As the UK beverage alcohol landscape undergoes significant transformation, understanding emerging consumer behaviors and category dynamics is critical for industry success. These two comprehensive presentations offer essential insights into the forces reshaping Britain’s drinks market, from the broader demographic shifts driving moderation trends and occasion-based consumption patterns to the explosive growth potential within specific premium categories.
UK Beverage Alcohol Trends in 2025: Moderation, Occasions, and the Gen Z Shift
In this data-rich presentation, Luke Tegner, Director of Consulting at IWSR, breaks down the key UK beverage alcohol trends every brand, retailer, and on-trade operator needs to know. Discover how shifting occasions are moving consumption earlier, why RTDs are the standout growth category in a challenging market, and how to engage with the critical Gen Z demographic.
Tequila and Mezcal in the UK: Analyzing a Premium Growth Market
The Agave spirits category, including tequila and mezcal, is one of the most dynamic and fast-growing segments in the global beverage alcohol market, and the UK is poised to be its next success story. In this presentation, Jon Hepplestone, Advocacy & SIP Manager at Pernod Ricard UK, breaks down the data, consumer trends, and actionable strategies to help your business benefit from this rising opportunity.
Tequila and Mezcal in the UK: Analyzing a Premium Growth Market Transcript
Luke Tegner (0:03)
Hi, I’m Luke Tegner. I’m Head of Consulting at IWSR. IWSR is the leading data and insights provider for the total beverage alcohol market. Today I’m going to be talking about what is happening in the UK spirits category and in the on-trade. So what are the key trends in UK beverage alcohol?
Luke Tegner (0:26)
Working from left to right, we’ll start by looking at the shifting occasions. Pre-drinks and after-parties are increasingly bookending the on-trade experience, and there are added-value experiences such as competitive socialising and dry clubbing, offering high levels of engagement and activity — often without alcohol. The popularity of early evening and daytime occasions is lending itself more to lighter, aperitif-style drinks and cocktails, including things like premium beer. Spirit aperitifs are one of the strongest growing spirits categories in 2024. And then there’s a continued uptick in agave spirits — let’s call it tequila, because that’s essentially what it is in the UK, albeit slightly slower than previously — and that’s being supported by the rise of tequila as a cocktail ingredient.
The second point is that an increasing proportion of drinkers, in our tracking studies, recall consuming multiple beverage categories at their last occasion. So repertoires are broadening. When people are out in the on-trade, they tend to drink more different styles of drink than they do in the off-trade. This is being driven by legal drinking age Gen Z and millennials, though that overall growth is slightly hindered by older generations who are cutting back on spirits in the UK. The third point is about lifestyle — lifestyle trends are driving growth. Despite overall total beverage alcohol volume decline, there are bright spots emerging. RTDs continue to grow, and value is rising in lifestyle-led segments. I’ve already mentioned tequila, but also non-alc and liqueurs, as people moderate and shift their habits, driving different categories. Beer and sparkling wine are also gaining ground in the on-trade, supporting those shifting consumer habits. The fourth point — moderation. That momentum is enduring, but there is some good news. There are various different drivers of moderation, which we’ll talk about in a moment — some can be classified as incidental moderation, others as intentional. The good news is that younger generations are still participating in alcohol. They have not given up.
Luke Tegner (3:08)
So what do the numbers say? We’re looking at five different categories across total beverage alcohol: beer, wine, spirits, cider, and RTDs — on a serves basis, so this is volumetric. We’re looking at what has happened over the last five years, and also what happened last year specifically. What we’re seeing is that beer, from the top, reverted after a couple of years of growth — it declined last year and reverted to the long-term trend of modest year-on-year declines. Wine has struggled; it’s a global downward trend for the category, especially in the on-trade, driven as much as anything by the difficult economic climate, which reins in things like champagne sales. There was also heavy discounting at the end of 2024. Prosecco, on the other hand, stabilised, and there were some gains for other sparkling wines. Spirits — which is what this conversation is mainly about, shown in the middle block — suffered really heavy losses across the board, with white spirits particularly hard hit, as we’ll see in the next couple of charts, and on-trade sales saw heavier volume losses. Tequila made most of its gains from new retail listings, and it is a category on the rise, in part due to cocktail culture. Finally, RTDs — the only category to grow — grew at plus 4% from a small base and are now plus 8% versus 2019. So on the right-hand side you can see the percentage change year on year. The only category that’s growing is RTD. It’s a tough time — you all know that — and this is the data that backs it up.
Luke Tegner (5:00)
When we look at spirits specifically, we’re looking at what happened in 2024 versus 2023 — those are the light blue bars — and then the IWSR forecast for the next five years as a compound growth rate for each category. The key point here is that, sadly, more categories are forecast to decline than to grow. On the right-hand side you can see real struggles for gin, US whiskey, vodka, and Scotch, and even bitters. On the left-hand side are those categories where we’re expecting more growth — tequila and agave-based spirits, but again mainly tequila, along with liqueurs and non-alc, are the two categories expected to have the most growth. And there is also some good news for Irish whiskey looking forward.
