Spirits In Asia Pacific 5y5471
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SPIRITS IN ASIA PACIFIC February 2019
INTRODUCTION REGIONAL OVERVIEW LEADING COMPANIES AND BRANDS FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
INTRODUCTION
Scope Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors. Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies’ opinions, reader discretion is advised.
Dominating global volume sales of spirits, Asia Pacific is a major driver of the category. However, due to the low disposable incomes of most consumers in the region, sales are dominated by cheap local spirits. This is gradually changing as prosperity spreads and gives consumers the chance to broaden their tastes, as they are starting to do.
© Euromonitor International
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INTRODUCTION
Key findings Big countries and their local products dominate growth
The region’s volumes are dominated by four key markets: China, India, South Korea and Japan. Of these, China s for around 40% of Asia Pacific’s volumes. Current and future growth are particularly reliant on the healthy performances of all. Of the four, all except Japan have performed well, driven by local products: baijiu in China, whisky in India, and soju in South Korea. International spirits categories have also done well, notably whiskies.
Off-trade dominates consumption
In most markets, and certainly the big two, China and India, off-trade consumption dominates sales. This is due to the low disposable incomes of most people. Nevertheless, in certain markets, such as Singapore, where this is less of an issue, on-trade dominates. Within the off-trade splits there is a mixture of channels which are dominant, with supermarkets and hypermarkets big in large markets such as South Korea and China, but where the retail sector is more fragmented, such as India, specialist and independent retailers are key.
Big two distillers strong thanks to India
Diageo and Pernod Ricard are two of the leading players in the region thanks to their strong positions in its second-largest market. However, apart from these two companies, the rest of the top 10 is dominated by local players, whose health is based on the performance of their local products domestically.
Future potential for international spirits categories
China, and to a lesser extent India, and their locally produced spirits, will still be the key growth drivers for the region. However, particularly in whiskies and cognac, there are possibilities for growth.
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INTRODUCTION REGIONAL OVERVIEW LEADING COMPANIES AND BRANDS FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
REGIONAL OVERVIEW
Dominant with room to grow Asia Pacific is the key growth driver for global spirits. In 2017 it ed for 60% of global spirits volumes and saw the second-fastest rate of growth over the review period, after the much smaller Middle East and Africa region. This is not surprising due to having so many populous countries, but also that in all the major markets in the region, such as China, India, Korea and Japan, spirits have traditionally been the alcoholic drinks of choice. However, thanks to a mixture of low disposable incomes, growing consumer choice in mature markets, and in some markets cultural issues, per capita consumption is relatively low, being only the fourth-largest region.
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REGIONAL OVERVIEW
Continued steady growth Since 2012 Asia-Pacific has continued to grow. The dip in 2016 was due to declines in the high-volume markets of Thailand, Japan and South Korea, but these markets recovered to varying degrees in 2017. The major growth drivers remain the two largest markets: China and India. Both have and will continue to see steady growth throughout the forecast period, but will be assisted by other markets. Growth in many markets has been driven by rising disposable incomes, which have encouraged the region’s consumers to move into legal consumption, but also enabled them to afford to drink more and higher quality products – a trend that is set to continue.
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REGIONAL OVERVIEW
Local spirits dominate Asia Pacific volumes Spirits produced in specific countries dominate volume sales in the region. Four out of the top five markets are dominated by such types, led by baijiu in China and soju/shochu in Japan and South Korea. In markets with more conventional spirits categories such as in India and the Philippines, where whiskies and rum have large volumes, these categories are dominated by cheap, locally-produced products. Despite this, categories and products are present, for example cognac in China, Taiwan and Malaysia, while Scotch whiskies, particularly single malt products, are growing strongly in India, China and Japan. However, their volumes are comparatively low. © Euromonitor International
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REGIONAL OVERVIEW
Small growth goes a long way with big volume base Although they have relatively low rates of growth the massive volumes of local spirits consumed means that they continue to drive volume sales. While the majority of that growth is low-value products, it is worth noting that in China and super baijiu was the key growth driver for the category in 2017. India has the second biggest actual volume growth, driven by whiskies. This is mainly local whiskies, but from relatively low bases both blended and single malt Scotches are doing well. The country with the third highest volume growth was South Korea, with tits volumes driven by soju/shochu. Despite the category’s maturity, producers’ capacity to adapt to the latest trends, eg lower ABV variants and the threat of flavoured vodka, has allowed the category to grow.
