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. 

Continue reading "Boom to Struggle: Changing Prospects of Cognac in China" »

Three Categories Driving Growth in Health and Wellness Soft Drinks

The health and wellness soft drinks industry is being driven by three main categories: bottled water, juice and ready-to-drink tea. There is a consumer shift in ready-to-drink bottled water towards the premium sector, with mineral water and natural spring water driving sales in this sector. For health and wellness juice, reducing sugar content has proved a successful strategy as consumers are increasingly concerned about their sugar intake. In healthy ready-to-drink teas, companies are tailoring the health benefits and tastes of their products to match consumer profiles and preferences in different areas of the world.

Join Diana Cowland at the Food Ingredients Global Summit on September 23-25 at etc Venues in London.

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Euromonitor to Speak at Petfood Forum China

Petfood-Forum-chinaDates: 20-22 August 2014

Location: Shanghai, China

Event Description:  Petfood Forum China 2014 will focus on nutrition, ingredients and formulation, the foundation for all pet food products and for new product development. In this conference, leading industry experts will provide in-depth information on the pet food product and ingredients market and the key ingredients categories for meeting companion animals’ nutritional needs. They will also discuss how to formulate products to satisfy varied and sometimes conflicting requirements (marketing, nutritional and regulatory), as well as how to process pet food to best deliver nutrient and product benefits.

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July 17, 2014

Prospects for Fish Oils and Omega Fatty Acids in China

Mark StrobelWith Mark Strobel, Consumer Health Analyst

China is a promising market for the consumer health industry, with consumer expenditure on health goods and medical services expected to grow by 56 percent between 2013 and 2018. Vitamins and dietary supplements, especially fish oils and omega fatty acids are among the strongest prospects for the country. The average adult in China consumes only one-quarter of the recommended daily intake of DHA and EPA which is found in these supplements.  Although the regulatory infrastructure for dietary supplements in China is notoriously strict, proposals are in place to change the process.

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The Real Cost of Cocoa


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The rising cost of cocoa has been touted by manufacturers as one of the biggest challenges to maintaining healthy profit margins. By 2020, some are forecasting the price of cocoa to be double at US$6000/tonne. If rising prices were not passed on to consumers and absorbed by the manufacturer, the manufacturer’s mark-up on 100g of chocolate would fall from US$0.44 to US$0.37, a decline of 16%. Yet this mark-up is still twice the amount that cocoa costs the consumer when they buy 100g of chocolate.

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Techweek Chicago 2014 Recap

David McGoldrickAnalyst Insight by David McGoldrick - Research Associate

View David McGoldrick's profile on LinkedIn

Techweek Chicago was held in Chicago over 23-28 June. The event centred on new technological advances that are disrupting nearly every area of commerce. Every industry – from finance and health to packaged food and tourism – is being impacted by these technological developments. The event was a chance to discuss and present on what has occurred so far and on new ideas in the pipeline.

Beacons and Mobility Create New Possibilities

Mobility was a big topic at the conference, with presenters discussing the infiltration of electronics into all aspects of life and how this will create smarter consumers, businesses and cities. Ray Velez, Global Chief Technology Officer at Razorfish, explained that growth in the number of internet-enabled devices sold will soon outpace growth in the number of children born each year. A panel on the future of location-aware marketing discussed how these internet-enabled devices (especially the combination of beacons and smart phones) could be used to enable customers to see reviews of products simply by standing in front of them. These devices could also let consumers know that items they have previously viewed online are available in the store they just entered. Others cited their potential usage in high-end boutiques and hotels, which will enable employees to recognise loyal customers and provide a personalised level of service.

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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

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July 16, 2014

Global Luxury Jewellery and Timepices: Key Trends and Growth Prospects

Fflur Roberts, Head of Luxury Goods Research at Euromonitor, recently spoke at Jewellery & Watch London. Euromonitor and Jewllery and Watch are pleased to offer Fflur's presentation exclusively.

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Michael Kors’ Marketing Strategy Pays Off

Euroasia_Chloe.Wu_LThumbWith Chloe Wu, Personal Accessories & Eyewear Industry Analyst

Michael Kors is investing heavily in marketing its new diffusion line and as a result, consumers are associating the company as a lifestyle brand in line with Coach and Tory Birch. The company is also using social media as a way to use consumers to market its brands. It has a blog site called MK Timeless where consumers can upload pictures of their Michael Kors watches and a campaign called Watch Hunger Stop where the company donates money to the World Food Program for every 100 series timepiece purchased. These marketing strategies have paid off for the company with strong brand equity.

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Hemp Ice Cream and Champagne Popsicles to Target the Mellow and Buzz Mood Demographic

Lianne van den BosAnalyst Insight by Lianne van den Bos - Food Analyst

View Karine Dussimon's profile on LinkedIn

Maturity, health-conscious consumers and a decline in product launches have all contributed to a slowdown in ice cream sales in saturated markets such as the US and the UK. However, whilst Unilever and Nestlé dominate overall sales of ice cream, with a combined global value share of 35%, a somewhat controversial revolution is brewing in the background, targeting the ultimate indulgent experience.  Will hemp-infused ice cream and alcoholic popsicles pioneer the wave of craft ice cream? Euromonitor International takes a closer look at the rise of craft ice cream and how Unilever and Nestlé should take pointers from two university graduate entrepreneurs.

hemp ice cream_small_small.jpgRetail ice cream sales in the US posted a 1% decline in 2013 compared to historic average growth of 2%, primarily due to a drop in product innovation, consumers switching to healthier products outside ice cream, such as Greek yoghurt or fruit, or opting for cheaper formats. The UK paints a somewhat different picture; growth has also slowed down, but still registered a 5% value increase in 2013, compared to 7% in 2012

New Product Launches in Craft Ice Cream

While major manufacturers have been busy trying to launch healthy ice cream formats or jumping on the Greek yoghurt bandwagon, a new wave of entrepreneurs are instead focusing on flavour, excitement and, above all, provocative product innovation. Hemp-infused ice cream by Relaxation Solutions, a subsidiary of Bebida Beverage Company (BeBevCo), is expected to be launched in the US by August this year. The company is partnering up with 80s comedy duo Cheech and Chong to be the face of this ‘’relaxation’’ ice cream, which claims to contain 5mg of hemp per half pint serving. With some states in the US having already legalised recreational marijuana use and more to follow this year, it’s quite the catchy product launch of 2014.

Continue reading "Hemp Ice Cream and Champagne Popsicles to Target the Mellow and Buzz Mood Demographic" »


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