Global alcohol industry faces structural decline amid shifting consumer habits

The global alcohol industry is facing a period of structural decline driven by shifting consumer habits and economic pressures. Major spirits companies, including Diageo and Pernod Ricard, are navigating a landscape where analysts compare the sector’s declining valuations to the ‘big tobacco’ era.

In Scotland, the Scotch whisky industry is struggling with a surplus of maturing spirits caused by overproduction in the 2010s, coinciding with a drop in demand due to the global cost-of-living crisis. Meanwhile, the Australian market has seen significant distress, including the collapse of nearly 50 craft breweries over three years and a $1 billion loss reported by Treasury Wine Estates.

While Gen Z is often cited as a primary driver of declining consumption, data suggests the shift is broader. Factors contributing to the trend include a growing wellness culture, the rise of GLP-1 weight loss drugs like Ozempic among middle-aged drinkers, and reduced disposable income. Additionally, public health initiatives led by the World Health Organization are increasing pressure on the industry through advocacy for higher taxes and stricter marketing regulations.