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REGIONAL OVERVIEW
Growth by category in key markets
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REGIONAL OVERVIEW
Other spirits and whiskies key to growth Major volume categories in Asia-Pacific saw fluctuating fortunes over 2012-2017. The relatively strong performances in China, India and South Korea of local products contrasts with that of Japanese shochu, which suffers from an ageing consumer base. The Philippines saw declines in its local rum, brandy and gin categories for a variety of historic reasons, including large excise duty hikes. On the positive side there has been the increasingly broad-based growth of whiskies, particularly international variants. Excluding India, Japan has seen the healthiest increases in volumes. Driven by its native whisky it has also spread to other variants, especially Scotch, where the blended variants saw the fastest rate of growth. This strong growth originated in Japanese whisky, and the desire to look to the past with the popularity of the Highball cocktail. Scotch has also seen strong growth in India and the Philippines, and is recovering somewhat in China. In the latter market, single malt Scotch is thriving due to its high-end positioning, while blended Scotch is benefitting from price rises in and above baijiu, which is making people who cannot afford the new high prices switch to blended Scotch. The major international spirits category in China, cognac, is also seeing a return to growth. In the first half of the review period the category was hit very hard by an anti-corruption and anti-gifting drive, as much of the growth was driven by corporate gifting/entertainment. Consumption of cognac has now switched to a more sustainable personal consumption model. Although not showing up in the figures, other international spirits categories, such as English gin and vodka, are growing from low bases in a number of markets. This is being driven by isation and the growing popularity of cocktails, for example in China, Hong Kong and Indonesia.
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REGIONAL OVERVIEW
Broad range of consumption habits In Asia Pacific consumers drink in a wide variety of locations, either at home or in on-trade establishments. In Pakistan, due to the strong religious sentiment against alcohol, consumption is almost entirely at home.
The decline of the off-trade share in Malaysia is due to a big push of international spirits categories, eg whiskies, cognac and gin, primarily through on-trade. Indonesia suffered a decline in off-trade shares due to the banning of alcohol sales through traditional shops, the main outlook for local spirits, and thus saw an overall volume decline.
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100 90 80 70
% volume share
By contrast, less than 20% is consumed at home in Singapore – a trend exacerbated by the strong rise of the cocktail culture.
Spirits in Asia Pacific: % Volume Sales Through Off-Trade 2011-2016
60 50 40 30 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Azerbaijan Indonesia Pakistan Taiwan
China Japan Philippines Thailand
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Hong Kong, China Kazakhstan Singapore Uzbekistan
India Malaysia South Korea Vietnam
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REGIONAL OVERVIEW
Small specialist stores dominate most markets
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REGIONAL OVERVIEW
Eclectic off-trade retailing environment The two major consumers of alcohol in the region, China and India, have very different pictures for off-trade alcohol consumption. China, despite its size, has a strong concentration of sales in supermarkets and hypermarkets. By contrast, India’s dependence on specialist retailers reflects a combination of tight regulation and control of alcohol sales in the many different states, but also the general fragmentation of retailing and lack of chained retailers. Specialist retailers are also dominant in both Pakistan and Uzbekistan, for similar reasons to India. However, Pakistan has the added issue of the cultural difficulties of drinking alcohol in a strict Islamic environment. In those markets with a large proportion of sales via supermarkets and hypermarkets, such as South Korea and Singapore, this reflects the concentration of their retail environments. Local independent stores are major outlets for spirits purchases in a number of markets, such as Indonesia, Vietnam and Malaysia. However, they have all suffered declines in share, especially in Malaysia and Indonesia. This is predominantly due to the decline in local spirits, for which independent stores represent the main outlet. This decline is due to a mixture of changing consumer habits as they shift to more international spirits, but in the case of Malaysia excise duty rises, which disproportionally impacted cheaper local spirits. In many of these markets, such as Indonesia, there is a major split in of where products are purchased, with cheap local spirits being bought in local independent stores, while international spirits are purchased through supermarkets/hypermarkets, where the better off increasingly tend to shop.
