The news of Pernod Ricard’s restructuring is just the latest sign that premium spirits are struggling. Redundancy numbers within the French giant haven’t yet been declared but it’s not alone. Earlier this year Moët Hennessy announced a 13% cut (around 1,200 jobs) while Diageo suggested in May that it was seeking to identify “substantial” brand disposals from its portfolio.

When the big guys show vulnerability, so does the trade. It’s well documented that post-pandemic spirits sales boomed in value, but a subsequent cost of living crisis, supply chain issues and both trade and military wars have impacted sales.

An IWSR report from late 2024 read: “Many leading beverage alcohol manufacturers have tied their strategies for the 2020s into building up their premium-and-above offerings as a way of mitigating the general decline in alcohol volumes seen in more mature markets.”

Another contributing factor to premium spirits declines, particularly in mature markets such as Europe and the US, is the moderation trend. For a decade now analysts have documented the rising trend of younger consumers drinking less but better quality, and brands have upmarketed in response. But this only works if those consumers can afford it.

Emily Neill, IWSR chief operating officer, says: “The post-pandemic consumer squeeze has inevitably resulted in a softening of the premiumisation trend, with any market value gains more related to price rises than consumer choices.

“Champagne, cognac and malt Scotch results are a good barometer to gauge the economic climate, and the deteriorating demand for these products in 2024 illustrates the cautious nature of today’s consumer.”

The latest report by the IWSR, published in April, said that excluding national products (baijiu, shochu etc), volumes of super-premium-plus spirits declined by more than 3% in 2024, while the value price tier grew marginally. The report excluded agave and high-end Indian whisky, which both demonstrated the opposite.

Neill adds: “The super-premium-and-above segment experienced the largest volume decline at -3% as consumers cut back on luxuries and traded down. Weak sentiment pervaded among even the most affluent of buyers.”

And her expectation for this year was even less promising: “2025 looks set to bring choppier waters, with the sector on the front line of a trade war. The outlook remains unpredictable for the year as the threat of tit-for-tat tariffs could potentially trigger dramatic shifts in alcohol choices.”

Long-term change

However, despite a rather dampened performance for premium spirits in the industry’s mature markets, long-term growth is expected to be driven by India and similarly emerging economies.

IWSR data suggests the global beverage alcohol market is expected to grow by $16bn over the next five years, with a $34bn value growth over the next 10 years across key markets.

Neill adds: “Beverage alcohol growth momentum has decisively shifted towards developing markets, with India likely to be the biggest engine of growth for the next decade, followed by Brazil and Mexico.  The 10-year forecasts provided by our new Global Forecast Suite really lay bare the extent of the change that is coming, as the combination of demographic changes, shifting economic growth patterns and the long-run moderation trend in developed markets take full effect.”

The restructuring of Pernod Ricard and the other major companies may not be just a quick fix, but part of a longer strategy. Of course, redundancies reflect the impact which tariffs and inflation have had on premium spirits sales, but long term the growth of moderation is the real threat for mature markets.

This trend is yet to impact emerging markets, and won’t for a while, therefore it wouldn’t be a surprise to see the world’s biggest spirits companies invest in the future’s biggest spirits markets. Those, such as India, which promise both volume and value growth over the next decade.