July 21, 2014 - Blogs
Driven by a combination of new trends in emerging economies and changing demand patterns in developed markets, the global alcohol ingredients market—flavors, colors and other ingredients for beers, spirits and wines—is expected to experience steady growth to reach $1.18 billion in 2019, up from 989.2 million in 2013.
According to the “Analysis of the Global Alcohol Ingredients Market" report from Frost & Sullivan, flavors remains the biggest segment of the alcohol ingredients market, but strong growth is projected in the “other ingredients" sector due to increasing demand for yeast and enzymes.
From a global perspective, interest in alcohol ingredients is expected to increase in developing regions where consumer spending on alcohol is rising. This means understanding the traditional and cultural tastes and preferences of consumers in these regions will be crucial in order for beverage makers to take full advantage of this trend. While Western markets—Europe in particular—are the largest consumers, the strongest growth potential is in emerging markets, including Asia-Pacific, South Africa and Latin America. Spirits have the largest market share of alcohol beverage ingredients, mainly driven by the extensive use of flavors.
One area of concern is the decline in alcohol consumption in developed regions because it reduces the incentives for manufacturers to invest in production and stifles innovation and restrains alcohol ingredients market growth. Also hampering market expansion are anti-alcohol campaigns, price volatility and limited availability of raw materials to manufacture alcohol ingredients.
So what does all this mean? It means beverage makers will need to focus on product differentiation and innovation, which is a win-win for the alcohol ingredients market.
“As innovation is a key success factor in the alcohol beverage industry, new product development is likely to gain pace in the ingredients space," said Tosin Jack, Frost & Sullivan Chemicals, Materials & Food industry analyst. “Brand image and customer loyalty will also drive growth, with consumers embracing authenticity and sticking to products they know best."
“For companies with a global presence, consolidating with regional and smaller companies that have substantial knowledge of the local market will allow them to tailor alcoholic beverage production to suit varying regional and local tastes." Jack said.
Interestingly, a January 2014 report from Mintel found almost 25 percent of 22- to 24-year-olds report drinking more spirits or wine compared to the previous six months, with craft beer accounting for the one beer segment that has benefitted from increased interest across 22- to 44-year-olds. Nearly 55 percent of all beer drinkers said they like to try new alcoholic drinks, such as craft beer or hard cider.
“Spirits," a free digital issue from SupplySide Beverage Insights, recently explored the growing spirits market, including influencers, such as small-batch super-premium craft creations and the cocktail culture, emerging at the hand of seasoned mixologists.
Recent trends indicate the market growth experienced by vodka—particularly through the proliferation of flavored vodkas—is now emerging in brown spirits such as whiskey. Also of note, craft creations, including small-batch super-premium brands, are showing strong across segments.
Driven by a combination of new trends in emerging economies and changing demand patterns in developed markets, the global alcohol ingredients market—flavors, colors and other ingredients for beers, spirits and wines—is expected to experience steady growth to reach $1.18 billion in 2019, up from 989.2 million in 2013.
According to the “Analysis of the Global Alcohol Ingredients Market" report from Frost & Sullivan, flavors remains the biggest segment of the alcohol ingredients market, but strong growth is projected in the “other ingredients" sector due to increasing demand for yeast and enzymes.
From a global perspective, interest in alcohol ingredients is expected to increase in developing regions where consumer spending on alcohol is rising. This means understanding the traditional and cultural tastes and preferences of consumers in these regions will be crucial in order for beverage makers to take full advantage of this trend. While Western markets—Europe in particular—are the largest consumers, the strongest growth potential is in emerging markets, including Asia-Pacific, South Africa and Latin America. Spirits have the largest market share of alcohol beverage ingredients, mainly driven by the extensive use of flavors.
One area of concern is the decline in alcohol consumption in developed regions because it reduces the incentives for manufacturers to invest in production and stifles innovation and restrains alcohol ingredients market growth. Also hampering market expansion are anti-alcohol campaigns, price volatility and limited availability of raw materials to manufacture alcohol ingredients.
So what does all this mean? It means beverage makers will need to focus on product differentiation and innovation, which is a win-win for the alcohol ingredients market.
“As innovation is a key success factor in the alcohol beverage industry, new product development is likely to gain pace in the ingredients space," said Tosin Jack, Frost & Sullivan Chemicals, Materials & Food industry analyst. “Brand image and customer loyalty will also drive growth, with consumers embracing authenticity and sticking to products they know best."
“For companies with a global presence, consolidating with regional and smaller companies that have substantial knowledge of the local market will allow them to tailor alcoholic beverage production to suit varying regional and local tastes." Jack said.
Interestingly, a January 2014 report from Mintel found almost 25 percent of 22- to 24-year-olds report drinking more spirits or wine compared to the previous six months, with craft beer accounting for the one beer segment that has benefitted from increased interest across 22- to 44-year-olds. Nearly 55 percent of all beer drinkers said they like to try new alcoholic drinks, such as craft beer or hard cider.
“Spirits," a free digital issue from SupplySide Beverage Insights, recently explored the growing spirits market, including influencers, such as small-batch super-premium craft creations and the cocktail culture, emerging at the hand of seasoned mixologists.
Recent trends indicate the market growth experienced by vodka—particularly through the proliferation of flavored vodkas—is now emerging in brown spirits such as whiskey. Also of note, craft creations, including small-batch super-premium brands, are showing strong across segments.
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