Premium alcoholic beverages have been outperforming other price categories for many years, helping to drive the steady growth in craft beer. But the first half of 2023 has begun to show some cracks in premiumization, which may not bode well for craft beer, which is already slowing due to multiple other factors.
On Drizly, the overall average unit price of products sold has seen a steady rise since 2019, growing nearly 17% over the last five years. So far in 2023 that average has remained flat.
At this point however, any trend away from premium beverages that might be occurring does not look dramatic. Growth of the category is set to continue in the US, according to Richard Halstead, head of consumer insights at IWSR, albeit at a rate “more moderate than previously,” according to an article in The Drinks Business.
It is obvious that inflation has triggered a change in spending habits by consumers, but how much those consumers of higher-end alcohol, such as craft beer, are willing to give up their favorite beverage to save money is unclear. In past recessions craft beer has fared well, with consumers tending to be more cost conscious by looking for deals, but seemingly not trading down into cheaper non-craft options.
One factor that is different today than in past recessions is how many craft beer brands are owned by global brewers, who are more able to price discount. This could mean more craft beer offerings from the big brewers on sale in the grocery store aisles, leading to a more price-competitive environment for smaller, independent craft brewers.