Asia key region for ‘long-term’ growth

Asia will remain the “key region for the long-term development of the global alcohol market”, according to a recent report by the International Wine and Spirits Review, despite the well-documented slowdown in China.

In its 2014-2019 Forecast Report, analysts said Asia was expected to see the largest volume increase of any region across the beer, wine, spirits and mixed drinks categories, while total yearly consumption is predicted to surge by almost 1.2 billion nine-litre cases by 2019.

In contrast, consumption in Europe is expected to shrink by 27.2 million cases over the same period, largely blamed on a steady decline in both the beer and wine categories.

Of the top five largest growth markets, the US is the only non-Asian market to feature.

China and India were pinpointed by analysts as the markets expected to grow at the fastest rate from 2013 to 2019, together accounting for a rise of 120.5m cases.

Local spirits, such as baijiu, whisky and brandy, will continue to drive much of the expansion within Asia, however there will be opportunities for imported products to make their mark in many Asia markets.

Imported spirits are expected to increase their compound annual growth rate (CAGR) by 3.8% between 2013 and 2019, local brands by 1% – an increase of 8.7m cases.

China’s President Xi Jinping has been enforcing stringent austerity measures since late 2012 in a bid to crackdown on extravagance and prevent state and local officials from spending taxpayers’ money on entertaining each other with premium and super-premium priced wines and spirits.

Earlier this year LVMH blamed continued destocking in China for a 15% drop in profits in its wine and spirits portfolio in the second half of 2014.

In the year to the end of June, Diageo’s net sales to China fell by 33%, reflecting a slump in demand for premium products, notably Scotch and high end baijiu.