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COUNTRY SNAPSHOTS
LEADING COMPANIES AND BRANDS
National consolidation Many of the large volume countries have highly consolidated markets, most notably in South Korea, Thailand and Philippines, where large companies dominate. In South Korea it is focused on which region companies dominate, while in the Philippines it is by category (gin, rum or brandy). In Thailand it is the one major player Thai Beverages. The one large market which remains fragmented is China, the huge size of the country meaning there are lots of regional players. Private label is almost nonexistent. This is due to the retailing set up, where either ontrade takes a large portion of sales, or alcohol is mainly through independent stores rather than large grocery outlets.
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LEADING COMPANIES AND BRANDS
Local companies dominate the rankings Only two of the top 10 distillers in Asia Pacific are international companies. Diageo in first and Pernod in fourth are only there due to their large volumes of local spirits in India. All other companies in the top 10 are there due to their large shares in domestic markets. Three are from South Korea, two from the Philippines and one each from China, India and Thailand. The performances of these companies are all dependent on local conditions, such as tax hikes, economic woes etc. In the case of Diageo, its decline in share was due to struggles turning around its Indian United Spirits division, which for years suffered from lack of investment by its predecessor, and low-margin products. Diageo is trying to re-position its portfolio to be more upmarket. © Euromonitor International
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Narrow geographic spread for all the leading companies The consolidated nature of the leading companies’ volume profile is emphasised here. The most diverse company of the top 10 is Pernod Ricard, with only 90% of its region’s volumes in its main market of India. This is predominantly due to its strength in China. The company’s broader spread is due to Pernod’s historic strength in the region, and unlike its rival Diageo, it has remained fully focused on Asia despite various economic crises. Post the 1998 economic crisis, Diageo pulled back from the region, only re-engaging from the mid-2000s A couple of the South Korean companies have volumes in Japan, due to the fact that soju/shochu are similar products. Their brands there primarily focus on Korean ex-pats.
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LEADING COMPANIES AND BRANDS
Cheap local brands rule All the 11 leading brands in Asia Pacific are cheap local brands focused on one specific market. The leader is the South Korean brand Chamisul. The brand’s volumes are focused in the most populous part of the country, around Seoul. Second placed McDowell’s is an Indian brand, but made up of a range of variants in different categories – whiskies, rum and brandy.
Of the remaining brands, Filipino ones are strongly present with Emperador, San Miguel and Tanduay. Each of the brands dominate their respective brand, gin and rum categories. As with Chamisul, the two Korean brands (Choumchorum, Joeunday) are focused on a particular region in Korea. © Euromonitor International
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FORECAST PROJECTIONS
Giants shape the region
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FORECAST PROJECTIONS
Large markets shape growth prospects Over 2017-2022, Asia-Pacific will see volumes grow by a 1% CAGR (804 million litres). This is a slowdown on the review period, but will continue to drive the growth of the global category. Unsurprisingly, it is the large markets that will drive growth, with India leading the way. Spirits sales in India have struggled, and will continue to struggle due to outside factors, namely the introduction of the general sales tax, the ban on alcohol sales next to major roads, and a general negative view of alcohol amongst national and regional governments, which has seen mass on-trade closures in certain regions. This negativity will continue to hold back growth. However, this will still be faster than China as the category matures. What the country lacks in volume growth will be compensated for in part by value growth as consumers to trade up. Growth in Thailand and the Philippines is very reliant on local social and political conditions. With the former country in particular still showing signs of instability, these healthy prospects could change. South Korea is the market which will see the biggest decline as its major category, soju, continues to decline, underpinned by the decline of the next biggest whiskies. Soju suffers from maturity, with its consumers ageing and younger ones preferring more eclectic tastes. Japan will also continue to see shochu decline, however the category’s overall fall will be mitigated by the continued healthy growth of whiskies. Throughout the region international spirits brands and categories will continue to gain popularity, as consumers become better off and desire more variety and better quality in what they drink. Whiskies will be the main beneficiary of this, but so too will be more mixable/cocktail-focused categories such as vodka, rum and gin.
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FORECAST PROJECTIONS
China hard landing will hurt growth prospects The slowing but still large volume growth expected in Asia Pacific could be further impacted if a sudden economic shock occurs. There are various scenarios, such as trade wars, although the most damaging would be a hard economic landing by China. Although it has less than 10% probability, its impact could be considerable. This is unsurprising as China is the dominant market in the region and it will suffer the most. However, it will not be alone with many of its neighbours, such as Thailand and South Korea, also suffering.
