The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
Results of the 2009 Millionaires list research show that despite the inevitable impact of the global economic situation, the outlook for the spirits sector is not entirely gloomy.
For a second consecutive year Euromonitor International has teamed up with Drinks International to research the leading spirits brands for the Millionaires supplement. The supplement is an annual listing of distilled spirits brands which have sales of over one million 9-litre cases, classified under domestic/local, regional and international brands.
In the 2009 edition, domestic/local brands are the most prevalent on the list with 74 entries, with international brands numbering 56 and regional brands making up the remaining 22. This shows that despite the steps taken by international companies to push their leading brands into new markets, the global spirits market is still largely reliant on domestic/local brands, which again accounted for over half of total volumes.
Vodka continued to have the highest number of brands at 42 and another major category was brandy and cognac, which had 15 entries. It is interesting to note that Other spirits, including lesser known products such as baijiu, anis, soju, shochu and cachaça, accounted for 15 brands on the list, showing again the increased importance of domestic local brands, benefiting from consumers trading down due to economic difficulties.
Asia-Pacific is still the key region for spirits consumption globally as in 2008, the region accounted for just under 50% of total spirits consumption. The second largest region is Latin America, with a 17% volume share, followed by Eastern Europe with just over 10%, while Western Europe and North America accounted for just under a 10% share of volumes respectively. Australasia, unsurprisingly, is the smallest region, commanding less than 4% of global sales.
Pernod Ricard was the company with most entries with 22 brands thanks to the addition of Absolut and Luksusowa from the V&S acquisition. It is now followed by United Spirits, with 17 brands following the addition of its Romanov vodka. Diageo fell back into third place with only 15 brands, after its VAT 69 brand saw its volumes fall below the million case mark. However, Diageo still leads in terms of actual cases sold with 15 brands representing 87.7 million cases.
Although the current global economic crisis did not hit until the latter part of 2008, the 2009 Millionaires list has already started to show the effects of the recession. “Brands have certainly been affected, especially those with large volumes in the US, the UK, Ireland and Spain, in other words those countries which have been in recession the longest. Brands with large volumes in emerging markets still continued to perform well in 2008” stated Euromonitor International senior alcoholic drinks analyst Jeremy Cunnington.
Growth prospects look bleak, especially for international, premium brands, which are likely to suffer considerably in 2009. However, international companies should remember lessons from past economic crisis – although volumes fell, they rose quickly again, as was seen with Scotch in recent region-wide economic crises, such as those in Asia-Pacific and Latin America in 1998 and 2002 respectively.
Cunnington adds, “The one bright spot could well be the Asia-Pacific region, where economies such as China and India are still growing strongly, and, in the case of the former, has recovered from the steep decline in exports at the end of 2008.”
The Drinks International Millionaires Club is an annual listing of distilled spirits brands with sales of a million 9-litre cases or more but differs from Euromonitor International’s research in that it includes sales in all channels, such as duty free/travel retail.
Research is conducted independently by Euromonitor International and brands are classified under the following guidelines: Domestic/local (90% or more of volumes sold in a particular country); Regional (80% or more of volumes sold in a particular region); International (sold in at least two regions and no more than 80% in any one region).