Drinks Industry Series Part 1: The Next Round: Where the Drinks Market Is Moving, and Why.
By Colm Devine, Chief Sales Officer, Teybridge Capital Europe.
Headlines and social media might have you believe declining alcohol sales are simply a Gen Z story. But there is far more to it than “young people don’t drink anymore”.
Headline numbers show that the alcohol market is under pressure. Global beverage alcohol volumes declined by 2% in 2025, marking a third consecutive year of decline, according to IWSR. In Ireland, average alcohol consumption per adult also fell by 2.1% in 2025, continuing a much longer-term downward trend.
But the decline is far from uniform. Ready-to-drinks (RTDs) were the only major beverage-alcohol category to grow globally in 2025, with volumes increasing by 3%. In the UK off-trade, RTD volumes increased by 12% and value by 17%.
No- and low-alcohol is also gaining ground, with global no-alcohol beer volumes increasing by around 8% in 2025.
There are pockets of growth within traditional alcohol too. Irish cream liqueur exports, for example, increased by 10% in 2025 to €430 million, while trade to the UK grew by more than 20%.
So rather than thinking about the market simply in terms of “alcohol up” or “alcohol down”, a more useful question is: where is the consumer going next and why?
Why are drinking habits changing?
There is no single explanation. Several trends are happening at the same time and together they are changing how consumers approach alcohol.
Moderation, rather than abstention
One of the biggest changes is moderation. Consumers are becoming more deliberate about when they drink. Someone might have wine with dinner on Saturday, choose an alcohol-free beer on Tuesday and drink nothing for the rest of the week.
That is different from consumers simply becoming “drinkers” or “non-drinkers”. Many people are moving between full-strength, low-alcohol and alcohol-free products depending on the occasion.
For drinks brands, that creates a different competitive landscape. An alcohol-free beer is not necessarily competing only with another alcohol-free beer. It could be competing with a traditional beer, soft drink, functional beverage or sparkling water for the same consumer occasion.
Health and wellness are influencing choices
Consumers are also paying greater attention to sleep, calories, fitness and general wellbeing, and alcohol increasingly sits within that broader conversation.
GLP-1 medications such as Ozempic, Wegovy and Mounjaro could become another factor. Early research suggests these medications may reduce alcohol consumption among some users. A 2026 randomised trial published in The Lancet, for example, found that semaglutide reduced heavy-drinking days among adults with alcohol use disorder and obesity. It is too early to know how significant this will be across the wider population, but as the use of GLP-1 medications grows, their potential impact on drinking behaviour is something the industry will be watching closely.
Consumers are becoming more selective about spending
Price matters too. Consumers across the UK and Ireland have faced higher living costs, while drinks businesses themselves are dealing with pressure from production costs, duties, logistics and distribution.
But drinking less does not necessarily mean spending less on every occasion. Some consumers may drink less frequently while choosing a better or more premium product when they do decide to drink. This helps explain why selected premium brands and categories can continue to grow even when overall alcohol volumes are falling.
For brands, this makes positioning increasingly important. In a more selective market, giving consumers a clear reason to choose one product over another matters.
The competition is getting wider
Alcohol is also competing with a broader range of alternatives. In the US, for example, cannabis is increasingly part of the way some consumers choose to relax and socialise. That does not mean cannabis is simply replacing alcohol, and alcohol remains more widely consumed overall, but it points to a broader shift in consumer choice.
The drinks industry is increasingly competing for occasions, rather than simply competing against other alcoholic drinks.
Whether the alternative is an alcohol-free spirit, functional beverage, cannabis product or something that has not yet reached the mainstream, consumers have more choices about what they consume and how they socialise.
What does this mean for drinks businesses?
For SMEs operating in the drinks industry, a changing market creates both risk and opportunity, and the working-capital challenge can look very different depending on where a business sits.
For new and fast-growing brands, particularly in categories such as RTDs and no- and low-alcohol, growth can require significant working capital before it generates cash. Winning a major supermarket listing or distributor order may mean paying for ingredients, packaging, production and freight well before getting paid. A business can therefore be growing quickly and still face a significant working-capital gap.
For established alcohol brands, the challenge can be different. Slower or less predictable demand can leave cash tied up in stock for longer, while longer production cycles and distributor payment terms can add further pressure. Strong forecasting and access to flexible working capital become increasingly important when historical sales patterns are no longer as predictable.
There is also a third group: established drinks businesses responding to the change. A spirits producer might launch an RTD, introduce a lower-alcohol product or expand into a new market. That can create an additional funding requirement because the business may need to finance the existing range while simultaneously investing in stock, packaging, production and distribution for the new one.
In each case, the underlying challenge is similar: cash often has to leave the business well before it comes back in.
For SMEs, brokers and advisors, this means looking beyond turnover. Stock levels, distribution, rate of sale, payment terms and where growth is actually coming from can all help build a clearer picture of the business and its working-capital needs.
The right funding structure will depend on where cash is tied up. That could mean invoice finance, stock finance or, as is often the case in the drinks industry, a combination of facilities supporting different stages of the trading cycle.
The next round
The drinks industry is not moving in one direction. Consumers are drinking differently, new categories are emerging and established brands are adapting.
For drinks businesses, that creates opportunities as well as challenges. New brands need the capital to scale, established brands need the flexibility to manage changing demand, and businesses launching new products need to fund today’s operations while investing in tomorrow’s growth.
Teybridge has spent years funding drinks businesses across both established and emerging categories, including premium alcohol and alcohol-free brands. That gives us a close view of how changes in consumer demand ultimately flow through to stock, distribution and working capital.
As the market continues to evolve, the businesses best placed to respond will be those with the flexibility to move with it.
