Why does Australia love RTDs and Bourbon?

8th May, 2013 by Andrew Catchpole

A buoyant economy, thriving bar scene and an increasing consumer preference for premium and super-premium spirits, not to mention RTDs and Bourbon, suggest a bright future for spirits in Australia. By Andrew Catchpole.

Sydney Australia

Australia’s drinking culture is well established across RTDs, Bourbon and out of home

Australia’s economy, fuelled by demand for raw materials from growth in China and elsewhere, has escaped relatively unscathed from the Global Financial Crisis (GFC) of the past few years.

This has resulted in a historically strong Australian dollar against the currencies of many of its trading partners in the Western world, meaning that purchasing power for overseas goods is high. This, in turn, suggests a buoyant consumer sector, and while Australians have not been immune to the wider world picture, the overall scene is one of opportunity and potential for growth.

A fair test of this buoyancy is the spirits market, which arguably provides a clear barometer of consumer purchasing habits and related confidence in the general Australian economy.

The most recent figures for 2012 show continued volume and value growth in the overall spirits category. This follows a 50-year trend, which has seen beer consumption fall from 76% to 42% of alcohol consumed, with wine rising from 12% to 37% and spirits (including RTDs) from 12% to 20% (Australian Bureau of Statistics).

“Drinking less, but better”

Even more significant, though, is that this spirits growth is increasingly coming from the premium and super-premium end of the market, with Australian consumers buying into higher quality brands both via off-trade sales and in the booming bar culture.

“While total alcohol consumption in Australia is flat, generally people are drinking less but better and there is definitely a broad trend of ‘premiumisation’ across all spirits categories,” says Tim Salt, managing director of Diageo Australia, which accounts for some 33% value share of the spirits category and 30% of the RTD market.

“We are extremely pleased with the growth we are seeing across the premium and super-premium segments of our business, these delivering 48% net sales value growth in H1 (the first half of Diageo’s fiscal year), which is outstanding.”

Backed by independent category research from Euromonitor, which similarly identifies “evidence of consumers generally trading up to premium and super-premium spirits at the expense of standard and economy expressions”, Salt talks about a “macrotrend of consumers seeking quality, authenticity and craftsmanship in the products and experiences they choose”, which is seeing people trade up to the “affordable luxury” offered by premium spirits.

The desire to become knowledgeable and learn to mix quality drinks at home has caught on in a big way, with this trend is being reinforced by the cutting edge bar scene.

One Response to “Why does Australia love RTDs and Bourbon?”

  1. Divya Sangam says:

    Hi Andrew,

    Thank you for citing Euromonitor International figures in your article. I wanted to reach out and introduce myself as the media representative for Euromonitor International Australasia and Asia Pacific. If you’re working on any stories and would like to speak to a research analyst in our team- feel free to email me at the address I’ve provided in the form.

    Warmest Regards,

    Divya

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