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MARKET SUMMARY

1.1 Presentation

A spirit drink is an alcoholic beverage obtained from distillation, maceration, and infusion. Among spirits, it is then necessary to distinguish between two broader segments:

  • "simple" spirits or "eaux-de-vie" (this category includes vodka, gin, whisky, tequila, etc.)
  • "compound" spirits obtained by adding an aromatic substance to an eau-de-vie or neutral alcohol. [spiritieux]

The global spirits market is growing at moderate pace, driven mainly by demand from the Asia-Pacific market.

On the other hand, the French market is shrinking; volume sales are decreasing as a result of societal perceptions about the negative effects of alcohol. However, value sales are increasing driven by higer prices and demand on premium products. The French market continues to be heavily reliant on exports, and whisky is the dominant beverage of choice in France.

Moreover, the French market is organised around two main types of players: on the one hand we find major international groups (specialized or not) in the production of spirits. On the other hand, many small and medium producers or local distilleries which are specialized in one type of alcohol; this type of production is increasingly sought after in France.

Finally, COVID-19 will most likely have a negative impact on the industry of spirits in France. A detailed analysis follows in section 2.4

1.2 The Global market's growth

Source: ****
In ****, the global spirits' market retailed **.** billion liters. In value terms, the market size was around $***.** in ****. [***] Moreover, between **** and **** the market is expected to grow at a CAGR of *.**% to reach more than ** billion liters sold in ****. 
Several factors contribute to this growth, including premiumization of products, higher demand ...

1.3 A small decline in the domestic market

Source: ****
From the graph above, it is clear that the spirit market in France has contracted and is projected to continue doing so, measured through million of liters sold. In ****, close to *** million litres were sold; in ****, this value is expected to be *** million, which is equivalent to a decline of ...

1.4 International Trade

This section analyses France's trade with spirits. Data is retrieved from UN Comtrade and in particular we use the code **** – "Ethyl alcohol, undenatured; of an alcoholic strength by volume of less than **% volume; spirits, liquers, other beverage; compound alcoholic preparations of a kind used for the manufacture of beverages" in order ...

DEMAND ANALYSIS

2.1 Profile Analysis: The French Consumer

Source: ****
Althought alcohol consumption in France is decreasing, the nation remains one of the highest consumers in the world in aggregate terms; as we saw in section *.*, France ranks in fourth place globally for pure alcohol consumption per capita, equal to **.* liters per year per person. [***]
The graph above shows spirits ...

2.2 Breakdown: demand per product

Below we break down spirits into different sub-categories and analyse the market oulook for each one. 

Source: ****
In ****, *.** million liters of brandy and cognac was sold in France. This product category experienced a strong decline in sales between **** and **** (***). Until ****, this decrease is expected to continue, albeit at a lower rate ...

2.3 Demand Trends

Premiumization
In France the overall consumption of spirits continues to diminish. Meanwhile, there is an increase in the share of products which belong to the luxury beverage segment. According to larvf these trends are created in bars and restaurants, since it takes four to five years before premium brands reach supermarket ...

2.4 COVID-19's impact on the industry

Source: ****
The graph above represents the proportion of searches for a given term in a given region during a specified amount of time, compared to when it was the most searched (***). Thus, a value of ** means that the keyword has been used less often in the region concerned, and a value ...

MARKET STRUCTURE

3.1 Breaking down the production & distribution chain

Source: ****

3.2 Production

Production overview
Agriculture is a key element in the production of spirits. Accordingly, at the core of production fermentation and distillation methods are used to obtain spirits. For each sub-category of spirits the production process matters, and often there are strict rules to which producers must adhere in order to be ...

3.3 Distribution

Source: ****
Spirits in France are predominantly bought through hypermarkets, which in **** represented **.*% of sales value. Supermarkets are in second place (***) which held **.*% of the distribution share. E-commerce remains a small distribution channel for spirits, accounting for only *.*% of purchases.
Nevertheless, IWSR reports that e-commerce could start reaping market share from the ...

ANALYSIS OF THE OFFER

4.1 Product Overview

Below follows an overview of the different products found among spirits. They fall into two categories: eaux de vie and compound spirits.  
The eaux-de-vie or simple spirit drinks:
Vodka Tequila Mezcal Brandy Marc brandy Cognac Armagnac Cider or pearly brandy Pisco Rum Cachaça Baiju Whisky
The compound spirits:
Gin Liqueurs ...

4.2 Price Analysis

Source: INSEE This graph demonstrates the price development for spirits in France between **** and ****. The base year is ****, where the value is ***; accordingly, a value of *** means that, on average, prices have increased by *% (***). Following this logic, we can see that in March ****, prices had increased by *.**% since ****. This trend can ...

RULES AND REGULATIONS

5.1 An increasingly strict regulatory framework

France is affected by regulation on a European level. In particular, the regulations below are central:
Regulation (***) No ***/**** of the European Parliament and of the Council of ** January **** on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks related to this regulation, we find ****/*** and ***/**** which ...

POSITIONING OF THE ACTORS

6.1 Segmentation

This section looks to analyse different players in the spirits industry. In general, we can differentiate these companies by classifying them into three broad categories, presented below:

  • Diageo
  • Pernod Ricard
  • La Martiniquaise
  • Courvoisier
  • Distillerie Jean Chatel

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in 40 pages
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Analysts

chargé d'études économiques, Xerfi

Hugo Schott

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Associate Consultant

Mathieu Luinaud

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PhD Industrial transformations

Robin Charbonnier

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Analyst

Pierre Doussau

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President Ross Alumni Club France

Arnaud Walter

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Analyste de marché chez Businesscoot

Amaury de Balincourt

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Consultant

Pierrick Cudonnec

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Project Finance Analyst, Consulting

Maelle Vitry

Etudiante en Double-Diplôme Ingénieur-Manager Centrale

Héloise Fruchard

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EDHEC

Imane Essadiq

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Auditeur

Vincent Defrenet

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Eva-Garance Tison

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Market Research Analyst

Michela Grimaldi

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Market Research Analyst @Businesscoot

Azelie Prigent

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Cantiane Gueguen

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Consultant

Jules Decour

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Alexia Vacheron

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Emil Ohlsson

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Anna Oeser

Anna Oeser

Gabriel Salvitti

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