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243 posts categorized "Alcoholic Drinks"

August 19, 2014

Wine Demand Shifts from Mature to Developing Regions

Karine.DussimonAnalyst Insight by Karine Dussimon - Senior Packaging Analyst

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The future of packaging for still light grape wine is rather positive. By 2018, global retail demand is set to rise by a 2% CAGR to reach 20.3 billion units. Yet it is also going through rather revealing changes. While the ‘Old World’ continues to dominate still wine consumption in glass bottles in 2013, Western Europe is predicted to see a decline and glass is finding a new lease of life among developing regions. Asia Pacific holds some of the best opportunities for packaging and closure unit volume increase in still red wine but also white and rosé. 

A Seemingly Homogenous Market

Demand for still light grape wine packaging is on the rise, globally. Still wine packaging also remains rather concentrated in format, with the ubiquitous 750ml glass bottle and cork representing the bulk of volumes. Glass holds a share of 85% of the entire category; a characteristic which comes to a great extent from the traditions of wine production and consumption in the Old World. Western Europe still accounts for 49% of global wine packaging sales in 2013. This homogeneity in the market for still wine packaging and closures is not expected to change in any drastic manner through to 2018; yet there are some areas of diversification in evidence.

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August 17, 2014

Economy Focus Required to Meet Burgeoning Demand for Blended Scotch

Jeremy_Cunnington0Analyst Insight by Jeremy Cunnington - Senior Alcoholic Drinks Analyst

Euromonitor International’s latest forecast growth figures for other blended Scotch make happy reading for international spirits companies, with the category anticipated a volume CAGR of 3% (125 million litres) over the 2013-2018 period.

In five key markets that are expected to drive blended Scotch growth between 2013-2018 the key or at least an important growth driver in 2013 were economy brands. These five markets, laid out in the chart below are expected to account for around 60% of the category’s growth over the forecast period.

Top Five Forecast (2013-18) Growth Markets for Blended Scotch Performances in 2012/2013

BlendedScotchGrowthin2013inKeyMarkets

Source: Euromonitor International

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August 6, 2014

Price Elasticities in Alcoholic Drinks

Lan-HaAnalyst Insight by Lan Ha - Contributing Analyst

Findings from the Euromonitor International industry demand model show that price elasticity – the responsiveness of volume consumption to a change in product price – varies significantly across different alcoholic drinks categories. Interestingly, price elasticity for the majority of alcoholic drinks categories is generally higher in the developed markets as opposed to emerging and developing markets.

Figure 1: Global Demand Price Elasticity for Selected Alcoholic Drinks

Source: Euromonitor International’s Industry Demand Model (based on alcoholic drinks industry research).

Note:  Retail sales only (excludes on-trade), fixed exch. rates. The price elasticity in this article refers to a long-run elasticity, meaning a five-year cumulative effect on consumption of 1.0% price change in a given year.

Price Elasticity as an Analytical Measure

Price elasticity allows estimation of the effect a particular price change has on the volume sales of that category. The sign of price elasticity is typically negative, as price and volume demand are expected to be inversely related for the majority of products - if price rises, people tend to consume less of that product. Generally, the demand for a product is said to be (relatively) inelastic when price elasticity is (in absolute terms) less than -1.0, meaning, changes in price have a relatively small effect on the quantity of the product demanded, and it is elastic when price elasticity is (in absolute terms) more than -1.0.

This article focuses on category level price elasticity rather than brand level elasticity. Price elasticity at a category level shows how strongly consumers react to a price change, and whether they are likely to switch to another category as a result of a price change. For example, if the price of beer goes up, consumers may choose to drink less beer and more wine. The strength of the price elasticity shows whether this switch is likely to happen if price level rises across the board in the category. This is different from brand level price elasticity, which measures inner-category competition between brands, and the effect of price change a particular brand on its sales.

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July 29, 2014

Rum's Image Problem in Chile Leads to Dramatic Decrease in Sales

 

Rum, which has enjoyed a decade of uninterrupted growth in Chile, is no longer a favorite among Chilean consumers. Sales of the drink fell by about 40 percent in volume terms from 2011 to 2013. This dramatic drop was caused by rum's image problem in the country. Essentially, the drink became so popular that consumers are now tired of it. Major manufacturers are fleeing Chile, leaving the rum market to a few local brands and imports.

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Problema de imagen del ron en Chile causa dramática caída en ventas

El ron, que ha gozado de una década de crecimiento interrumpido en Chile, dejó de ser un favorito entre los consumidores. El volumen de ventas de esta bebida cayó aproximadamente 40 por ciento entre 2011 y 2013. Esta dramática caída fue causada por el problema de imagen que enfrenta el ron en el país. Fundamentalmente, el trago se volvió tan popular que los consumidores se cansaron de él. Los principales productores están yéndose de Chile, dejando el mercado en manos de algunas marcas locales e importadas.

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July 26, 2014

Shifting Power in the Beer Market

Amin AlkhatibAnalyst Insight by Amin Alkhatib - Alcoholic Drinks Analyst

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There is an on-going global economic shift in power from West to East, a phenomenon the beer market began to witness years ago. In 2002, according to Euromonitor International, China overtook the USA to become the leading beer market in terms of volume sales. However, in spite of this achievement, China still has some way to go before it can claim to be the world’s biggest beer market by value.

