If 2024 was the slowdown and 2025 the recalibration, 2026 is shaping up to be the year of strategic clarity.

Beverage alcohol is navigating economic fragility, geopolitical tension and evolving consumer behaviour, yet growth hasn’t disappeared. It has simply shifted.

IWSR has identified six major drivers that will shape the short- and mid-term future of the industry. Together, they signal not collapse, but transformation. Here’s what that transformation looks like.

1️⃣ Gen Z Isn’t Leaving — They’re Editing

The myth that Gen Z is “abandoning alcohol” continues to unravel. Participation levels are stable and, in some markets, higher than in 2023. What has changed is how they drink.

• Fewer categories per occasion (down from 2.8 to 1.8 in two years)

• More intentional selection

• Less enthusiasm for extreme “dry” cycles

• Strong engagement with the on-trade

This is not rejection. It’s refinement. Gen Z wants:

• Purpose

• Moderation without exclusion

• Value without compromise

• Experiences that feel chosen, not habitual

Brands that interpret selectivity as disengagement will misread the moment. The real opportunity lies in building formats and rituals that reward intention.

2️⃣ Premium Isn’t Dead — It’s Demanding Justification

Premiumisation is not disappearing. It is being interrogated. Affordability concerns persist, even among high earners. Financial optimism is improving in some regions, but alcohol spend is not automatically rising alongside it.

Consumers are asking: “Why is this worth it?”. That question applies equally in retail and on-premise.

The result:

• Fewer impulse trade-ups

• More scrutiny of price ladders

• Growth in categories perceived as accessible (standard beer, RTDs)

Premium must now deliver narrative, provenance, functionality or emotional resonance. Status alone is no longer sufficient currency.

3️⃣ Growth Is Shifting South and East

As mature markets plateau, developing economies are stepping forward.

Between 2024 and 2029, countries like India, Brazil, Nigeria, Mexico, Ethiopia and South Africa are projected to add the most total beverage alcohol volume globally. India stands out as the most strategic long-term opportunity, but it is not a blank canvas. Local brands are strong. Regulations are complex. Pricing strategy will be decisive.

Meanwhile, China presents a paradox: total volume softness alongside pockets of category growth (RTDs, sparkling wine, imported wine, agave, gin, rum, whisky).

The lesson? Growth will not be uniform. It will be highly category- and market-specific.

4️⃣ Travel Retail Is Becoming Experiential, Not Transactional

Global travel retail (GTR) is recovering, but unevenly. Passenger numbers are rebounding in some regions, yet volume growth still lags behind traffic recovery in China and North America.

The channel is evolving from a price-driven duty-free space to an experience-led environment.

• Storytelling

• Exclusivity

• Limited editions

• Emerging categories (agave, bitters)

Whisky’s dominance is being challenged by diversification and innovation. The brands that win in GTR will be those that treat it as theatre, not clearance.

5️⃣ RTDs: The Connector Category

RTDs remain one of the most versatile growth engines in beverage alcohol. They intersect with:

• Moderation

• Flavour exploration

• Convenience

• Younger demographics

While recruitment has slowed, frequency is rising, particularly among younger legal-age consumers. Importantly, RTDs are gaining traction across multiple channels:

• On-premise

• On-the-go

• E-commerce

They are no longer a fad; they are infrastructure. The strategic question now is portfolio discipline. RTDs must deliver incremental growth, not cannibalise core brands without purpose.

6️⃣ Innovation Must Be Smarter, Not Louder

Over the past decade, innovation has delivered 55% of total beverage alcohol value growth globally. But in a tightening market, innovation for volume’s sake is risky. The focus must shift toward:

• Incrementality

• Sustainable formats

• Occasion-based solutions

• Long-term flavour platforms

Judicious innovation will outperform constant iteration.

🧠 Merch & Effect POV: From Volume Growth to Precision Growth

The throughline across all six drivers is clear: growth is no longer broad-based. It is selective, occasion-led, and geographically nuanced.

For brands, this demands:

• Precision positioning for Gen Z

• Premium storytelling that withstands scrutiny

• Regional playbooks rather than global templates

• Physical environments that elevate experience

• Innovation pipelines tied to occasion and behaviour

In other words, strategy must become more surgical. The era of automatic premium expansion is over, while the era of disciplined, insight-led growth has begun.

And for brands willing to adapt, 2026 still holds enormous opportunity.