Spirits Projected to Overtake Wine in Global Market, Fueling Billions in GDP Gains

Bottles of liquor are being displayed at the LCBO (Liquor Control Board of Ontario) in Toronto, Ontario, Canada, on November 19, 2023. (Photo: Creative Touch Imaging Ltd./NurPhoto via AP)

With a global gross domestic product contribution of over $730 billion in 2022, spirits are set to overtake wine in the international market for the first time in recent history, according to a study published by Oxford Economics and research firm IWSR.

On Wednesday, the organizations published an extensive report investigating the downstream effect of the alcohol industry on various regions. A key finding showed that wine made up 10.4% of total beverage alcohol volume in 2022, compared to a marginally slimmer 9.9% for spirits; in years to come, spirits are poised to overtake the former figure.

Beer continues to make up a lion’s share at 75.2%.

While spirits like whiskey, tequila and vodka reign supreme in the U.S., global trends are driven primarily by the East Asian market. Jinro Soju, a neutral spirit distilled in South Korea, is the best-selling spirits brand in the world, beating out runner-up White Claw by over 40 million cases in 2023. Meanwhile, the most consumed spirit type is baijiu, enormously popular in its home country of China — the spirit single-handedly accounts for one-third of all liquor consumed internationally.

The report puts forward some big claims on the economic impact of these trends. Moët Hennessy CEO Philippe Schaus remarked the following in the report:

“Not surprisingly, the industry contributes significantly to government revenues through taxes and tariffs, which fund essential public services from healthcare to education and infrastructure. In 2022 spirits manufacturers’ total gross value added (GVA) contribution to global GDP was $230 billion. To put this in context, that is only slightly less than the total GDP of Portugal for the same year.”

Narrowing in on the finer details, the report alleges that one in every 84 jobs is supported by spirits “manufacturing and downstream activities.” At the same time, $1 in every $140 of global GDP is reportedly generated by the spirits sector.

However, it should be noted that this economic impact comes as a double-edged sword for the spirits industry. Due to its higher alcohol content, liquor is taxed at a much higher rate than beer or wine in virtually every market; in countries like Norway, Australia and Ireland, excise taxes can account for over 50% of the price of a bottle of spirits. As a result, liquor’s outsized impact isn’t necessarily attributable to its popularity, but rather to government policy.

Nonetheless, higher prices still coincide with higher gains for producers. Though wine and beer sell more in terms of sheer quantity, spirits made up the largest retail value share of any alcohol in the world at $468 billion.

Looking forward, the study projects that Indian whisky, tequila, rum and gin will be the largest growing spirits categories over the next five years.

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