Luxurysafes blog will talk today about tendencies in luxury spirits industry and what is the pattern of growth for the next few years. The US will be the main driver of the luxury spirits sector, growing in value from £2.5bn in 2010 to £4.9bn in 2020. The UK will have seen the value of its luxury spirits market grow from £432m to £525m. All categories will have witnessed strong growth by the end of the decade, especially Tequila and whiskey, growing from £570m to £1.2bn and £1.9bn to £4.1bn respectively. “Luxury spirits” is defined as an aggregation of the luxury brands in each category, based on both price and their respective position within their category.

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However, global growth of luxury spirits in the current five-year period between 2015 and 2020 will be slower than the previous five years. The retail value of the luxury spirits market will increase by 30% between 2015 and 2020, 10% slower than it was between 2010 and 2015, based on current exchange rates and prices.

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Encouragingly, China will move from a recession of -4.8% in the first five years of this decade to 16.4% year-on-year growth between today and 2020. But the slowdown in the latter part of the decade will affect most other major markets. The US will move from 52% year-on-year growth between 2010 and 2015 to 31.1% year-on-year growth from 2015 to 2020.

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Explaining the scene in the luxury spirits market at the moment, Spiros Malandrakis, senior analyst at Euromonitor International, said: “One of the biggest benchmarks for Luxury spirits in recent times has been the great recession. Luxury brands operating in Western markets, where thrift was now back in vogue, were pushed to focus on the emerging nations and China.

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“While they too suffered from the global economic recession, these markets were still open to the ‘bling’ associations that previously dominated the luxury market in the West. This was most especially the case in China, from wine to Cognac to single malt whisky, where a bubble emerged as prices rocketed.

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“But the latest benchmark in luxury spirits has been this bubble in China bursting, in line with the crackdown on extravagant spending brought in by the government. This came at a time when the sophistication of the Chinese palate increased. “Now, even emerging nations do not like bling. Luxury has come of age across the world. As such, the major issue is now how luxury brands differentiate themselves from standard and premium categories.”