Luke Tegner (5:58)
Moving on to the on-trade, because that’s what this is all about — what are the key areas for growth? I’ve listed the six categories we’re forecasting growth in. Beer is expected to grow in the on-trade. In a way, beer is actually premiumising through a form of down-trading — people moving out of more expensive categories like wine and opting for a premium beer instead. They’re still having a premium experience but at a slightly lower cost. Agave-based spirits and non-alc spirits are also growing, as we saw earlier in the total trade, and the forecasts look positive. Jumping to lifestyle and occasions — on-trade consumption is shifting earlier. There’s been a massive decline in late-night occasions; there are something like 25% fewer nightclubs at the end of 2024 than there were pre-Covid. Consumption is shifting towards earlier moments — the aperitivo occasion — driven by moderation and safety factors. People prefer going out earlier, it’s slightly cheaper, and if you’re getting home before the last train rather than being out at 4:00 in the morning, there’s a safety factor involved as well. So many factors are driving earlier consumption.
Luke Tegner (7:26)
Moderation — I’ve already mentioned it — and its drivers are evolving. There are around five different drivers. The most important by some distance is economic: when people have less money, beverage alcohol is the category that suffers most. People still buy food and household essentials, but alcohol suffers, and the correlation is very tight. Economic moderation is therefore the number one concern, but the good news is that it’s cyclical rather than permanent. Lifestyle moderation is also an important factor — consumers are spending less time out drinking and more time on fitness, wellness, and other experiences. There’s a degree of moderation that comes from that, partly because there’s less money to spend on alcohol, and partly because people are simply doing other things. Health moderation and pharmaceutical factors are less significant, and generational moderation — weirdly, in spite of all the headlines that Gen Z has given up drinking, that is not in fact the case.
Luke Tegner (8:37)
We can see that here. This is a view of legal drinking age Gen Z in the UK across three different charts. The one on the left shows their participation over a two-year view — in April 2023, just 66% of Gen Z said they were drinking alcohol. That has jumped by 7 percentage points up to 76%. So that sober-curious moment is essentially behind us, because that 76% is very much in line with other age cohorts. They also drink more in the on-trade — the middle chart shows Gen Z on the right in the dark colour, and all drinkers on the left; Gen Z are more likely to drink in the on-trade than the general population in the UK. Why is that good news? Broader repertoires, and people tend to drink more when they’re in the on-trade than when they’re at home. On the right-hand side, you’ve got what they drink, specifically who drinks spirits. Looking at all drinkers against Gen Z — 85% of Gen Z drink spirits, compared with 78% of the general population. So this is good news, because Gen Z have taken the hit and been blamed for the moderation and the downshift, and it’s really not their fault.
Luke Tegner (10:00)
Just to wrap up with a few key takeaways. Drinking occasions are shifting earlier — you can cater to that growing demand with non-traditional drinks and lighter serves, easy sparklers, and lighter cocktails. Moderation is evolving, and we need to ensure we’re making quality offerings that are affordable — allowing people to trade up to better experiences when they are drinking. Gen Z are engaged, and what they need are offers that alleviate their daily stresses, give them joy and connection, and make indulgence feel permissible. Momentum lies in these changing occasions, and we need to refocus brand availability beyond traditional drinking environments — both on-trade and off-trade channels — to wherever consumers are spending their time. They may be doing other things, but that doesn’t mean they’re not drinking; it may just mean the brands they’re looking for aren’t available there. We have to make those brands available and be part of their experience. I hope you found that interesting, and if you want to find out more about what’s going on in total beverage alcohol anywhere in the world, or particularly in the UK, jump on our website at theiwsr.com and you can find out lots more about the industry.
Tequila and Mezcal in the UK: Analyzing a Premium Growth Market Transcript
Jon Hepplestone (0:01)
Hi everyone, my name is Jon. I head up the advocacy team and the sit team here at Pernod Ricard UK. I’m here today to talk to you a little bit about the Agave Spirits market in the UK and the opportunity that it might present.
Jon Hepplestone (0:17)
We’re going to talk a little bit about agave globally — the scale of agave spirits moving into the UK market — and then how we can tap into that growth and unlock the opportunity within it. Now, agave in numbers is a massive category. It represents more than 40 million 9-litre cases globally. The two biggest markets currently are the US and Mexico. There are more than 1,500 brands of tequila registered with the CRT, and that means Mexico is producing over 300 million litres of tequila, with a large chunk of it being served up in margaritas. On average, Americans drink more than 185,000 margaritas an hour — that represents just over 50 cocktails per second.
