Spirits - Iceland

The Spirits market in Iceland has experienced significant growth in recent years, driven by changing customer preferences, emerging trends, and local special circumstances.

Customer preferences: Customers in Iceland have shown a growing interest in premium and craft spirits. This can be attributed to a shift towards quality over quantity and a desire for unique and artisanal products. Consumers are increasingly willing to spend more on higher-end spirits that offer a superior taste and experience. This trend is not unique to Iceland, but reflects a global shift towards premiumization in the spirits market.

Trends in the market: One of the key trends in the Icelandic spirits market is the rise of local distilleries. In recent years, there has been a surge in the number of small-scale distilleries producing Icelandic spirits. These distilleries often focus on using local ingredients and traditional production methods to create unique and authentic products. This trend has been driven by a growing interest in supporting local businesses and a desire for products with a strong sense of place. Another trend in the market is the increasing popularity of flavored spirits. Flavored spirits, such as fruit-infused vodkas and botanical gins, have gained traction among Icelandic consumers. These products offer a more diverse and innovative flavor profile, appealing to those looking for new and exciting taste experiences. The rise of flavored spirits can be seen as a response to changing consumer preferences and a desire for variety in the market.

Local special circumstances: Iceland's unique geographical location and natural resources have played a significant role in shaping the spirits market. The country's pristine environment and abundant natural resources, such as pure glacial water and native botanicals, provide a distinct advantage for Icelandic distilleries. These natural ingredients contribute to the production of high-quality spirits with a unique flavor profile, appealing to both domestic and international consumers. Furthermore, Iceland's tourism industry has also had an impact on the spirits market. The country's growing popularity as a tourist destination has led to an increase in demand for local products, including spirits. Tourists are often drawn to the authenticity and uniqueness of Icelandic spirits, seeking to bring home a taste of their travel experience. This has created opportunities for local distilleries to expand their customer base and increase sales.

Underlying macroeconomic factors: The overall economic stability and increasing disposable income in Iceland have also contributed to the growth of the spirits market. As the economy has improved, consumers have become more willing to spend on luxury and premium products, including spirits. This has created a favorable environment for the development of the premium spirits segment in Iceland. In conclusion, the Spirits market in Iceland has experienced significant growth due to changing customer preferences, emerging trends, and local special circumstances. The rise of premium and craft spirits, the emergence of local distilleries, the popularity of flavored spirits, and the influence of Iceland's unique natural resources and tourism industry have all contributed to the market's development. Additionally, the overall economic stability and increasing disposable income in Iceland have created a favorable environment for the growth of the spirits market.

Data coverage:
The data encompasses B2C enterprises. The at-home market covers retail sales via super- and hypermarkets, eCommerce, convenience stores, or similar sales channels. The out-of-home data encompasses all sales to hotels, restaurants, catering, cafés, bars, and similar hospitality service establishments. Combined numbers encompass both the at-home market and the out-of-home market. Both the at-home and the out-of-home market are valued at retail selling prices including all sales and consumption taxes.

Modeling approach:
Market sizes are determined through a Top-Down approach, building on specific predefined factors for each market segment. As a basis for evaluating markets, we use resources from the Statista platform as well as in-house market research, national statistical offices, international institutions, trade associations, companies, the trade press, and the experience of our analysts. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending (e.g. consumer spending on alcoholic beverages, consumer spending at Hotels, Restaurants etc.), and price level index. This data helps us estimate the market size for each country individually.

Forecasts:
In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing is well suited for forecasting the Alcoholic Drinks market with a projected steady growth. The main drivers are GDP per capita and consumer spending per capita.

Additional notes:
The data is modeled using current exchange rates. The impact of the COVID-19 pandemic and the Russia-Ukraine war are considered at a country-specific level.