Aspirational drinking drives foreign spirit sales in Asia

14th August, 2013 by Andrew Catchpole

While local spirits still dominate the volume end of Asia Pacific, affluent consumers are increasingly trading up to luxury imports, as Andrew Catchpole reports

Asian-spirits-market

International spirits account for just 6% of alcohol consumed in Asia – for now.

The spirits boom in Asia Pacific continues apace with growth in many individual countries within this vast corner of the globe in stark contrast to the flat, mature markets of the West.

International spirits may account for just over 6% of the estimated £94 billion for Total Beverage Alcohol (TBA) in the region, but the category is growing fast. The latest figures are up 8.5% for Asia Pacific as a whole, and an impressive 11% for emerging markets in the region. This is way ahead of growth rates for locally produced and traditional spirits.

Clearly, then, these are territories where the big international players will continue to redouble their fight to consolidate and grow their competing brands. To take a top-line look at the trends, the driver of foreign spirit consumption in the Far East can be broadly summed up as aspirational and premium-led, with Scotch whisky remaining the dominant category by a country mile, with 45% of the market.

Cognac holds on to an 18% share, while rum and vodka continue to deliver growth, accounting for 12% and 8% respectively. Market leaders Diageo and Pernod Ricard dominate sales, with both companies confidently predicting that they will continue to increase their penetration of the market.

This huge region is predicted to be the largest TBA net sales pool in the world. Rising populations are matched by rising wealth, coupled with aspirational drinking in line with a newly cosmopolitan and increasingly well-travelled middle class elite. With Diageo’s ‘Emerging Asia’ growth doubling its broader Asia Pacific growth, the figures speak for themselves.

Growing middle classes

China adds 22 million consumers to its ranks each year, with disposable income growing by14% between 2005 and 2010 and predicted to continue its upward curve.

Similarly India sees 19m new consumers each year, with 15% growth in disposable income recorded over the same period. Across South East Asia seven million new prospective drinkers join the market with a 13% increase in spend, while Korea managed just 0.6m, yet spending power within the country has increased by 7% over the past half decade. Moreover, much of this new consumer spend is increasingly targeted at the profitable premium and ultra-premium end of the spirits market, as James Maxwell, regional director for Asia at Pernod Ricard’s Chivas Brothers division, confirms.

“Consumers in the Far East are often focused on super-premium, prestige, ultra-prestige and beyond, so as the global leader in luxury Scotch whisky, Chivas Brothers is perfectly placed to satisfy these markets’ needs,” says Maxwell, whose company counts brands such as Ballantine’s, Glenlivet and Chivas Regal in its portfolio.

“Whisky drinkers in the Far East are aspirational and respect the craftsmanship involved in the creation of the product and appreciate that it takes care, expertise and attention to detail to nurture rare whiskies to great age,” continues Maxwell. “The increased demand for luxury whiskies is more evident in the on-trade and with young affluent adults that are moving away from more traditional on-trade customs and are looking for something new.”

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