Jon Hepplestone (1:11)
Globally, agave spirits have grown to more than $13.5 billion worth of revenue, with high growth coming from premium tequila and artisanal mezcal, which is fantastic when we try to drive spend per head in the on-trade. From a UK perspective, the UK is still relatively small in volume — worth 346,000 9-litre cases, with 52% coming from the on-trade and 48% from the off-trade. Looking at total share of spirits within their separate arenas, 4% of the total on-trade market is agave spirits, but in the off-trade, because of the sheer volume sold, it still represents less than 1% of the total spirits category.
Jon Hepplestone (2:08)
Most importantly, there is huge growth in both channels — 9% growth MAT within the on-trade and a massive 18.4% being driven in the off-trade. And interestingly, it’s being driven by premium tequila. The agave category is up 57% in the last 5 years, with 69% of that growth coming from premium tequila and a further 13% from super premium. As I said, there is a massive opportunity for tequila and agave spirits to help grow your spend per head and encourage consumers and bartenders alike to trade up.
Jon Hepplestone (3:02)
There are multiple contributing factors to that growth within the trade. Tequila has exploded in the off-trade — it’s now no longer a one or two line product, but is commanding a full bay, driven by new innovation through premiumisation and celebrity-endorsed tequilas. It’s coming at the expense of gin, as flavoured gins are trailing off a little in the off-trade. Secondly, agave consumers are really interested in cooking at home — they are big foodies who look at trends and want to lead those with their friends. They’re looking at cocktail equipment, cocktail ingredients, and more explorative recipes. And lastly, that growth is fuelling additional events, such as the first Tequila and Mezcal show hosted in May in London, which is really fuelling consumer interest in the category.
Jon Hepplestone (4:20)
So how do we benefit from this growth and interest within agave? We’ve bucketed it down to two main things. The first is serve. A third of tequila is served as shots, but almost another third is served in cocktails, making margaritas a must-stock item on your cocktail menus. They represent a huge share of mainstream cocktail service — ninth overall by total share. Whether you’re serving a picante, a classic margarita, a Tommy’s, or a twist, make sure you’re offering a serve that has real resonance with consumers and that they understand what they’re looking for.
Jon Hepplestone (5:09)
Second, consider offering a secondary serve alongside a margarita. In the US, 34% of all tequila cocktails use a base tequila in longer formats. Things like the Paloma or the Banga are great options — a Paloma is fantastic: lime, agave, tequila or mezcal, topped up with a pink grapefruit soda. It’s absolutely delicious and taps into a slightly different opportunity for consumers to get interested in agave. It also taps into the highball trend in the UK and extends accessibility for people looking for a longer serve, or for those who may have had a bad experience with tequila in the past. Something like a Paloma is a great easy way into the category.
Jon Hepplestone (6:06)
Last but not least, we talked about artisanal mezcal being a growth driver within agave, and none more so than things like Del Maguey, with a fantastic range of products. Give consumers an opportunity to explore — look at using mezcal within cocktails, whether as a base spirit or as a modifier. Introducing that smoky note to something like a smoky pineapple daiquiri or even a margarita can help bring consumers into the category, rather than expecting them to try it neat.
Jon Hepplestone (6:41)
Finally, we talk about range. Tequila is no longer a category where you can afford to stock only one SKU. Back when I was a bartender — with hair and a rock and roll attitude — we used to have one brand of tequila next to the Sambuca with salt and lemon. While 33% of tequila is still served as a shot, having ways for consumers to explore tequila and agave spirits is massive. Look at stocking 100% agave, and consider introducing one mezcal into your range to offer a different flavour profile and give consumers an opportunity to trade up within the category. That means involving premium and super premium brands in your offering. Something like Código 1530 — we have a Rosa line, which is essentially a blanco tequila rested in unchared Cabernet Sauvignon barrels, giving it a lovely pinkish hue and a berry note. It’s something really interesting from a flavour profile perspective to introduce to consumers and help them explore the category.
Jon Hepplestone (8:03)
And that brings us to the final piece, which is all about bartender and server knowledge. Make sure your team is comfortable talking about the brands you’re stocking. They don’t need to know every single detail, but knowing the region — whether from Jalisco or the wider Mexico region — is really helpful. Even within Jalisco, the highlands versus the lowlands produce very different flavour profiles because of the terroir in which the agave is grown. Just understanding that can help consumers explore the category. And tapping into fantastic brand ambassadors helps enormously — we’re very lucky to have Simon Hodgson, our UK brand ambassador, who travels the country talking to bartenders about our fantastic range of tequilas and mezcals, helping them understand the differences so they can explain that to consumers. That will ultimately allow you to trade up and say, “Look, if you like this one, try something over here — try this cocktail, or otherwise.” And that’s everything from me. I hope this has been interesting. If you need any more information, please contact Jon Hepplestone and we’ll be in touch.
More Resources on Beverage Alcohol Trends
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Trending Categories in Beverage Alcohol
Beverage Alcohol Industry Forecast in U.S. and Around the Globe
Mergers & Acquisitions for the First Half of 2025 in the Beverage Alcohol Space