The current global beverage market size is valued at over $1.6 trillion, and the industry is growing at 4% CAGR (Compound Annual Growth Rate). The compound annual growth rate, or CAGR, is a business and investing specific term that measures the rate of return that would be required for an investment to grow from its beginning balance to its ending balance. It is the most accurate way to calculate returns that can rise or fall in value over time. CAGR calculates smoothed growth rate per year by taking the ending value, from the starting value, in the number of years given.
It is estimated that the global beverage industry will be valued at over $1.9 trillion by the year 2024.
What is the Beverage Industry Classified as?
The beverage industry is split into two classifications; non-alcoholic and alcoholic. A Non alcoholic beverage is a product such as coffee, tea, soda, sports drinks, fruit drinks, and more. Beer, cider, sake, wine, and distilled spirits are considered alcoholic beverages, among others.
How Much is the Non-Alcoholic Industry Worth?
The global non alcoholic beverage industry was valued at $970 billion at the end of 2016. It has been growing between 5.5% – 5.8% CAGR. By the end of 2021, it is estimated that the value for non-alcoholic beverages will be $1.16 trillion, and it is expected to hit $1.44 trillion by 2025.
Soft drinks currently make up the largest segment of the non-alcoholic beverage industry, but with rising awareness around serious health problems, the industry is reshaping itself. Low-calorie, low-sugar drinks are on the rise, taking more market share with them.
So how is the non-alcoholic beverage industry growing? Product line extensions, rapid availability, marketing, and advertising, sales promotions, and organized sales have all aided in the continued and steady growth of the non-alcoholic beverage industry.
The top non-alcoholic beverage products are carbonated soft drinks, fruit beverages, bottled water, functional beverages (beverages classified as conventional liquid food marketed to convey product ingredients and supposed health benefits), and sports drinks. The most common places to find non-alcoholic beverage products that are readily available are supermarkets or general merchandise stores, food service and drinking establishments, gas stations and convenience stores, and vending machines.
Non-Alcoholic Beverages in the United States
The United States has seen a steady increase in the market size of the non-alcoholic beverage industry over the past several years. The market was growing at about 3.8% CAGR and was valued at $200 billion in 2018 and is currently valued at $217 billion in 2021. By 2024, it is estimated that the industry will be valued at $236 billion.
The soft drink segment of the non-alcoholic beverage market has been consistently the largest market. That is until recent years. The rise in obesity rates and increase in awareness of the impacts of drinking soft drinks in excess has led to consumers making more health-conscious choices. This creates a shrinking of the soft drink market share. Young Americans are migrating away from soft drinks and looking to healthier alternatives such as fresh juices, ready-to-drink coffees, probiotic drinks, and enhanced waters, to name a few. The U.S. government is also imposing sugar taxes on drinks made with sweeteners to try to reduce the sales and consumption of sugary drinks.
Non-Alcoholic Beverages in the Asia Pacific Region
The Asia Pacific (APAC) region makes up the majority of the consumers in the global non-alcoholic beverage market – driven by high consumption rates in India and China. Similar to the United States, the soft drink segment of the market in the APAC region is also on the decline as preferences shift to healthier alternatives. Natural fruit juices and pulp fruit juices are on the rise in this region.
Non-Alcoholic Beverages in the Europe Union
Growing at about 5% CAGR, the non-alcoholic beverage market in the European Union is expected to hit almost $633 billion by 2023. Also opting for healthier options, Western Europe has shifted away from alcoholic beverages and is leading the pack of zero alcoholic beverages. This demand is being driven by Germany and Spain, who make up about 30% of the demand for zero alcoholic beverages, with Poland and the Netherlands following closely behind.
How Much is the Alcoholic Beverage Industry Worth?
Globally, the alcoholic beverage market is currently valued at $1.55 trillion with a growth rate of 2% CAGR.
Alcoholic Beverages in the United States
The alcoholic beverage market in the U.S. is valued at over $220 million, growing at 3.7% CAGR. The alcoholic beverage segment comprises 80% malt-based beverages and 20% spirit-based beverages. Of the 80% malt-based beverages, beer is the most consumed with a special interest in craft beers, as it is trending amongst Millennials.
Alcoholic Beverages in the Asia Pacific Region
An increase of social drinking is growing the alcoholic beverage market in the Asia Pacific (APAC) region. Valued at $9.7 billion in 2018, it is expected to reach over $11 billion in valuation by 2022. Beer and spirits are the most consumed products in the category as of now but, wine and premium alcohol products are climbing in consumption rates. APAC is seeing a change in consumption patterns with the influence of Western culture.
Alcoholic Beverages in the European Union
Europe is home to the largest alcoholic beverage market, valued at over $332 billion and continuously growing at a rate of 3% CAGR. Europe is seeing a trend of using natural fruit flavors in different alcoholic products like ciders and ready-to-drink options. Premium organic wines and new varieties of craft beers are also on the rise.
Trends in the Global Beverage Industry
Changes in lifestyle and consumption habits are evolving the global beverage industry and are creating opportunities for new products in the space. From kombuchas (both alcoholic and non-alcoholic) and pre-mixed cocktails, to cold brew coffee and hard seltzers, the beverage industry is seeing market growth and change to the product offering.
Driven by a focus on health, new products are consistently being sought out by consumers and being added to shelves by manufacturers. Functional beverages, dairy alternatives, vegan-safe beverages, CBD-infused (Cannabidiol) drinks, and more are being produced to meet consumers’ evolving needs. Consumers are also demanding more personalization, sustainability, and direct-to-consumer options.
Personalization
Similar to how vitamin manufactures and hair product companies are offering personalized packages to their customers, the beverage industry is doing the same. From personalized hydration platforms to wine delivery based on a flavor profile, brands are meeting the desire of consumers to have personalized options.
Sustainability
Recent surveys have confirmed that about half of digital consumers purchase based on environmental concerns, using their purchasing power to make a great impact. Beverage companies are meeting this demand by reinventing packaging to include more environmentally friendly packaging like compostable packaging, recyclable hard plastic tops, and aluminum cans that are infinitely recyclable.
Direct-to-Consumer
From coffee subscriptions to wine clubs to same-hour delivery services, direct-to-consumer companies are influencing the beverage industry in positive ways. For example, Drizly gives consumers the access to alcoholic and non-alcoholic beverages at the tip of their fingertips. On top of the speed and ease of ordering online, Drizly can deliver within the hour, as needed, increasing access to beverage products to the consumer. Subscription packages deliver wine, spirits, or coffee right to the consumer’s door which also plays into the personalization desires by being able to completely customize each order.
Popular retailers are also trying their hand at various beverage products by introducing private-label alcoholic and non-alcoholic beverages, available for purchase in their retail shops. Kroger, Trader Joe’s, Costco, and Whole Foods, among others, have all introduced various beverage products to the market in recent years.
