Here are four consumer spirits trends to watch in 2018

Market research firm Euromonitor looked at the spending habits of spirits drinkers around the world, revealing some curious predictions for the market in 2018.

This year, the focus  appears to be location, location, and location. While vodka-makers are focusing on provenance and terroir to tout their tipples, English gin is continuing to expand, and hyperlocal spirits such as China’s Baijou and Sochu are set to become the words on everybody’s lips, according to chief alcohol market analyst Spiros Malandrakis.

From gin saturation to a cognac revolution, keep scrolling to see what could happen to the spirits market in 2018.

Whisky 2.0

Whiskey continues to go from strength to strength, but whisky, less so, according to Malanradkis.

“As bourbon and Irish varietals will continue spearheading growth through savvy positioning, approachability credentials, versatility and bold experimentation,” said Malandrakis, “it will be within Scotch where the battle lines are drawn and the fine balance between tradition and innovation will have to be struck. ”

Cross-pollination has been identified as a key trend for many aspects of the alcohol industry as we move into 2018. Whiskey-maker Jameson recently launched an IPA cask-aged expression, while Scotch producers are diversifying themselves to stay relevant to an increasingly informed and curious consumer base.

“Allowing room for interpretation of centuries old regulations, utilising untapped cask types, providing transparency on proportional age statements , taking a shot on once sacrilegious canned and pouch formats and bringing singular grains to the forefront, whisky 2.0 could well be just around the corner. The alternative is less than palatable.”

There has been much debate within the spirits sector about the direction Scotch regulation could take in the coming years. While The Scotch Whisky Association launched a new plan to receive Geographic Indication status in New Zealand last August, this year drinks giant Diageo confirmed the existence of documents outlining plans for drastic changes to the rules of Scotch whisky production. These included the ageing of Scotch in old Tequila barrels, new blended whiskies designed to have a low-ABV, and adding chocolate to the mash during fermentation — all major departures from traditional production rules.

Maladrakis argued: “As the Irish distillery boom reaches escape velocity, a ladder of products will become available, the establishment of a wholesale market will come closer while the debate on official guidelines and labelling rules will mature in parallel to the category coming of age.”

Cottoning on to Cognac

Euronomitor believes that 2018 could be the year that Cognac becomes mainstream once more.

“Further focusing on entry and medium level varietals, establishing mixability credentials and –perhaps belatedly- supporting cocktail culture, experimenting with hybrid barrel finishes and expanding the range of occasions will be keys to unlocking the category’s long term sustainable future.”

Last November, The BNIC (Bureau National Interprofessional du Cognac) unveiled a new visual identity for the Cognac appellation, including a new logo across all of its promotional materials which gave the product a fresh new look. Exports of Cognac, meanwhile, reached record highs at the end of 2017, with around 197.4 million bottles exported from the region last year – almost 98% of its total production – resulting in a turnover of €3.15 billion.

Malandrakis predicts that cognac will become more accessible to millennial drinkers, targeting consumers looking for a new experience over luxury products.

“On the other hand, and even though cognac will break away from its bling associations and expand beyond luxury stereotypes it will be the category’s lesser known siblings that will find themselves increasingly under the spotlight. More affordable, versatile , less pretentious and not overburdened by the stifling weight of tradition , American brandies and segments like Armagnac could soon mirror other sparkling wines’ rise as a legitimate alternative to champagne.”

Vodka goes back to basics

Vodka will continue to lose market share in 2018, according to Euromonitor, but premium brands’ focus on terroir and diversity within the white spirits market will slow down its drop-rate.

“As the ripple effects of the saccharine waves washing over vodka and the resulting flavour fatigue begin to subside, transparency, a shift of focus back towards provenance, a return back to vodka’s unpretentious positioning and high energy roots and its evolution through hyperlocal campaigns and global iterations will begin to stem the tide in its still haemorrhaging core markets.”

Producers such as Belvedere, Stoli and Absolut have already begun to tap into the terroir conversation with single-estate expressions, meanwhile other firms in the drinks market, such as distiller Foxhole and winemaker Chapel Down, are diversifying into gin and vodka with their own unique spirits made with wastage from crushing grapes.

“Since the downward pressure is ultimately cyclical, the roaring performance of the past decade will not be back, however pockets of opportunities will begin to resurface.”

Meanwhile, Malandrakis cautions that English gin cannot expand forever.

“As for English gin, seemingly impervious to downward pressures and riding high on the back of its nostalgia-tinged offerings and international expressions, learning from vodka’s cautionary tale will become essential. Nevertheless, as ever more obscure and radical botanical tinctures are beginning to overcrowd the segment, flavour fatigue and lack of equity will surface as key risks with the potential to derail its performance if not moderated.”

Local goes global

Finally, unusual, uncommon spirits one usually buys impulsively on holiday could be the next big thing in 2018.

While vodka makers are looking at provenance and terroir as a means of separating their products from the saturated market, consumers are expected to become even more interested in hyperlocal products such as Baijou.

“Whiskies, cognac, English gins and vodkas will be the usual suspects dominating most of the headlines,” said Malandrakis, adding that “niche local specialties will also reach escape velocity beyond their respective domestic markets. Artisanal positioning, rebranding for an international audience, flavour sophistication initiatives and on-trade seeding trials will be the key drivers for expansion.”

“From baijou taking educational initiatives around the globe from Western Europe to Africa, to shochu capitalising on its approachability and lower abv to enter key western metropolitan cities to mescal hanging on tequila’s coattails to build its own premiumisation narrative, once niche segments will increasingly move from the sidelines to the role of the protagonist- first in trendsetting mixology menus and eventually in retailer portfolios. “