28 Jan 2021
Posted in Consumer
Diageo’s decline to be offset by 5% growth in global spirits market worth $787bn in 2021
Following today’s news (Thursday 28th January) that Diageo has released its 2021 Interim Results, half year ended 31 December 2020:
Ethan Elliott Maddison, Beverages Analyst at GlobalData, a leading data and analytics company, offers his view:
“Diageo’s net sales decline for the second half of 2020 reflects the struggle faced by the industry as sales through on-premise distribution channels, alongside travel ban restrictions, continue to heavily impact the sector. The weakening of the US dollar is likely to continue for much of 2021 as the US will look to close parts of the economy to properly deal with the pandemic, which will certainly be a hit to Diageo.
“Additionally, the effect of the pandemic on consumer’s finances are influencing alcohol purchases, with a recent GlobalData survey reporting that one quarter (24%)*1 of US consumers have stopped buying alcohol or are buying such products at the lowest end of the price range due to budget constraints.
“However, there is a ray of hope at the end of the tunnel. Although unstable, the alcohol sector, and spirits in particular, are set to recover. GlobalData forecasts a 5% growth for the global spirits market from $749bn in 2020 to reach $787bn in 2021*2, boosted by the global distribution of the COVID-19 vaccine, which promises the steady reopening of on-premise sales channels which will allow the market to recoup losses.
“What’s more, the strong performance in the US reflects changing consumer trends and how people are becoming increasingly health sensitive over the course of the pandemic, causing a migration away from calorific alcohols such as wine and beer. In fact, *3four out of five (82%) US consumers say their choice of product is influenced by how it affects their health and wellness, indicating optimistic growth for the future of the segment.”
*1- GlobalData’s 2020 COVID-19 Recovery Tracker – US – Week 11, Published December 09 2020
*2- GlobalData Market Analyzer – Global Market Data: Segment Insights
*3 GlobalData’s 2020 COVID-19 Recovery Tracker – US – Week 11, Published December 09 2020 – Combined responses: “‘Somewhat’, ‘Often’ and ‘Always’ influences your product choice”