Discovery spirits: an exploratory analysis of European spirits’ market

The European alcoholic beverages market is one of the most mature and diverse markets globally. With a long history of tradition and craftsmanship, Europe remains a key player in the production and consumption of spirits, including categories such as whisky, gin, vodka, rum, and liqueurs. According to the European Commission’s Alcohol Strategy (2020), Europe accounts for nearly 60% of global alcoholic beverage consumption. The European spirits market was valued at approximately €80 billion in 2023 (IWSR, 2023). As of recent years, the market has experienced a dynamic shift, driven by changing consumer preferences, evolving trends, and increased awareness of sustainability. Consumer demand for premium and craft spirits has risen significantly, reflecting a broader trend towards higher quality and authenticity. Additionally, the rise of mixology and the growing popularity of cocktail culture have further fueled the demand for diverse spirit products. Moreover, sustainability has become a central theme in the European spirit’s market. Environmental certifications, such as organic and eco-friendly labels, have gained prominence as consumers seek products aligned with their environmental values. This shift is influencing production practices, packaging innovations, and marketing strategies across the industry. Additionally, the rise of new consumption trends is influencing the market. For example, the increasing interest in cocktails and the mixology culture has prompted brands to diversify their offerings, with more innovative flavors, ingredients, and limited-edition releases becoming available. The hedonic price approach is an established economic model used to analyze how the price of a product is influenced by its characteristics or attributes, which consumers value based on their preferences and perceived quality. In this context, the approach has been extensively applied to markets where product differentiation plays a significant role, such as the spirits industry. According to Rosen (1974), the hedonic pricing model assumes that a product’s price is determined by the aggregated value of its characteristics, and consumers are willing to pay a premium for products offering attributes that are perceived to provide greater utility. In the spirits market, these attributes can include factors such as brand reputation, production methods, aging processes, alcohol content, packaging, and even sensory experience of the product, such as flavor complexity and aroma. Several studies have explored the role of hedonic pricing in alcohol markets, but often for each single spirit. For example, in the case of rum, the rise of premium and aged rums has also shown that consumer willingness to pay a higher price is closely linked to perceptions of quality, often associated with longer aging processes, artisanal production methods, and packaging innovations (Giraud-Héraud & Réquillart, 2021). Consumers of premium vodka increasingly value purity, production methods, and unique flavor profiles, driving higher prices for organic or artisanal vodkas (Euromonitor, 2023). In Europe, the growing demand for premium spirits reflects a consumer shift towards quality and authenticity, where factors such as brand heritage and production authenticity take on increasing importance in pricing decisions (Bergquist & Bolin, 2019). In this study, we will explore some factors that characterize spirits, influencing the price of these products in the European market. We employ Mintel database, collecting data regarding spirits divided by companies and sale destination markets, from 2001 to 2024. The hedonic price approach is applied across four spirit categories—gin, rum, whisky, and vodka—to understand pricing dynamics and consumer preferences in the European spirit’s market. We employ a log-lin regression model with fixed effects, in order to control for and account for unobserved characteristics that do not change over time. The dependent is represented by the price of spirits products and the explanatory variables are organized in three groups: 1) Product Sustainable Characteristics (PSC); 2) Product Quality Characteristics (PQC); 3) Product Market Characteristics (PMC). The first group of variables includes factors related to sustainable characteristics of the product, such as packaging features and environmental certifications. The Quality characteristics deals with the aging of products and particular editions, while the Market characteristics group includes variables as the market destination of products or the brand. First results of the study highlight the importance of the brand-related characteristics appearing to have a strong influence on price, especially for certain types of products such as gin and whisky. Furthermore, despite the increase in sales volumes of private label products over the years, the "private label" variable shows a negative relationship with price. Additionally, as is the case for food products, it seems that for spirits, certain environmental certifications, such as organic certification, have a positive relationship with the product price, highlighting their importance in the spirits market as well.