarkably resilient when compared to products in more mainstream price segments,” said Guy Wolfe, head of status spirits insights at IWSR.
“While the above-average wealth of the status spirits buyer means the market is more insulated, recent challenges for status spirits have demonstrated the importance of discipline regarding stock and the value of a wide footprint. Innovation and a laser focus on the consumer will be key to maintaining growth.”
Scotch outperforms Cognac
Scotch whisky was the leading category within status spirits, rising by 17% in 2023, led by malt/grain and blended whiskies. IWSR is forecasting a growth of 5% for malt/grain and a 10% gain for blends in the five years to 2028.
The Scotch category is expected to add US$2 billion of value to the market, driven by duty free, the US and emerging markets such as Nigeria and Vietnam. IWSR noted that innovation has helped to drive growth for Scotch with more 340 new high-end products launched in 2023.
In comparison, Cognac and Armagnac has released the smallest number of new products of all other status spirits segments in 2023 with the category ‘steadily losing market share’, IWSR noted. In 2023, it was pushed into second place by Scotch for the first time.
Cognac’s value fell by 12%, impacted by the decline in China as a result of high inventory levels and the economic downturn. The category is expected to suffer further due to China’s anti-dumping tariff on imports of European brandy.
High-priced agave spirits saw an increase of 4% last year, a slower rate than the segment’s previous growth of 25% in 2022. Tequila is the leading agave-based product but mezcal soared by 73% from a low base.
The agave spirits segment added US$220 million to the value of status spirits, IWSR revealed.
The US is the leading market for US$100 bottles, which posted a compound annual growth rate (CAGR) of 35% since 2019 – at the expense of Cognac and Scotch. High-end agave spirits sales recorded double- or triple-digit gains in every market except Russia in 2023.
The US$100-plus American whiskey segment in the States also increased by 17% over the last five years (CAGR 2019-2023) as demand has risen for high-end Bourbon, rye and American single malt.
As Tequila’s growth decelerates, American whiskey is now forecast to generate the greatest value growth to 2028, IWSR believes.
Meanwhile, Chinese baijiu on the expensive end of the scale is expected to see its growth rate fall in the near term after facing price pressure this year.
Status spirits boom in GTR
In terms of markets, the value of status spirits fell by single digits in France and the UK and declined by 12% in China. However, the segment grew by low single digits in the US while global travel retail (GTR) sales soared by 48%.
GTR is now the leading market by value for status spirits, with IWSR previously noting that the segment’s sales in the channel could skyrocket by 115% over the next five years (2022-2027).
IWSR said GTR sales of status spirits are predicted to post a 10% CAGR in value of 10% to 2028. The US is expected to rise by 4% between 2023 and 2028, and low single-digit growth is estimated for the UK, France and some markets in Asia Pacific over the five-year period.
IWSR said a potential free trade agreement between the UK and India could provide a ‘big boost’ to luxury Scotch if it slashes the 150% import tariff.
The report also noted that the secondary market has been ‘sluggish’ for status spirits during 2023, with rare and ultra-aged spirits, like The Macallan, being the exception.
Across all subcategories, bottles in the US$350-US$499.99 price tier rose by 42%, while spirits retailing for US$5,000-plus per bottle saw value grow by 39% last year. Other price brackets saw far lower rates of growth, while bottles at the top end (US$2,500-US$4,999.99) declined.
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Author: Nicola Carruthers