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COUNTRY SNAPSHOTS
COUNTRY SNAPSHOTS
China: market context
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COUNTRY SNAPSHOTS
China: competitive and retail landscape
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India: market context
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India: competitive and retail landscape
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South Korea: market context
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South Korea: competitive and retail landscape
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Japan: market context
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Japan: competitive and retail landscape
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Thailand: market context
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Thailand: competitive and retail landscape
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Philippines: market context
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Philippines: competitive and retail landscape
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Uzbekistan: market context
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COUNTRY SNAPSHOTS
Uzbekistan: competitive and retail landscape
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Taiwan: market context
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Taiwan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Vietnam: market context
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COUNTRY SNAPSHOTS
Vietnam: competitive and retail landscape
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Kazakhstan: market context
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COUNTRY SNAPSHOTS
Kazakhstan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Pakistan: market context
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COUNTRY SNAPSHOTS
Pakistan: competitive and retail landscape
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Malaysia: market context
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COUNTRY SNAPSHOTS
Malaysia: competitive and retail landscape
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COUNTRY SNAPSHOTS
Azerbaijan: market context
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Azerbaijan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Hong Kong, China: market context
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COUNTRY SNAPSHOTS
Hong Kong, China: competitive and retail landscape
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COUNTRY SNAPSHOTS
Singapore: market context
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COUNTRY SNAPSHOTS
Singapore: competitive and retail landscape
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COUNTRY SNAPSHOTS
Indonesia: market context
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COUNTRY SNAPSHOTS
Indonesia: competitive and retail landscape
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FOR FURTHER INSIGHT PLEASE Jeremy Cunnington
Drinks & Tobacco Project Manager [email protected]
RELATED ANALYSIS Spirits in Western Europe
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ALCOHOLIC DRINKS: SPIRITS IN ASIA PACIFIC
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INTRODUCTION REGIONAL OVERVIEW LEADING COMPANIES AND BRANDS FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
INTRODUCTION
Scope Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors. Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies’ opinions, reader discretion is advised.
Dominating global volume sales of spirits, Asia Pacific is a major driver of the category. However, due to the low disposable incomes of most consumers in the region, sales are dominated by cheap local spirits. This is gradually changing as prosperity spreads and gives consumers the chance to broaden their tastes, as they are starting to do.
© Euromonitor International
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INTRODUCTION
Key findings Big countries and their local products dominate growth
The region’s volumes are dominated by four key markets: China, India, South Korea and Japan. Of these, China s for around 40% of Asia Pacific’s volumes. Current and future growth are particularly reliant on the healthy performances of all. Of the four, all except Japan have performed well, driven by local products: baijiu in China, whisky in India, and soju in South Korea. International spirits categories have also done well, notably whiskies.
Off-trade dominates consumption
In most markets, and certainly the big two, China and India, off-trade consumption dominates sales. This is due to the low disposable incomes of most people. Nevertheless, in certain markets, such as Singapore, where this is less of an issue, on-trade dominates. Within the off-trade splits there is a mixture of channels which are dominant, with supermarkets and hypermarkets big in large markets such as South Korea and China, but where the retail sector is more fragmented, such as India, specialist and independent retailers are key.
Big two distillers strong thanks to India
Diageo and Pernod Ricard are two of the leading players in the region thanks to their strong positions in its second-largest market. However, apart from these two companies, the rest of the top 10 is dominated by local players, whose health is based on the performance of their local products domestically.
Future potential for international spirits categories
China, and to a lesser extent India, and their locally produced spirits, will still be the key growth drivers for the region. However, particularly in whiskies and cognac, there are possibilities for growth.
© Euromonitor International
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INTRODUCTION REGIONAL OVERVIEW LEADING COMPANIES AND BRANDS FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
REGIONAL OVERVIEW
Dominant with room to grow Asia Pacific is the key growth driver for global spirits. In 2017 it ed for 60% of global spirits volumes and saw the second-fastest rate of growth over the review period, after the much smaller Middle East and Africa region. This is not surprising due to having so many populous countries, but also that in all the major markets in the region, such as China, India, Korea and Japan, spirits have traditionally been the alcoholic drinks of choice. However, thanks to a mixture of low disposable incomes, growing consumer choice in mature markets, and in some markets cultural issues, per capita consumption is relatively low, being only the fourth-largest region.