Following years of mid single-digit to low double-digit volume growth rates, the Chinese market boasted a volume size more than twice that of the USA in 2013. Yet, when it comes to value sales, China is yet to reach the dizzy heights of the USA. In 2013, the Chinese beer market was 79% the value size of the USA beer market in fixed USA dollar exchange rate terms, so is not too far off from overtaking it. In fact, Euromonitor International forecasts that by 2017 China’s beer market will grow by 45% and thus assume the leading position in value sales terms.

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July 23, 2014

China Overtakes the US as the World's Largest Economy

China is set to overtake the US as the world's largest economy in 2014, with a significant impact on consumers and industries. Learn which industries will be the most affected and why by watching this video and downloading Euromonitor's latest whitepaper.

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Champagne and Problems Bubbling Beneath the Surface: Post-Recession Sales Decline and Growth in Sparkling Wine

Spiros_MalandrakisAnalyst Insight by Spiros Malandrakis - Senior Alcoholic Drinks Analyst

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According to Pierre-Emmanuel Taittinger, outspoken president of the eponymous champagne house, "Champagne's stiffest competition comes not from other sparkling wines but from Viagra". If there ever was a sentence encapsulating the category’s inherent contradictions, emotional gravitas and effervescent overconfidence, that would be it.

Reality is unfortunately less lyrical. According to Euromonitor International’s latest research, global champagne volumes declined by more than 1% in 2013 – a relative improvement compared to the moribund performance of 2012 but still nowhere near the heady heights of pre-recessionary exuberance. And while an inverse correlation between Viagra sales and champagne is yet to be established, other sparkling wine’s seemingly unstoppable advance is highlighting the dangers of competition coming from Cava and Prosecco rather than pharmaceutical companies.

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July 18, 2014

Boom to Struggle: Changing Prospects of Cognac in China

Jeremy_Cunnington0Analyst Insight by Jeremy Cunnington - Senior Alcoholic Drinks Analyst

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Up until 2013, selling cognac in China was considered to be one of the sure fire ways of generating great revenues and profits. Between 2007-2012 volume sales grew by 119% (14.8 million litres), with retail sales up by 186% (RMB31 billion, US$5 billion). Cognac benefitted from its highly prestigious image in China and the Chinese culture of gift-giving to nurture relationships, especially with government officials and other businesses. Both factors boosted the luxury end of the cognac category.  There seemed little doubt that growth would continue.

 

Problems Taking Time to Appear

Even when, in October 2012, the Chinese president, Xi Jinping, announced a clampdown on government extravagance and corruption, in early 2013, cognac producers and distributors were still optimistic that the category would return to healthy growth and last year’s Euromonitor International’s forecast growth of 15% volume CAGR (27 million litres) and 16% value CAGR (RMB53.5 billion) between 2012-2017 reflected those views. The consensus opinion was that cognac’s strong image and long presence in the country would shield the category from the brunt of any negative effect, unlike the less well-established blended Scotch.

However, the anti-extravagance push has had a more deleterious effect on cognac sales than expected and has substantially curbed “gifting” by business executives offering luxury gifts to officials, who increasingly dare not accept them. Nor has it been helped by a slowing economy and investigations into the links between some on-trade establishments and prostitution. 

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July 17, 2014

Heineken NV: Reaching Out to Africa’s Growing Beer Market

Amin AlkhatibAnalyst Insight by Amin Alkhatib - Alcoholic Drinks Analyst

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Heineken NV is opening a third brewery in Ethiopia in 2014 in an effort to expand in African markets. This is expected to be the world's fastest-growing region in beer volume sales, in percentage terms, in the 2013-2018 period. The Middle East and Africa (MEA) is forecasted to grow, according to Euromonitor International, by a 5% CAGR in total volume sales. The significance of this logistical move derives from the company’s strategy to dominate the continent’s second-most populous market.

Africa’s population size, untapped low-income consumer expenditure, growing incomes and rate of urbanisation are all playing a part in its global significance. It is no surprise that global companies like Heineken are looking to get a stronger foothold in this continent, but they have to contend with incumbent brewers, especially SABMiller Plc.

Demography and Economy in Favour of Africa

As the urban population is expected to grow at 3% CAGR over 2013-2018 in the MEA, and the population is expected to grow by a CAGR of 2%, Heineken is looking towards a growing consumer base. But let’s not forget that growth of a beer consumer base will also depend on the degree of social mobility, and growing accessibility of low-income consumers to beer markets via affordability.    

Source: Euromonitor International from national statistics/UN

Continue reading "Heineken NV: Reaching Out to Africa’s Growing Beer Market" »

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Recent Posts

Wine Demand Shifts from Mature to Developing Regions

Economy Focus Required to Meet Burgeoning Demand for Blended Scotch

Price Elasticities in Alcoholic Drinks

Rum's Image Problem in Chile Leads to Dramatic Decrease in Sales

Problema de imagen del ron en Chile causa dramática caída en ventas

Shifting Power in the Beer Market

China Overtakes the US as the World's Largest Economy

Champagne and Problems Bubbling Beneath the Surface: Post-Recession Sales Decline and Growth in Sparkling Wine

Boom to Struggle: Changing Prospects of Cognac in China

Heineken NV: Reaching Out to Africa’s Growing Beer Market