Less consumption, more quality: New perspectives for the spirits and bar industry

Angelika Wiesgen-Pick brought along some less-than-encouraging industry figures: over the past three years, sales in the German spirits market have each fallen by around three percent. Per-capita consumption is currently 4.8 litres a year. Spirits, she stressed, are an important value driver for retailers and a revenue generator for the hospitality sector. Into this already difficult situation comes the planned 20 percent tax increase.

For the association representative, this is a misguided path: “This tax will become a zero-sum game in fiscal terms,” says Wiesgen-Pick. Due to falling consumption and substitution effects, such as buying products from abroad, there will be no increase in tax revenue as early as 2027, as the BSI predicts in its latest press release. Spirits make up only a small share of total alcohol consumption but account for the bulk of tax revenue: according to the BSI, only just over 4,6 percent of per-capita consumption, but almost 70 percent of tax revenue, is attributable to spirits. “It cannot be that an industry with outstanding products is defamed and reduced,” Wiesgen-Pick criticises sharply.

Hubertine Underberg-Ruder sees it similarly: “The alcohol tax is a spirits tax,” she puts it plainly. Wine and beer bear only a small part of the burden, while the main burden falls on spirits. Because margins in the consumer goods industry are narrow, her company will have no choice but to pass the additional costs on to end consumers.

Markus Kramer also announces corresponding adjustments: “In the end, customers will pay higher prices in retail and in the hospitality sector.” “The entire value chain will suffer,” adds Maren Lahm, from producers through logistics and trade partners to hospitality and, ultimately, end consumers. Lahm stresses that the burden is already very high.

Alexander Stein, by contrast, plans to absorb the additional tax costs himself rather than pass them on through price increases: “Thankfully, the calculation allows for that.” At the same time, he criticises the price level that has now been reached in the hospitality sector: “Nobody can buy a round anymore when a gin and tonic costs 16 euros.” The goal must be to work together to ensure that guests can once again afford something for their money.

“Hospitality businesses live off beverage sales, and we already see today that often only one drink is ordered and there is no second or third,” says Lisa Behn, describing what she observes.

Can alcohol-free products offer an alternative given changing consumer behaviour? Moderator Christian H. Rosenberg put this question to Andreas Till. “Demand for alcohol-free products is rising,” Till said. He is grateful to be able to work with “grown-up” products, products no guest has to feel inferior for choosing. “Many products have an aromatic and sensory quality that in some cases is no longer distinguishable, and I think that is very good,” he explains.

In this context, Lisa Behn emphasises the advisory role of the specialist wholesale trade. It must support the hospitality sector in adding alcohol-free alternatives to the menu and in making the product mix attractive to guests.

“As an industry, we must create more clarity so that premium offerings can be taken up,” demands Hubertine Underberg-Ruder. She sees a particular strength in the beverage and hospitality industry in creating shared experiences: like hardly any other sector, it can “set a highlight” when people come together, turning the increasingly rare moment of community into an experience. This applies equally to products with and without alcohol.

In this context, Maren Lahm presents the “sibling strategy” pursued by Henkell Freixenet Germany: “For every alcoholic drink, we try to launch the alcohol-free version at the same time.” This gives their target groups the choice of picking a product depending on the occasion or, in what is known as “zebra striping”, alternating between alcoholic and alcohol-free drinks over the course of one evening.

Hubertine Underberg-Ruder would like to use this “sibling strategy” for the spirits industry. However, it is currently not permitted to put, for example, “dealcoholised cachaça” on a bottle label. The industry will therefore have to take a “rocky road”, category by category, to meet changing consumer needs. Angelika Wiesgen-Pick adds that the absence of any final EU-wide regulation in sight makes matters even more complicated.

Moreover, the strategy cannot be applied to every spirit, the association representative says: “Some spirits need spirit, that is what they are there for.” Gin expert Alexander Stein sees it similarly: “It simply doesn’t work with my products.” He considers dealcoholised gin nonsense: “I’d rather drink water.”

Andreas Till agrees with him. For a gin and tonic, he prefers 3 cl of high-proof gin to 5 cl of conventional strength, because it gives a better texture and taste in the mix. He offers guests drinks with moderate alcohol content, known as low ABVs, by combining alcohol-free sparkling wines (“We have a huge range”) with alcoholic liqueurs. At the same time, Till observes great curiosity, especially among young guests, such as the chance to try a pisco for the first time in their lives.

That falling sales across the overall market could even have positive effects for bars is Till’s surprising conclusion. “We can deliberately offer quality and present it within its categories. That is what makes premium spirits.” His perspective puts a different emphasis on the warnings about falling consumption and rising prices: when guests choose more consciously, bars can score with quality, expertise and a clearly defined offering. Fewer drinks sold does not necessarily mean less demanding bar culture.

“The portfolio and the demands of the target group are becoming more complex,” is Maren Lahm’s conclusion. The shared task of industry, trade and wholesale, and hospitality is to educate more about the product range, drive activations and create experiences. What is needed today is a holistic beverage strategy that takes high-proof spirits as seriously as low-ABV drinks and alcohol-free offerings. What will matter is how the industry uses this diversity to meet guests’ changing needs while remaining economically successful.