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REGIONAL OVERVIEW
Continued steady growth Since 2012 Asia-Pacific has continued to grow. The dip in 2016 was due to declines in the high-volume markets of Thailand, Japan and South Korea, but these markets recovered to varying degrees in 2017. The major growth drivers remain the two largest markets: China and India. Both have and will continue to see steady growth throughout the forecast period, but will be assisted by other markets. Growth in many markets has been driven by rising disposable incomes, which have encouraged the region’s consumers to move into legal consumption, but also enabled them to afford to drink more and higher quality products – a trend that is set to continue.
© Euromonitor International
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REGIONAL OVERVIEW
Local spirits dominate Asia Pacific volumes Spirits produced in specific countries dominate volume sales in the region. Four out of the top five markets are dominated by such types, led by baijiu in China and soju/shochu in Japan and South Korea. In markets with more conventional spirits categories such as in India and the Philippines, where whiskies and rum have large volumes, these categories are dominated by cheap, locally-produced products. Despite this, categories and products are present, for example cognac in China, Taiwan and Malaysia, while Scotch whiskies, particularly single malt products, are growing strongly in India, China and Japan. However, their volumes are comparatively low. © Euromonitor International
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REGIONAL OVERVIEW
Small growth goes a long way with big volume base Although they have relatively low rates of growth the massive volumes of local spirits consumed means that they continue to drive volume sales. While the majority of that growth is low-value products, it is worth noting that in China and super baijiu was the key growth driver for the category in 2017. India has the second biggest actual volume growth, driven by whiskies. This is mainly local whiskies, but from relatively low bases both blended and single malt Scotches are doing well. The country with the third highest volume growth was South Korea, with tits volumes driven by soju/shochu. Despite the category’s maturity, producers’ capacity to adapt to the latest trends, eg lower ABV variants and the threat of flavoured vodka, has allowed the category to grow.
© Euromonitor International
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REGIONAL OVERVIEW
Growth by category in key markets
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REGIONAL OVERVIEW
Other spirits and whiskies key to growth Major volume categories in Asia-Pacific saw fluctuating fortunes over 2012-2017. The relatively strong performances in China, India and South Korea of local products contrasts with that of Japanese shochu, which suffers from an ageing consumer base. The Philippines saw declines in its local rum, brandy and gin categories for a variety of historic reasons, including large excise duty hikes. On the positive side there has been the increasingly broad-based growth of whiskies, particularly international variants. Excluding India, Japan has seen the healthiest increases in volumes. Driven by its native whisky it has also spread to other variants, especially Scotch, where the blended variants saw the fastest rate of growth. This strong growth originated in Japanese whisky, and the desire to look to the past with the popularity of the Highball cocktail. Scotch has also seen strong growth in India and the Philippines, and is recovering somewhat in China. In the latter market, single malt Scotch is thriving due to its high-end positioning, while blended Scotch is benefitting from price rises in and above baijiu, which is making people who cannot afford the new high prices switch to blended Scotch. The major international spirits category in China, cognac, is also seeing a return to growth. In the first half of the review period the category was hit very hard by an anti-corruption and anti-gifting drive, as much of the growth was driven by corporate gifting/entertainment. Consumption of cognac has now switched to a more sustainable personal consumption model. Although not showing up in the figures, other international spirits categories, such as English gin and vodka, are growing from low bases in a number of markets. This is being driven by isation and the growing popularity of cocktails, for example in China, Hong Kong and Indonesia.
© Euromonitor International
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REGIONAL OVERVIEW
Broad range of consumption habits In Asia Pacific consumers drink in a wide variety of locations, either at home or in on-trade establishments. In Pakistan, due to the strong religious sentiment against alcohol, consumption is almost entirely at home.
The decline of the off-trade share in Malaysia is due to a big push of international spirits categories, eg whiskies, cognac and gin, primarily through on-trade. Indonesia suffered a decline in off-trade shares due to the banning of alcohol sales through traditional shops, the main outlook for local spirits, and thus saw an overall volume decline.
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100 90 80 70
% volume share
By contrast, less than 20% is consumed at home in Singapore – a trend exacerbated by the strong rise of the cocktail culture.
