Premiumisation has long been a go-to business strategy for the alcohol industry. Yet with signs of it in decline, multinational giants are moving towards cheaper, stronger ‘ready to drink’ products to appeal to younger people. This possible shift in strategy is a trend to watch, with possible implications for drinking rates and industry ‘responsible drinking’ strategies.
For at least the last couple of decades, the ‘premiumisation’ trend has dominated the global alcohol industry.
Premiumisation refers to a business strategy which encourages consumers to ‘trade up’ from cheaper products to buy fewer but more expensive, higher-quality or ‘craft’ products. Premiumisation is often framed by the alcohol industry as encouraging customers to “drink better, but not more”, with industry trade bodies like spiritsEUROPE linking it to public health efforts to reduce alcohol harm. This might be one of the few areas in which public health and alcohol industry perspectives could overlap, at least theoretically; however, such claims lack evidence.
Look at the shareholder reports from any of the major alcohol producers and you will likely see references to ‘premiumisation’.
Diageo tells prospective investors that premiumisation is driving long-term growth in spirits – “as consumers want to drink better, not more”. AB InBev, the world’s largest beer producer, attributes its growth in revenues to premiumisation in its most recent annual report. And a focus on premiumisation was cited as a reason that Pernod Ricard sold off its portfolio of more affordable wine brands.
Premiumisation in decline?
Though companies have publicly maintained an emphasis on premiumisation for a while, there are signals that this long-standing trend may be shifting. Diageo’s new CEO Dave Lewis recently signalled that the company may be focusing on more affordable ‘ready to drink’ products in the near future, as the public grapples with the cost of living. The company just launched a cheaper version of its Johnnie Walker whisky product.
IWSR, a body that analyses data for the alcohol industry, also recently reported that premiumisation is waning, with volume performance (the amount of alcohol sold) exceeding that of value in 2025.
The alcohol industry evolves
‘Ready to drink’ or RTD products generally refer to pre-mixed, packaged drinks, e.g. canned cocktails or alcopops. In the same report on premiumisation being in decline, IWSR noted that RTDs are an industry growth segment. If you look at the media, you may have seen that Buzzballz, an example of an RTD product, has recently attracted a lot of attention in the UK and the US. The focus of media discourse has been on how the canned cocktails, with their sugary flavours, bright branding, and relatively high strength (13.5% ABV) are appealing to Gen Z. Sazerac, the company which owns Buzzballz, is notably also selling a 99p shot, the marketing of which has been criticised as likely to appeal to children.
The alcohol industry is aware that higher-strength RTDs are popular among Gen Z, and there are signals that companies will seek to expand this market, particularly given the widely discussed phenomenon of Gen Z consuming less alcohol than previous generations.
Young people are choosing RTDs, but they’re choosing RTDs with higher ABV, which gives some indication of their attitude towards this category. We believe there’s a very significant and profitable opportunity for Diageo in RTDs, but we have work to do.
Why this is a trend to watch
A shift from premiumisation has implications for oft-cited trends in moderation. Regarding young people in the context of the UK, where alcohol harm is persistent, a more mindful approach to consumption is to be celebrated. However, the popularity of Buzzballz and similar products seemingly runs counter to moderation trends and may even undermine them. With recent research finding that rates of heavy episodic drinking among Gen Z have increased as they reach their early 20s and Great Britain still having some of the highest rates for young people drinking, there are clearly grounds to not be complacent about the need for comprehensive, evidence-based alcohol policies to reduce harm. With alcohol marketing causally linked to young people’s drinking, marketing restrictions are an evidence-based way that the UK Government could ensure that trends towards reduced consumption don’t reverse.
Given premiumisation has been cited by the alcohol industry as a quasi-harm reduction tool, a shift towards producing cheaper and stronger products would also have implications for industry ‘responsible drinking’ narratives. The notion of ‘responsible drinking’ as a solution to alcohol harm has long been known to be a helpful PR myth for the industry, with evidence showing that the industry profits disproportionately from heavy drinking and that there is no evidence that ‘responsible drinking’ campaigns are effective at reducing harm. Nonetheless, Diageo’s own ‘magic of moderate drinking’ hinges on the idea of encouraging consumers to drink “better, not more”, and such campaigns are prevalent throughout the industry. If there is a movement towards pushing volume over ‘premium’ products, such messaging will be even harder to defend – and so should be monitored.
Written by Emma Thompson, Researcher, Institute of Alcohol Studies, and PhD student in Global Health Policy at the University of Edinburgh.
All IAS Blogposts are published with the permission of the author. The views expressed are solely the author’s own and do not necessarily represent the views of the Institute of Alcohol Studies.