Spirits in Asia Pacific: % Volume Sales Through Off-Trade 2011-2016
60 50 40 30 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Azerbaijan Indonesia Pakistan Taiwan
China Japan Philippines Thailand
ALCOHOLIC DRINKS: SPIRITS IN ASIA PACIFIC
Hong Kong, China Kazakhstan Singapore Uzbekistan
India Malaysia South Korea Vietnam
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REGIONAL OVERVIEW
Small specialist stores dominate most markets
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REGIONAL OVERVIEW
Eclectic off-trade retailing environment The two major consumers of alcohol in the region, China and India, have very different pictures for off-trade alcohol consumption. China, despite its size, has a strong concentration of sales in supermarkets and hypermarkets. By contrast, India’s dependence on specialist retailers reflects a combination of tight regulation and control of alcohol sales in the many different states, but also the general fragmentation of retailing and lack of chained retailers. Specialist retailers are also dominant in both Pakistan and Uzbekistan, for similar reasons to India. However, Pakistan has the added issue of the cultural difficulties of drinking alcohol in a strict Islamic environment. In those markets with a large proportion of sales via supermarkets and hypermarkets, such as South Korea and Singapore, this reflects the concentration of their retail environments. Local independent stores are major outlets for spirits purchases in a number of markets, such as Indonesia, Vietnam and Malaysia. However, they have all suffered declines in share, especially in Malaysia and Indonesia. This is predominantly due to the decline in local spirits, for which independent stores represent the main outlet. This decline is due to a mixture of changing consumer habits as they shift to more international spirits, but in the case of Malaysia excise duty rises, which disproportionally impacted cheaper local spirits. In many of these markets, such as Indonesia, there is a major split in of where products are purchased, with cheap local spirits being bought in local independent stores, while international spirits are purchased through supermarkets/hypermarkets, where the better off increasingly tend to shop.
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INTRODUCTION REGIONAL OVERVIEW LEADING COMPANIES AND BRANDS FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
LEADING COMPANIES AND BRANDS
National consolidation Many of the large volume countries have highly consolidated markets, most notably in South Korea, Thailand and Philippines, where large companies dominate. In South Korea it is focused on which region companies dominate, while in the Philippines it is by category (gin, rum or brandy). In Thailand it is the one major player Thai Beverages. The one large market which remains fragmented is China, the huge size of the country meaning there are lots of regional players. Private label is almost nonexistent. This is due to the retailing set up, where either ontrade takes a large portion of sales, or alcohol is mainly through independent stores rather than large grocery outlets.
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LEADING COMPANIES AND BRANDS
Local companies dominate the rankings Only two of the top 10 distillers in Asia Pacific are international companies. Diageo in first and Pernod in fourth are only there due to their large volumes of local spirits in India. All other companies in the top 10 are there due to their large shares in domestic markets. Three are from South Korea, two from the Philippines and one each from China, India and Thailand. The performances of these companies are all dependent on local conditions, such as tax hikes, economic woes etc. In the case of Diageo, its decline in share was due to struggles turning around its Indian United Spirits division, which for years suffered from lack of investment by its predecessor, and low-margin products. Diageo is trying to re-position its portfolio to be more upmarket. © Euromonitor International
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LEADING COMPANIES AND BRANDS
Narrow geographic spread for all the leading companies The consolidated nature of the leading companies’ volume profile is emphasised here. The most diverse company of the top 10 is Pernod Ricard, with only 90% of its region’s volumes in its main market of India. This is predominantly due to its strength in China. The company’s broader spread is due to Pernod’s historic strength in the region, and unlike its rival Diageo, it has remained fully focused on Asia despite various economic crises. Post the 1998 economic crisis, Diageo pulled back from the region, only re-engaging from the mid-2000s A couple of the South Korean companies have volumes in Japan, due to the fact that soju/shochu are similar products. Their brands there primarily focus on Korean ex-pats.
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LEADING COMPANIES AND BRANDS
Cheap local brands rule All the 11 leading brands in Asia Pacific are cheap local brands focused on one specific market. The leader is the South Korean brand Chamisul. The brand’s volumes are focused in the most populous part of the country, around Seoul. Second placed McDowell’s is an Indian brand, but made up of a range of variants in different categories – whiskies, rum and brandy.
Of the remaining brands, Filipino ones are strongly present with Emperador, San Miguel and Tanduay. Each of the brands dominate their respective brand, gin and rum categories. As with Chamisul, the two Korean brands (Choumchorum, Joeunday) are focused on a particular region in Korea. © Euromonitor International
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INTRODUCTION REGIONAL OVERVIEW LEADING COMPANIES AND BRANDS FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
FORECAST PROJECTIONS
Giants shape the region
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FORECAST PROJECTIONS
Large markets shape growth prospects Over 2017-2022, Asia-Pacific will see volumes grow by a 1% CAGR (804 million litres). This is a slowdown on the review period, but will continue to drive the growth of the global category. Unsurprisingly, it is the large markets that will drive growth, with India leading the way. Spirits sales in India have struggled, and will continue to struggle due to outside factors, namely the introduction of the general sales tax, the ban on alcohol sales next to major roads, and a general negative view of alcohol amongst national and regional governments, which has seen mass on-trade closures in certain regions. This negativity will continue to hold back growth. However, this will still be faster than China as the category matures. What the country lacks in volume growth will be compensated for in part by value growth as consumers to trade up. Growth in Thailand and the Philippines is very reliant on local social and political conditions. With the former country in particular still showing signs of instability, these healthy prospects could change. South Korea is the market which will see the biggest decline as its major category, soju, continues to decline, underpinned by the decline of the next biggest whiskies. Soju suffers from maturity, with its consumers ageing and younger ones preferring more eclectic tastes. Japan will also continue to see shochu decline, however the category’s overall fall will be mitigated by the continued healthy growth of whiskies. Throughout the region international spirits brands and categories will continue to gain popularity, as consumers become better off and desire more variety and better quality in what they drink. Whiskies will be the main beneficiary of this, but so too will be more mixable/cocktail-focused categories such as vodka, rum and gin.
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FORECAST PROJECTIONS
China hard landing will hurt growth prospects The slowing but still large volume growth expected in Asia Pacific could be further impacted if a sudden economic shock occurs. There are various scenarios, such as trade wars, although the most damaging would be a hard economic landing by China. Although it has less than 10% probability, its impact could be considerable. This is unsurprising as China is the dominant market in the region and it will suffer the most. However, it will not be alone with many of its neighbours, such as Thailand and South Korea, also suffering.
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INTRODUCTION REGIONAL OVERVIEW LEADING COMPANIES AND BRANDS FORECAST PROJECTIONS
COUNTRY SNAPSHOTS
COUNTRY SNAPSHOTS
China: market context
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COUNTRY SNAPSHOTS
China: competitive and retail landscape
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COUNTRY SNAPSHOTS
India: market context
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COUNTRY SNAPSHOTS
India: competitive and retail landscape
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COUNTRY SNAPSHOTS
South Korea: market context
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COUNTRY SNAPSHOTS
South Korea: competitive and retail landscape
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COUNTRY SNAPSHOTS
Japan: market context
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COUNTRY SNAPSHOTS
Japan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Thailand: market context
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COUNTRY SNAPSHOTS
Thailand: competitive and retail landscape
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COUNTRY SNAPSHOTS
Philippines: market context
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COUNTRY SNAPSHOTS
Philippines: competitive and retail landscape
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COUNTRY SNAPSHOTS
Uzbekistan: market context
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COUNTRY SNAPSHOTS
Uzbekistan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Taiwan: market context
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COUNTRY SNAPSHOTS
Taiwan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Vietnam: market context
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COUNTRY SNAPSHOTS
Vietnam: competitive and retail landscape
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COUNTRY SNAPSHOTS
Kazakhstan: market context
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COUNTRY SNAPSHOTS
Kazakhstan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Pakistan: market context
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COUNTRY SNAPSHOTS
Pakistan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Malaysia: market context
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COUNTRY SNAPSHOTS
Malaysia: competitive and retail landscape
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COUNTRY SNAPSHOTS
Azerbaijan: market context
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COUNTRY SNAPSHOTS
Azerbaijan: competitive and retail landscape
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COUNTRY SNAPSHOTS
Hong Kong, China: market context
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COUNTRY SNAPSHOTS
Hong Kong, China: competitive and retail landscape
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COUNTRY SNAPSHOTS
Singapore: market context
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COUNTRY SNAPSHOTS
Singapore: competitive and retail landscape
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COUNTRY SNAPSHOTS
Indonesia: market context
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COUNTRY SNAPSHOTS
Indonesia: competitive and retail landscape
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FOR FURTHER INSIGHT PLEASE Jeremy Cunnington
Drinks & Tobacco Project Manager [email protected]
RELATED ANALYSIS Spirits in Western Europe
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